BELGIUM Law and Practice Contributed by: Michel Bonne, Hannelore Matthys and Virginie Lescot, Van Bael & Bellis
Shareholders can, however, include restrictions in the articles of association on the directors’ freedom to frustrate a hostile takeover. For instance, the articles of association may include (i) a requirement for the prior authorisation of the shareholders’ meeting before the directors can take any action susceptible to frus - trate a bid, or (ii) a provision making restrictions on the transfer of securities with voting rights unenforce - able during the bid. In addition, the shareholders could also make certain voting and other rights, provided for in the articles of association or in contractual agree - ments between the target and the target’s sharehold - ers, unenforceable during the bid (the “breakthrough rule”). Companies can also link the above to a reciprocity condition, meaning that the implementation of these restrictions can be subject to the same rules being applied by the bidder. 9.3 Common Defensive Measures The most common defensive measures taken by the board to frustrate takeovers are the increase of the share capital under the authorised capital procedure (ie, the delegation of the powers needed to increase the share capital by the shareholders’ meeting to the board of directors), the issuance of warrants or bonds that become convertible in the case of a hostile takeover, and the buyback of shares without the prior approval of the shareholders’ meeting. For all these measures, however, the prior approval of the share - holders’ meeting is needed, and such approval may only be granted for a renewable period of, at most, five years. Shareholders frequently protect their interests from a hostile takeover by including restrictions on the transfer of shares in the articles of association and shareholders’ agreements. Common examples are the inclusion of a pre-emption right, a right of first refusal or approval, standstill provisions and tag-along rights. Under the BCAC, shareholders can also protect their interests by granting multiple voting rights to certain shares in the articles of association. While, for pub - licly listed companies, this possibility is limited to the granting of double voting rights for loyal shareholders (who have owned shares for more than two years), companies looking to register shares on a multilat -
eral trading facility (MTF) will soon be able to grant multiple voting rights to certain shares. Directive (EU) 2024/2810, which contains this rule, is a directive of minimum harmonisation that has not yet been trans- posed in Belgian law. It is expected that the Belgian legislature will likely limit the application of this new provision to Euronext Growth Brussels and Euronext Access Brussels. Besides the above, shareholders can also adopt a dis - posal-of-assets measure prior to the offer period and make this conditional upon an offer being launched. Additionally, the inclusion of change-of-control claus - es in important agreements is another common pos - sible measure. While it is not a measure specific to tackling a potential hostile takeover, it could have a dissuasive effect for any potential buyer. For list - ed companies, the shareholders’ meeting needs to At the risk of being held personally liable, directors should always act in the best interest of the company. This also applies when taking defensive measures. 9.5 Directors’ Ability to “Just Say No” Directors can combine a refusal to negotiate with an unwillingness to waive defensive measures, but only if this is in the best interest of the company. As this is usually hard to assess upon receipt of a first offer, it is recommended for directors to have at least initial talks regarding the offer to avoid any personal liability. The directors of the target do, however, need to draft a memorandum in reply to the takeover offer. If directors take a different position, in this memorandum, to the shareholders, this could influence the shareholders’ positions. Regardless of the position of the directors, the shareholders make their own assessment of the offer and decide on the offer independently. For more information on disclosure requirements in the case of a public takeover bid, see 7.1 Making a Bid Public . approve them as well. 9.4 Directors’ Duties
163 CHAMBERS.COM
Powered by FlippingBook