Transformation of SPRL into SRL

In Belgium, new legislation came into effect on January 1st, 2020 regarding the Private Limited Liability Company (SPRL). This law requires existing SPRL's to be converted into a Limited Liability Company (SRL) before January 1st, 2024.

This obligation arises from the approval of the law of March 23, 2019, which amended the companies law of 1999. This reform aims to modernize company law in Belgium, simplify administrative formalities, and strengthen the rights of shareholders and creditors.

The transformation from a SPRL to a SRL is a relatively simple procedure, but it must be carried out with care. The transformation requires a change in the company's articles of association and therefore a passage before the notary.

The benefits of the transformation to a SRL are numerous. Firstly, the SRL offers more flexibility and freedom to the partners to organize the management of the company. It also allows the creation of different types of shares and bonds, which can facilitate financing for the company. Moreover, the SRL offers better protection for creditors and third parties in the event of the company's bankruptcy.

However, it is important to note that the transformation to a SRL can have significant tax and accounting consequences for the company. Therefore, the partners should be advised by an expert accountant before proceeding with the transformation.

It is also important to note that the transformation to a SRL is mandatory for existing SPRL's. Companies that do not comply with this obligation risk administrative and criminal sanctions, including fines and the dissolution of the company.