14 November 2017

Management agreements for business managers do not belong in a BVBA

It is usually stipulated that the directorship will be unremunerated. On the basis of a management agreement, individuals or legal entities who are also business managers/directors charge high fees for the services they provide, which are subject to VAT.  

  1. Within a BVBA, which is regarded as a partnership with a private (family) character, the business manager is deemed to have been chosen intuitu personae. He is supposed to be responsible for the complete management and governance of the company. He cannot delegate to another person, or even to a management company of which he himself is the representative. One possible solution is for the management company to be appointed as business manager. 
  2. Within an NV, which is regarded as a joint-stock company, the general management of the company is assumed by a board of directors consisting of at least three members (except that if there are only two shareholders there may also be just two directors). The directors can also delegate their powers to a person charged with day-to-day management or a special attorney. In addition, a managing director may also be appointed who has sole authority to represent the company. 

At present it is often the case that a management agreement is concluded between the company and the director for the provision of services that they are in fact supposed to have performed as a director anyway.

In principle this is not allowed. If a directorship is combined with a management agreement, the management agreement must relate to tasks other than those performed within the framework of the directorship, i.e. the general management of the company.  

Certain arrangements between shareholders/partners and the management may be set out in writing, however, such as: what happens if the director is absent due to illness and inactivity? How much is the remuneration (determined by the general meeting)? How much time is the director supposed to spend on general management? Again, a management agreement can be concluded if a director also has specific tasks or responsibilities in addition to the general management, such as the commercial policy of a particular department.  

To summarise: fees paid to a business manager/director for services performed in connection with the general management of the company are always director’s fees, the amount of which is determined by the general meeting. There is thus a remunerated directorship, for which no separate agreement is in principle required.        

If the director additionally performs other services for the company that do not fall under the general management, he can enter into a management agreement for these services and invoice the company for them. However, the context in which the fees are paid and the services that are provided must always be made clear. 

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