How to Carry Out a Conversion Without Starting Over

What Is a Conversion?

In a conversion, a company changes its type without ceasing to exist. It keeps its legal personality, its enterprise number, its contracts, its assets and its debts. Only the articles of association and the applicable rules change.

That continuity is the whole point. You do not set up a new company, and you do not move your business into another entity. As a result, customers, suppliers and your bank keep dealing with the same party. Still, tell them about the change, since the SRL or SA label appears on invoices, websites and letters.

The Most Common Conversions

Each scenario meets a specific need.

• SRL to SA. The company brings in investors and wants freely transferable shares.
• SA to SRL. Shareholders want more flexibility and no longer need minimum capital.
• SC to SRL. Since the CCA, the SC stays reserved for genuine cooperatives. A cooperative without a real cooperative purpose therefore has good reason to move to an SRL.
• SNC or SComm to SRL. Partners want to limit their liability going forward.

Unsure about the target? Compare the SRL and the SA before starting a conversion.

The Three Documents to Prepare

The law requires three documents before the vote.

The Statement of Assets and Liabilities

The management body draws up a statement summarising the company's assets and liabilities. On the day of the general meeting, it must not be more than three months old. It gives a fair picture of the company's finances at the time of the conversion.

The Management Body's Report

This report justifies the proposed conversion. It explains why the operation serves the company's interest and what it changes for shareholders or partners. It builds on the statement of assets and liabilities.

The Registered Auditor's Report

A registered auditor ("réviseur d'entreprises") reviews that statement. Among other things, the auditor flags any overvaluation of net assets. For a move to an SA, net assets must also reach at least €61,500, the required minimum capital.

The Conversion Process, Step by Step

Plan a realistic timetable, since the auditor needs time.

The CCA also sets an attendance quorum. Our guide to publication in the Belgian Official Gazette covers that last formality.

Example: an SRL Becoming an SA

Here is a simplified scenario, for illustration only. A software SRL has €90,000 of equity. An investor agrees to come in, provided it receives shares in an SA. The auditor reviews a statement drawn up two months before the meeting. Net assets exceed €61,500, so the conversion can go ahead without a new contribution. The shareholders then vote unanimously before the notary. Afterwards, the company keeps its number and all its contracts.

If net assets reached only €40,000, equity would first need a boost. For example, shareholders could make an additional capital contribution before the conversion.

Common Mistakes

These errors often delay the operation.

• Using an outdated statement of assets and liabilities: after three months, you must redo it.
• Valuing assets optimistically, while the auditor will spot the gap.
• Forgetting that a conversion does not wipe out existing debts.
• Confusing a conversion with a company merger, which involves at least two companies.
• Leaving the shareholders' agreement out of step with the new articles.
• Keeping old invoices or a website that still show the former label.

What Does Not Change

Continuity also protects creditors. When an SNC or SComm becomes an SRL, its partners limit their liability for the future only. For debts that predate the conversion, they remain jointly and severally liable without limit. Likewise, a conversion cannot serve to escape commitments already made.

The enterprise number stays the same too. The FPS Economy manages the Crossroads Bank for Enterprises, which records the change. The Belgian Official Gazette publishes the extract of the deed.

In Summary

A well-prepared conversion rests on three documents, one vote and one publication. Prepare your figures early, have a registered auditor review the statement and align your articles with the notary. Finally, an up-to-date financial forecast helps you decide whether the conversion is worth it.