Through a Friends Share, individuals can invest up to €75,000 in a company with a Flemish operating location.
In return, they receive a tax benefit of 2.5% for up to five years.
As a company, you can thus raise up to 300,000 euros of fresh capital to strengthen equity.
For which entrepreneurs?
The issuer of the shares is a starting or existing SME or company with legal personality that has an operating location in the Flemish Region.
For which funding?
Friends shares are always newly issued shares. The company issuing the shares uses the amounts received exclusively for corporate purposes.
Activate Flemish savings and inject them into the economy
up to €300,000
up to €75,000 per Friends Shareholder
Tax benefit Friends Shareholder
2.5% tax credit
Combination with Win-Win Loan
possible up to €75,000 per Friends shareholder/lender and up to €300,000 per issuer/borrower
4 steps to a Friends Share
1/ Subscribe to shares
The Flemish government gives tax benefits to individuals who invest in Flemish companies. Investors are individuals who subscribe to newly issued Friends Shares through capital contributions. These shares must be paid up in full.
2/ Make a report
Prepare a report on the issue price of the Friends Shares within three months of full payment. The report should then receive a positive review from a company auditor or an external accountant.
3/ Draw up an issue agreement
The Friends Shareholder and the issuer (the company issuing the shares) confirm in an issue agreement that the Friends Shareholder has subscribed to newly issued shares of the issuer through a capital contribution. The agreement must be drawn up and signed within three months of the Friends Shares being paid up in full.
Submit the signed digital issue agreement along with the report to PMV via e-mail to firstname.lastname@example.org as soon as possible (no later than three months).
Registration or refusal of the agreement will be done within one month.
Conditions Friends Shares
Conditions for the Friends Shareholder (FSH)
- The FSH is a natural person acting outside the scope of his or her trade or profession.
- He or she is not an employee of the issuer.
- The Friends shareholder, their spouse or legally cohabiting partner must not be appointed or act as a director, manager or hold a similar office in the issuer.
- The FSH, their spouse or legally cohabiting partner must not own more than 10% of the shares (or convertible securities) and voting rights.
- The FSH, their spouse or legally cohabiting partner must not have left the company assets of the issuer 24 months prior to the payment of the Friends’ share.
- To enjoy the tax benefit, the FSH must be subject to personal income tax as localised in the Flemish Region.
Conditions for the issuer
- The issuer has an operating office in the Flemish Region.
- The issuer is an SME, company with legal personality.
- The issuer is not a listed company.
- The issuer has not reduced its registered capital in the 24 months preceding the full payment.
Issuer conditions to be held for 60 months after full payment
- The issuer is not an investment, treasury or finance company.
- The issuer is not a real estate owning company or in which the Friendshareholder, the spouse or legal cohabitant or their children
- hold a directorship or have income therefrom.
- The issuer is not a management company.
- The issuer has no ties with or makes no payments (+€100,000) to companies based in tax havens.
- The issuer does not repurchase its own shares or carry out any capital reduction, other reduction or distribution of equity.
Conditions for the Friends’ share
- The contribution must be fresh money.
- Loans and convertible securities converted into shares are not eligible.
- The Friends shareholder can subscribe and fully pay up Friends Shares for a maximum of 75,000 euros.
- The issuer can issue Friends shares for a maximum of 300,000 euros.
- Cumul with Winwin loan is possible with a ceiling of the above amounts.
- Funds received are for corporate purposes only.
- The amounts received may not be used for distribution of dividends, liquidation reserves, purchase of shares or granting of loans.
- A Winwin loan cannot be used for replenishment of a Friends share.
- A cumulation of the same funds with the federal tax shelter scheme is not possible.
Terms of the issue agreement
The Friends share issue agreement must contain the following elements. Have these details ready when preparing the Friends’ Share Issue Agreement:
- the identification details of the parties
- the price per share
- the number of subscribed Friends’ Shares
- the voting rights attached to a Friends’ Share
- the total number of existing shares (before the issue)
- the total number of existing voting rights (before the issue)
- a report on the issue price of the Friends shares, which has been positively assessed by a company auditor or an external accountant
The parties further declare in the agreement that the conditions of the Winwin Loan Decree of 19 May 2006 and its implementing decrees have been met and acknowledge the additional right of control (by Vlaio) over compliance with the conditions.
The issue agreement and report on the issue price must be signed within a period of 3 months after the full payment of the Friends shares. Thereafter, they should be sent to email@example.com or PMV, Oude Graanmarkt 63, 1000 Brussels within the 3 month period after signing the issue agreement. Registration or refusal will then follow within the month.
See how to prepare a valid Friends’ Share issue agreement at the Frequently Asked Questions under ‘How do I draft a valid issue agreement?’.
Legislative framework Friends share
The legal conditions that the Friends shareholder, the issuer (= the company issuing the Friends shares) and the issue agreement must comply with can be found here, in Dutch:
- the Winwin Loan Decree of 19 May 2006 (amended by the decree of 25 November 2020 as regards the Friends’ Share).
