Non-profit organisations (NPO)

Since 1 May 2019, the law on non-profit organisations (ASBL) has been integrated into the new Code of Companies and Associations (CSA). The reform aims to simplify and clarify the law by bringing non-profits under company law.

Non-profits can now pursue unlimited profit-making activities. However, they are forbidden from distributing their profits. This latter point is, therefore, a distinguishing characteristic of non-profit organisations (NPOs).

Like any other company, a non-profit can now go bankrupt and benefit from insolvency and directors' liability laws.

What is a non-profit organisation? (NPO)

A non-profit organization (NPO) is formed through an agreement (the articles of association) among at least two individuals, known as the founding members.

The organisation's actions must have an altruistic goal (which will define its social purpose). They cannot directly or indirectly benefit its founders, members, directors or any other person financially, except for the altruistic purpose stated in its articles of association.

Contrary to a commercial enterprise, the creation of an NPO :

• requires no minimum start-up capital.
• can be carried out via a private deed filed with the office of the Clerk of the Commercial Court. It is, therefore, not necessary to go to a notary.

Operation of an NPO

An NPO consists of its members. Its management is entrusted to a board of directors. Unlike its members, the directors are responsible for the commitments made by the NPO and for its proper management. Since September 2017, following a European directive, the directors of NPOs must also be registered in the UBO register as “beneficial owners”.

It is important to provide for a rotation in the composition of the members of the Board to bring in new ideas and to enable the association's means and objectives to be continually questioned. As a general rule, we recommend a three-year term of office.

The members of the board of directors are elected by the General Assembly (GA). The ordinary general assembly takes place once a year and is attended by all members of the non-profit organisation. The GA provides guidelines for the conduct of the NPO and makes decisions about the points on the agenda, such as the appointment or termination of a director's term of office, any changes to the articles of association, approval of the annual financial statements, etc.

Characteristics

A non-profit can have a legal personality if it meets the following conditions:

• The registered office is located in Belgium
• It has at least two founding members.
• The articles of association contain certain required information
• The articles of association, last and first names, professions and domiciles of the directors are published in the appendices of the Belgian Official Journal (Moniteur belge).

If these conditions are not met, the association will be considered an unincorporated association and will have no legal personality.

Legal personality

Legal personality is obtained once the articles of association and the director appointment procedures are submitted to the clerk of the appropriate commercial court.

A certain amount of time may elapse between the creation of an NPO and the moment it acquires its legal personality. Some transactions can take place during this period:

• Equipment purchases
• Leasing of premises
• Opening of a bank account
• Hiring staff

Articles of association

The articles of association must be recorded in writing. They can be written as a private agreement, in the presence of the founders only, or as an authentic act before a notary.

The articles of association and the list of members of the first board of directors must be sent to the office of the clerk of the Commercial Court for publication in the Official Journal. You can submit them via the e-greffe website. You will then receive a company number for your association, in principle later in the week.

The members' list should be submitted to the clerk's office within one month after the articles of association are published.

Legal and administrative obligations

NPOs are required to register with the Crossroads Bank for Enterprises, where they are assigned an identification number that must be included on all official documents.

If, following a tax audit, it becomes apparent that the NPO is engaged in profit-making activities, it will be required to pay corporate tax. If its activities are not profit-making, the NPO will be required to pay income tax on legal entities.

The details of the legal and administrative requirements are explained in this article (LINK).