BELGIUM Law and Practice Contributed by: Thomas Lenné, Mathias Hendrickx, Valentijn de Boe and Bram Devlies, Loyens & Loeff
get must also immediately inform the bidder and the FSMA of any decision to issue voting securities and of any decision which intends to or may frustrate the bid (except searching for alternative bidders).
comprehensive and reasoned advice on the decision to be taken by the board, including a description of the nature of the decision or transaction, the financial impact and the advantages and disadvantages of the company in respect of the decision or transaction. Once the advice has been issued, the board may resolve on the matter. The minutes of the meeting of the board must confirm compliance with the proce- dure and justify, as the case may be, why the board has opted to deviate from the advice of the special committee. The statutory auditor verifies if the finan- cial and accounting data mentioned in the board minutes and committee’s advice contain no material inconsistencies compared to the information available to him/her. All decisions taken in application of the aforementioned procedure are made publicly available ultimately when the decision is taken or the transac- tion is entered into and the annual report refers to all such publications. 9.3 Role of the Board In accordance with Belgian public takeover legisla- tion, the target board is required to form an opinion on the bid which it must publish in its response memo- randum to the bid. If there is no unanimity within the board, dissenting opinions must be included in the response memorandum. Since reference sharehold- ers are a common feature of Belgian-listed compa- nies and these reference shareholders are typically well represented on the target board, securing target board support is key in increasing the likelihood of a successful public takeover. While the role of the board of the target may be limited to a response memo- randum from a takeover legislation perspective, in practice (especially in supported bids) the board will closely co-operate with the bidder; eg, share informa- tion with the bidder, and communicate towards the target’s shareholders. Shareholder activism and challenges to the board’s decision to support a takeover bid are rather rare in Belgium, although not unheard of. If shareholders do challenge a public takeover transaction, the argu- ments typically revolve around the price offered and whether or not this is in line with (perceived) value of the target company.
9. Duties of Directors 9.1 Principal Directors’ Duties
Directors of Belgian companies have a duty of loy- alty towards the company and must always act in the interests of the company they manage. Belgian legis- lation, however, remains silent on the notion of “inter- ests of the company”. The Belgian Supreme Court has judged this to mean the joint interest of a company’s current and future shareholders. This judgment went somewhat against a recent evolution to broaden the scope of “corporate interest” to include other stake- holders, such as creditors and employees, as well. Considering this, the joint interest of the sharehold- ers will be the decisive factor to determine whether a decision has been made in the company’s interest, but decisions going clearly against the interest of the employees or creditors of the company may nonethe- less give rise to potential liability, if not through the corporate interest test, then through tortious liability. 9.2 Special or Ad Hoc Committees In accordance with the BCAC, publicly listed compa- nies must in principle apply a specific procedure in respect of decisions or operations with related parties (as defined in the International Accounting Standards), excluding subsidiaries (subject to exceptions). Such procedure must also be applied in case the board proposes a contribution in kind by an affiliate of the listed company, a merger or demerger proposal with an affiliate, a transfer of universality in an affiliate or a transfer of significant assets (ie, relating to at least 75% of the listed company’s assets). The BCAC does provide for several exemptions, eg, transactions at arm’s length or with limited value. In accordance with this procedure, the decision or transaction must first be submitted to a committee consisting of three independent directors who may appoint one or more independent experts to pro- vide advice on the matter. This committee shall issue
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