A Société à Responsabilité Limitée (SRL) is a Limited Liability Company (LLC), which is the most commonly encountered legal form in Belgium and suitable for small or medium-sized businesses. The SRL has no minimum capital requirement and can be established by one or more shareholders, whether a natural or legal person, providing a high level of freedom and flexibility. However, the SRL must have an “adequate initial capital”, meaning the capital requirements are not determined a priori by law and are instead tailored to the actual needs of the company’s business activity.
Features of a Belgian Société à Responsabilité Limitée (SRL)
Since the reform of the Companies Code, it is possible to make contributions in kind to an SRL, provided that each contribution in kind is documented in a report by an auditor and justifies the benefits that the contribution presents for the company. The transfer of shares in an SRL is regulated freely by the company’s statutes, so that the SRL can be either a closed or an open company. The SRL offers more freedom with regards to the shares issued. It is now possible to issue different types of shares in an SRL, with multiple or no voting rights, although at least one share must have the right to vote. Shareholders’ rights to profits can also differ. In addition, shareholders of an SRL have the right to withdraw their shares.
Unlike the former SPRL, the SRL is now managed by an administrator rather than a manager.
Creating an SRL in Belgium
To establish an SRL in Belgium, it is necessary to go to a notary to establish an authentic act of incorporation. Similarly, a financial plan for at least two years must be drawn up and kept by the notary (but not published). The financial plan should include sources of funding, a description of the activities, an opening balance sheet, a projected account of results after 12 and 24 months, a budget of projected revenues and expenses for a period of at least two years, and a description of the methods used to estimate the projected turnover and profitability. Additionally, the act of incorporation must be registered with the Belgian Central Enterprise Database (BCE) and published in the Belgian Official Gazette. The notary can accomplish the deposit formalities with the Registry electronically, making the process faster.
Liability of Shareholders and Administrators in an SRL
The SRL is a limited liability company, which means that the responsibility of the associates does not exceed the capital they have contributed to the company. Their personal property is therefore protected from professional creditors’ pursuit. However, the founder’s liability can be sought in case of bankruptcy within three years of the company’s creation, particularly if the financial plan was not drawn up with due care. This may be the case if the SRL was undercapitalized or lacked the resources to operate the business it projected or if its profitability prospects were unrealistic. Regarding the liability of administrators, a maximum amount has been introduced by the Companies Code reform. The exact maximum amount depends on the size of the company: €125,000 for companies with an average annual turnover of less than €350,000, excluding VAT.
Establishing an SRL in Belgium can be a simple and flexible process, and the structure offers several advantages for small or medium-sized businesses. By following the necessary steps and requirements, business owners can benefit from the legal protections and limitations that an SRL provides.
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