BELGIUM Law and Practice Contributed by: Michel Bonne, Hannelore Matthys and Virginie Lescot, Van Bael & Bellis
be involved to perform their specific role vis-à-vis the business combination. While the creation of a special committee might be recommended in the event of certain conflicts of inter - est, this is not required under Belgian law. Mandatory statutory conflict of interest procedures require the conflicted directors to disclose their conflict and to abstain from the decision-making process (both the deliberation and the vote). The remaining directors can subsequently proceed with the deliberation and decision. Should all directors be conflicted, they are required to submit the envisaged decision or trans - action to the general meeting of the shareholders for their approval. However, the board of directors of a listed company is required to create a special commit - tee for every decision or transaction of the company or its non-listed subsidiaries relating to an affiliated individual or company that is not a subsidiary. This special committee, composed of three independent directors and one or more independent experts, pre - pares a written and motivated report to advise the board of directors on the envisaged decision or trans - action. 8.4 Independent Outside Advice Depending on the size and scope of the business combination, directors will often appoint independent outside advisers to consult on financial, legal and tax aspects of the business combination and assist with the due diligence and valuation of the target. Independent expert advice may be required in certain circumstances; for example, within the context of (de) mergers or the takeover bid of a controlling bidder on Under Belgian company law, a conflict of interest is defined as a personal direct or indirect interest, of a financial nature, of a director of a company that con - flicts with the interests of that company. A functional conflict of interest – eg, both the acquiring and the target company sharing a director – does not trigger the conflict-of-interest procedure under Belgian law. A director with a conflict of interest must inform the other directors thereof before any decisions in this shares of a listed company. 8.5 Conflicts of Interest
regard are adopted and may no longer participate in the deliberations or the voting. As a preliminary remark, relatively few judgments of Belgian courts are published and, as a result, not many judicial decisions are publicly available. That being said, conflicts of interest of directors of a target company in a public takeover context have been the subject of judicial scrutiny in two notable cases before the Brussels Commercial Court and Brussels Court of Appeal. The case law has estab - lished that the mandatory statutory conflict of interest procedure is not applicable in the mere context of a public takeover bid whereby conflicted directors of the target do not abstain themselves from the prepara - tion of the response memorandum, even where those directors are also directors in the bidder. Within the context of a public takeover bid, the pro - spectus should mention the intention of the bidder regarding the (mandate of the) directors of the target. This should allow the target’s shareholders to accord - ingly weigh the response memorandum, should it be overwhelmingly positive or negative. Hostile tender offers are allowed, yet sporadic, in Bel - gium. Recommended takeovers are by far the most frequently occurring type of takeover. This is mainly due to the nature of Belgian listed companies, which are often family-owned or controlled by one or several shareholders. Consequently, in such cases, irrevoca - ble commitments by the controlling shareholders will typically be required. This, in turn, makes hostile ten - der offers rather unusual. 9.2 Directors’ Use of Defensive Measures Directors can take defensive measures as long as these are in the interest of the company as a whole. Specifically, for public takeovers, Section 9, 3° of the Public Takeover Law reflects this principle. Generally, directors must always exercise their powers in the company’s best interest. 9. Defensive Measures 9.1 Hostile Tender Offers
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