BELGIUM Law and Practice Contributed by: Michel Bonne, Hannelore Matthys and Virginie Lescot, Van Bael & Bellis
vided to all competing bidders. The bidder must also avoid receiving insider information. If the bidder nevertheless obtains insider information, it must disclose this in the prospectus. Regulation 596/2014 on market abuse defines insider information as “all information that relates, directly or indirectly, to particular instruments or issuers, is of a precise nature, has not been made public, and if it were made public, would be likely to have a significant effect on the price of those instruments”. Finally, there are some employee information and consultation obligations (see 2.5 Labour Law Regu- lations ). 5.2 Market Practice on Timing Market practice on the timing of disclosure does not typically differ from legal requirements. In general, in private M&A transactions, the acquirer and the target often prepare a common announcement and agree in advance on the content and timing of announce - ments. The most common market practices are to dis - close the deal after signing or after closing (or both). However, the timing of the announcement may vary depending on the factual circumstances of the deal. The parties may sometimes consider it more useful or appropriate to communicate information of a potential forthcoming deal during the due diligence process or upon execution of a memorandum of understanding. 5.3 Scope of Due Diligence The scope of due diligence depends on the activi - ties of the target, the dynamics between the parties, whether warranty and indemnity insurance is taken out and the timeframe within which the due diligence has to be conducted. Although conducting due diligence is not compulso - ry, prospective buyers typically conduct operational, legal, financial and tax (including pensions and social security) due diligence over the target. More often, a technical due diligence is also undertaken, and sometimes an environmental due diligence may be done, as well as an insurance audit. At the outset and throughout the due diligence process, management presentations and specific documents and informa -
tion are made available to the potential acquirer, and its advisers, through a (typically virtual) data room. 5.4 Standstills or Exclusivity Standstill provisions are frequently included in non- disclosure agreements and are fairly common in hos - tile takeovers. In private M&A transactions, standstill provisions are rather rare. It is common for potential buyers to request exclusiv - ity for a relatively short period of one to three months. Such exclusivity clauses are typically inserted in the offer letter or letter of intent, but parties may also enter into separate agreements on exclusivity. In public M&A, exclusivity is, however, not often granted (also in view of the target’s statutory obligations in case of competing bids). In principle, the completion of a transaction in breach of an exclusivity clause or agreement will only result in the unwinding of the transaction if it has been estab - lished that the third-party acquirer acted in bad faith (ie, that party was aware that the transfer would be a breach of the exclusivity agreement). In that case, the third-party acquirer may also be held liable for damages. In all other cases of a transaction in breach of an exclusivity clause or agreement, the seller will, in principle, be exposed to damages incurred by the potential acquirer that had obtained exclusivity. In any case, the negotiating parties should be cau - tious not to share information that could be qualified as insider information (eg, information that has not been made public relating to an issuer which, if it were made public, would be likely to have a significant effect on the prices of the (related derivative) financial instruments) as this may hinder a subsequent acquisi - While allowed, tender offer terms and conditions are rarely documented in a definitive agreement. Such agreements would potentially risk being qualified as behaviour of different potential acquirers acting in concert and therefore be subject to sanctions (for the definition of acting in concert, see 4.2 Material Share- holding Disclosure Threshold ). tion of the financial instruments. 5.5 Definitive Agreements
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