Capital Increase in a Belgian SRL: Procedure and Formalities

Key takeaways

• A capital increase in an SRL requires an extraordinary general meeting: 50% quorum of shares at the first convening, three-quarters majority of votes cast.
• A notarial deed is mandatory to record the amendment to the articles of association and the issuance of new shares (art. 5:120 CAC).
• Existing shareholders are entitled to a proportional pre-emption right when shares are issued for cash contributions, with a minimum exercise period of 15 days (art. 5:128 and 5:129 CAC).
• The authorised capital mechanism allows the management body to issue shares without convening a general meeting, for a maximum period of five years (art. 5:134 CAC).
• A cash contribution must be deposited in a special account at a credit institution before the notarial deed is executed (art. 5:132 CAC).

Increasing the capital of an SRL is a significant decision: it dilutes existing shareholders or welcomes new ones, strengthens equity and amends the company's articles of association. The capital increase procedure in a Belgian SRL follows a precise framework set by the Companies and Associations Code (CAC), which entered into force on 1 May 2019. For managers considering this transaction, understanding the quorum rules, the role of the notary and the options offered by authorised capital helps avoid errors that render any decision void.

What the CAC Changed for SRLs

Since the CAC came into force, the SRL no longer has share capital in the traditional sense. Where the former BVBA had to justify a minimum capital of 18,550 euros, the SRL now operates without a capital amount stated in its articles. Shareholders' rights are represented by shares (not "actions", a term reserved for the SA), and what is commonly called a "capital increase" is in practice an issuance of new shares in exchange for a contribution.

This distinction has practical consequences. The value of equity no longer appears in the articles: only the number of issued shares is recorded. Issuing new shares worth 100,000 euros therefore does not require this amount to appear in the amended articles of association, unless the articles themselves provide otherwise.

Why Increase the Capital of an SRL

The reasons for opening a fundraising round or increasing the equity of an SRL are varied. The most common are the entry of a new investor or shareholder, the financing of a major investment (asset acquisition, international expansion), strengthening equity to meet a banking criterion or a tender requirement, or the conversion of a debt into shares.

The Decision of the Extraordinary General Meeting

In the absence of authorised capital provided in the articles, issuing new shares requires a decision by the shareholders' meeting sitting in extraordinary session. This meeting amends the articles of association and must comply with enhanced quorum and majority requirements.

Before the meeting is held, the management body prepares a special report justifying the issue price of the new shares and describing the consequences for the existing shareholders' financial and voting rights (art. 5:121 CAC). This report must be announced in the notice and deposited at the clerk's office of the enterprise court. Without a report, the meeting's decision is void.

If the 50% quorum is not reached at the first convening, a second meeting may be convened with no quorum requirement. The three-quarters majority applies in both cases. The articles may provide for stricter conditions, never less strict ones.

The Pre-emption Right of Existing Shareholders

When new shares are issued against a cash contribution, each shareholder has a pre-emption right proportional to their current holding (art. 5:128 CAC). This right allows them to subscribe to the new shares as a priority in order to maintain their percentage of the company. The articles cannot remove or restrict this right: only the general meeting may derogate from it, and only in the company's interest, under enhanced modalities.

The minimum exercise period is 15 days from the opening of the subscription period. This period is mandatory and cannot be shortened by the meeting. Shares not subscribed at the end of the period may be offered to third parties or held in portfolio, according to the terms decided by the meeting.

In the case of a contribution in kind, the pre-emption right does not apply by default: the company receives an asset, not money, and the dilution rationale is different. Shareholders whose holding exceeds 10% of voting rights cannot take part in the vote on the decision to suppress or limit the pre-emption right.

Authorised Capital: Issuing Shares Without Convening an EGM

The articles may grant the management body the power to issue new shares without convening a general meeting. This is the authorised capital mechanism, defined in articles 5:134 to 5:137 of the CAC.

This delegation is valid for a maximum of five years from the publication of the relevant bylaw provision in the Moniteur belge. It may be renewed for successive five-year periods by decision of the general meeting. Before exercising this delegation, the management body prepares a special report describing the circumstances and objectives. The absence of this report renders the decision void.

The Notarial Deed and Subsequent Formalities

Any issuance of new shares must be recorded in an authentic deed executed before a notary (art. 5:120 CAC). Whether the decision comes from the general meeting or from the management body under authorised capital, the notarial step is mandatory.

1. 1

   Preparation of the management body's report

   Before the notice

   The management body drafts the report justifying the issue price and its impact on shareholders. This report is deposited at the enterprise court clerk's office and announced in the EGM notice.

2. 2

   Notice to the extraordinary general meeting

   Min. 15 days

   The notice is sent to all shareholders with a minimum notice period of 15 days. It sets out the agenda, the availability of the report and where it may be consulted.

3. 3

   EGM and vote

   Day 0

   The meeting deliberates on the issuance of new shares, the issue price and the terms. It must meet the 50% quorum and adopt the decision by a three-quarters majority.

4. 4

   Execution of the notarial deed

   D to D+15

   The notary executes the deed amending the articles of association. For cash contributions, funds must be deposited in a special blocked account at a credit institution before the deed is executed (art. 5:132 CAC).

5. 5

   Publication in the Moniteur belge and CBE update

   Within 30 days

   The notary files the amending deed for publication. The change in the number of shares and the articles is then reflected in the Crossroads Bank for Enterprises.

For contributions in kind, the management body describes each contribution and justifies its valuation. A statutory auditor or certified accountant certifies that the value adopted is at least equal to the amount of the contribution (art. 5:133 CAC). This certification must be deposited before the notarial deed is executed.

For legal support for your SRL, particularly for a capital increase or amendment to articles, our company law services help you structure the transaction in compliance with the CAC.

Support for your capital increase

Monsiegesocial helps you structure the transaction, prepare the required documents and coordinate notarial and CBE formalities.

Discover our servicesCreate or amend an SRL

Further reading

• General meeting of an SRL: rules and formalities, to master the rules on notice, quorum and majority applicable to shareholders' decisions
• Accounting obligations of a Belgian SRL, to understand the accounting implications of an equity increase
• Annual management report of an SRL, to find out which documents must be prepared each financial year in your SRL
• Companies and Associations Code, consolidated text available on ejustice.just.fgov.be