Law of 7 August 2023 on non-profit associations and foundations (as consolidated on 23 September 2023)

The rationale behind adopting this law was to update and streamline the 1928 law applicable to non-profit associations and foundations (Non-Profit Organisations).

Let’s look at the main amendments brought by the 2023 Law.

 

How the amendments affect associations

Administrative formalities

The 2023 Law removes the requirement to file a list of the members of the association with the Registre de Commerce et des Sociétés (RCS) every year. Now an association only has to keep an updated list of members at its registered office.

Associations no longer have to obtain a prior approval from the relevant jurisdiction to amend their articles of incorporation or to liquidate the entity.

Accounting regime

A new accounting regime has been introduced. The scope of the applicable requirements are proportionate to the size of the entity. There are three categories of associations (small, medium and large). Associations qualifying as d’utilité publique are considered large.

The criteria used to put the associations into the three categories are:

• the number of full-time employees overall during the fiscal year
• the amount of incomes
• the amount of assets at the end of the fiscal year

For example, any association which, for two consecutive financial years, has not exceeded the limits of at least two of the three following criteria, falls into the category of “small associations”, and as such can keep simplified accounts:

• the number of full-time employees overall during the fiscal year = less than three
• the amount of income = EUR50,000
• the amount of assets at the end of the fiscal year = EUR100,000

“Large associations” must keep accounts using a system of books and records accounts in accordance with the usual rules of double-entry bookkeeping. They also have to have their annual accounts audited by an auditor.

Restructuration options

An association or an association qualifying as d’utilité publique is now authorised to be converted into the following entities without being dissolved and without its legal personality being jeopardized:

• a foundation
• a social impact company (société d’impact sociétal or SIS) with 100% impact shares

Two associations (qualifying as d’utilité publique or not) can also merge into the same entity without the majority entity being liquidated.

 

How the amendments affect foundations

Administrative formalities

Foundations no longer have to indicate the contact details of the managers in the articles of incorporation.

Foundations also now don’t have to file or publish their provisional budget.

Accounting regime

The accounting regime applicable to all foundations, irrespective of their size, is the one applied to “large associations” in accordance with the accounting categories described above.

Restructuring options

A foundation can now be converted into the following entities without being dissolved and without its legal personality being jeopardized:

• an association qualifying as d’utilité publique
• a social impact company (société d’impact sociétal or SIS) with 100% impact shares

Two foundations can merge into the same entity without the majority entity being liquidated.

Minimum incorporation capital requirements

The minimum capital required at incorporation has been reduced from EUR250,000 to EUR100,000.

A foundation can also now use its own capital, provided that its net asset is not less than EUR50,000.

If the capital of the foundation falls below EUR50,000, the board of the foundation has to decide whether to continue the foundation. The board has to dissolve and liquidate the foundation if it can’t reach the minimum capital amount.

 

Changes for all Non-Profit Organisations

The authorisation procedure has generally been made more transparent.

It’s now more flexible in terms of governance rules with the possibility to hold general meetings remotely, including from abroad, and the possibility to use electronic means to convene general meetings. The board can also now make decisions using circular resolutions, provided they’re passed unanimously by the members of the board and that the decision-making process is authorised by the articles of incorporation.

It's also now possible to delegate the day-to-day management of a Non-Profit Organisation, including to a legal entity.

The RCS can now ask for updated data from the associations and foundations when the RCS deems it necessary. And the RCS can trigger an administrative dissolution procedure if the entity doesn’t provide an appropriate answer in due time.

Filing formalities have been simplified. The requirement to file the foundation’s annual accounts with the relevant ministry has been removed. And it’s no longer necessary to file documents that have already been filed with the RCS as part of previous procedures.

Finally, Non-Profit Organisations can now own a property that is not necessary to fulfil their corporate objective.