Restructuring of (family) companies: the key to sustainable growth

When is restructuring appropriate?

The reasons for proceeding with a restructuring are as diverse as they are numerous, some examples are:

• for the purpose of limiting liability, protecting or centralising certain assets (such as real estate) or facilitating their exploitation by placing certain activities in separate companies;

• separating different activities and grouping them into different companies or merging the activities of several companies can lead to significant cost savings and efficiency improvements; or

• in preparation for a sale (exit), transfer to the next generation, and attracting a new investor.

These scenarios may not seem immediately relevant to your company, but it is important to regularly review the corporate structure. A structure that was effective five or ten years ago on a legal, family wise and/or tax level may no longer be so now.  Restructuring is therefore a strategic step that can lead to a more robust and flexible organization.

Procedure?

After a thorough analysis of your current structure and vision for the future, you can initiate the legal process of merger, demerger, or contribution of an aggregate of assets or business division. We go over the most important steps:

• drawing up a restructuring proposal;
• filing this proposal at the clerk’s office of the competent business court(s) and publication thereof in the Annexes to the Belgian Official Gazette (“Bijlagen bij het Belgisch Staatsblad”);
• respect a waiting period of six weeks;
• compliance with the reporting obligation (by the administrative body and auditor);
• execution of the notarial deed(s) in which is decided on the restructuring;
• filing and publication of the decisions taken in the Annexes to the Belgian Official Gazette (“Bijlagen bij het Belgisch Staatsblad”); and
• administrative formalities post-restructuring (e.g. cancellation of VAT registration, filing a tax return, changes to registrations in the CBE, adjustment of share register(s), Ultimate Beneficial Owner (UBO), etc.).

What are the advantages of a restructuring (in accordance with Book 12 CAC)?

The restructuring takes place with accounting and tax continuity, the transfer of assets and liabilities is a transfer by universal title and the company taken over or split is dissolved without liquidation. As a result, in principle, no separate formalities must be completed for each component, contract, personnel, etc. to be transferred.          
Exceptions to this are mainly the transfer of rights in rem on immovable property such as rights of ownership, usufruct, emphytéose (”erfpacht”), superficie (“opstal”), etc. and the transfer of intellectual and industrial property rights (such as trademarks, patents, etc.). Other agreements for transfer may also have been made conventionally, e.g. with financial institutions.

In principle, the restructuring can also be carried out neutrally from a tax point of view if the conditions are met and there are sufficient business considerations on the basis.

However, it is important to carry out a thorough analysis in advance of corporate income tax, VAT and registration fees, which may require a ruling prior to the restructuring.

Conclusion

Mapping and adjusting your group structure can mean significant cost savings and/or efficiency improvements. The restructuring possibilities of the Companies and Associations Code (merger, demerger, contributions of an aggregate of assets or business division, etc.) provide you with the legal means to achieve this. Are you ready to take a closer look at your company(ies)? Feel free to contact us and we will see how we can optimize your structure both fiscally and legally.