BELGIUM Law and Practice Contributed by: Michel Bonne, Hannelore Matthys and Virginie Lescot, Van Bael & Bellis
10. Litigation 10.1 Frequency of Litigation
11. Activism 11.1 Shareholder Activism
Despite the plans to establish a central register for court decisions, court judgments in Belgium are not (immediately) published. It is therefore hard to assess the frequency of litigation in connection with M&A deals. The trend, however, seems to be that litigation is becoming increasingly common (but still far less common than in, for example, the USA). If the deal concerns a hostile takeover (which does not occur often), litigation is a common strategy to frustrate or delay the bid. 10.2 Stage of Deal Pre-closing litigation is rather common in the event of a hostile takeover (see also 10.1 Frequency of Litiga- tion ). In the case of private M&A deals, the vast majority of litigation proceedings occur in the post-closing stage. In such cases, purchasers often seek damages for breaches of representations, warranties or specific indemnities. 10.3 “Broken-Deal” Disputes As mentioned in 10.1 Frequency of Litigation , court judgments in Belgium are in general not published, and if decisions are published, there is often a delay. There is thus very little public information on “broken- deal” disputes and how frequently they occur. In the pre-signing phase, it is still recommended to enter into a detailed term sheet before entering into further negotiations to avoid misunderstandings as to the general terms and conditions of the transaction at a later stage. Between signing and closing, material adverse change clauses are sometimes invoked to walk away from a deal, but the threshold is often rather high, and linked to objective, financial thresholds or specific opera - tional triggers to measure the “adverse effect” on the company, and known (global) circumstances and events are typically excluded from the scope. In view thereof, in practice, material adverse change clauses are not invoked often in Belgium.
Shareholder activism in Belgium is not common as minority shareholders within large Belgian compa - nies often lack an incentive to take such action. Large shareholders usually own sufficient shares to control the company and can, therefore, often significantly impact the appointment of directors and the strategy of the company. In view of this, it is very difficult for minority shareholders to have any influence on the corporate decision-making process. Additionally, the minority shareholders can piggyback on the efforts of larger shareholders. However, with respect to certain topics, such as director remuneration, shareholder activism has increased. It should be noted that when shareholder activism does occur, it seems to find its source in organisations located in neighbouring coun - tries and not in Belgium itself. 11.2 Aims of Activists Generally, shareholders in Belgian companies tend to limit their activism to reacting to the behaviour of the company to protect their own interests. It is unu - sual for a shareholder in a Belgian company to try to actively impact the corporate policies pursued by a company. Reactive (and, less commonly, proactive) activism can be aimed at both financial and non-financial aspects of the management of a company. In relation to M&A in particular, activist shareholders have questioned the financial and strategic motivation of certain boards. 11.3 Interference With Completion Activist shareholders in Belgian companies have, on occasion, tried to interfere with the completion of announced transactions. A failed example of such interference was the exercise of the right to ask ques - tions during the annual general meeting, in relation to a proposed merger, and the questioning of the independence of the independent directors, by the minority shareholders of Immobel. An example of suc - cessful interference was the shareholder activism in relation to the proposed merger between Picanol and Tessenderlo.
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