- the decision of the Flemish Government on the implementation of the Decree of 19 May 2006 on the Winwin Loan (‘the Winwin Loan Decree’).
FAQs about Friends Shares
What is a Friends’ Share and what is its purpose?
To activate the savings of the Flemish people, the Flemish government has decided to grant a tax advantage to those willing to strengthen the capital of Flemish companies. To this end, the Winwin loan decree was amended (the loan amounts were increased, the duration was made more flexible…) and expanded to include the Friends’ Share. To provide additional support to SMEs, the Flemish government decided to grant a 2.5% tax credit to Flemish taxpayers (natural persons) who inject fresh capital into Flemish companies in exchange for Friends’ Shares.
What is an issue agreement Friends share?
An issue agreement Friendshare is a written declaration in which the parties confirm that the Friendshareholder has subscribed to newly issued shares of the issuer by means of a capital contribution, in accordance with the terms of the decree of 19 May 2006 and its implementing decrees.
It is a written confirmation of a legal event that has already taken place: a contribution of fresh money to a Flemish company.
More information on how to draw up the Friends’ Share Issue Agreement can be found in the Frequently Asked Questions under ‘How do I draft a valid issue agreement Friends share?’.
How do I draft a valid issue agreement Friends’ Share?
The issue agreement Friends’ Share must be drafted within a period of 3 months after full payment.
You can easily prepare the issue agreement via the PMV website: press the ‘Prepare’ button. You will need the following data:
- the identification details (including national register number, KBO number, address details…) of the Friendshareholder, of the issuer and of the director who can legally bind the issuer;
- the price per share;
- the number of subscribed Friends shares;
- the voting rights attached to a Friends share;
- the total number of existing shares (before this issue);
- the total number of existing voting rights (before this issue);
- a report on the issue price of the Friends Shares that has been positively assessed by a company auditor or an external accountant.
After entering all the details, you can print and save the agreement. Prepare the issue agreement in three original copies, one of which is for the Friendshareholder, one for the issuer and one for PMV. The latter copy should be delivered within three months of the signing of the deed (= date of entry) together with the auditor’s or external accountant’s report to PMV, Oude Graanmarkt 63, 1000 Brussels or via e-mail to firstname.lastname@example.org.
Within one month after receipt of the Issue Agreement, PMV will check whether all conditions have been met. If so, PMV will proceed to register the Issue Agreement. The Friends Shareholder will receive the registration letter by email.
If PMV (PMV-Standard Guarantees nv) cannot register the agreement because not all conditions are met, the Friendshareholder will be notified.
PMV will only notify the Friendshareholder of the registration or its refusal. If the issuer wants information about it, mutual arrangements should be made.
You can find an example of an issue agreement Friends’ Share (in Dutch) here.
When should the issue agreement be signed?
The issuance agreement must be drawn up and signed within a period of 3 months after the funds are paid in full.
What is the tax benefit for the Friends shareholder?
An annual tax benefit of 2.5% on the deposited amount applies to the Friends’ share for up to five years. It is calculated on a daily basis from the date of full deposit. Unlike a Winwin loan, there is no one-time tax credit. The taxpayer keeps the registration letter, issue agreement and report available to the tax authorities and the controlling body.
The tax benefit expires on the day of:
- the bankruptcy of the issuer
- the decision of dissolution (issuer)
- the transfer of (part of) the Friends shares
- the death of Friends shareholder
Is a Friends Share also possible when a company is incorporated?
What is the date of full payment?
It is the day when the issuer disposes of the funds.
Which company forms qualify as issuers?
Only companies with legal personality can issue Friends shares:
- SA (NV)
- LLC (BV)
- CS (CV)
- European (cooperative) society
- European economic cooperation
- Agricultural companies (under General Partnership or CommV)
- General Partnership (VOF)
Cannot act as issuer:
- a natural person
- a partnership
- a non-profit organisation
- a (private) foundation (of public benefit)
- a de facto association
What is the reviser’s or external auditor’s report?
Together with the issue agreement, a report on the issue price of the Friends Shares that has been positively assessed by an auditor or external accountant who is not an employee of the issuer must be submitted. That auditor or account assesses whether the financial and accounting information contained in the report of the governing body is true and fair in all material respects and sufficient to inform the Friends shareholder of his/her decision to invest. The auditor or accountant therefore does not add any additional liabilities to the report, nor does it express an opinion on the appropriateness of the transaction.
As an investor, can I simultaneously enter into a Winwin Loan and an issue agreement Friends’ Share?
You can, but the total amount for which you enjoy an annual tax credit is limited to 75,000 euros. Through Winwin Loans, you cannot own more than 5% of the borrower’s shares. As a Friendshareholder, you cannot own more than 10% of the issuer’s shares. If you want to combine both, you have to take those conditions into account.
Can I support Flemish companies in addition to the Winwin Loan and the Friends’ Share Issue Agreement?
This is possible, but additional loans and share subscriptions exceeding the €75,000 ceiling are not eligible for the Flemish Region’s tax benefit.