BELGIUM Law and Practice Contributed by: Steven De Schrijver and Carl Dotremont, Allegiance Law
tion and secure the FSMA’s authorisation to proceed with the announcement. Simultaneously, the bidder must complete the essential paperwork for the actual commencement of the public takeover bid. Once the public takeover bid is announced, withdrawal is typi- cally not permitted, except in specific circumstances. This entails submitting pertinent documents, such as a draft prospectus and evidence of fund certainty if the offer involves cash. The latter can take the form of an unconditional and irrevocable bank credit facility or funds held in a bank account with a credit insti- tution licensed in Belgium. For exchange offers, the bidder must demonstrate to the FSMA the availability of securities for the exchange, either through owner- ship, immediate access, or the ability to procure these securities within the stipulated timeframe (potentially from an affiliated entity). 6.10 Types of Deal Protection Measures In the context of friendly takeover bids, potential bid- ders typically strive to secure the support of the target company through tactics such as exclusivity com- mitments and break-fee agreements. However, in the Belgian market, the prevalence of break fees is limited – given the difficulty in convincing the target’s board to compensate the initial bidder for incurred costs in the event of a bid failure. Although there are no strict legal prohibitions on such commitments, their value and enforceability may be restricted owing to the overarching obligation of a Bel- gian company’s board to act in the corporate interest, ensuring equal treatment of all shareholders. Notably, potential bidders can derive reassurance from the fact that the authority of the target company’s board is restricted during a takeover bid, reducing the potential for obstructive actions. 6.11 Additional Governance Rights If a bidder cannot obtain 100% ownership over a tar- get company but possesses 95% of the share capital of the target (and 90% in case of a voluntary takeover), they can resort to squeeze-out mechanisms (see 6.8 Squeeze-Out Mechanisms ). If a bidder does not seek to acquire 100% ownership over a target company or fails to obtain the necessary share capital to resort to squeeze-out mechanisms,
contractual agreements to strengthen governance rights are possible. This may involve engaging with other reference shareholders to secure specific privi- leges in a shareholders’ agreement, such as the ability to nominate individuals for director positions within the target company. Given the distinctive context of listed companies, obtaining robust protective rights such as veto powers or control over reserved mat- ters could prove to be a formidable challenge, if not an outright impossibility. However, it must be noted that a partial tender offer (seeking less than 100%) is not permitted in a public takeover bid, except in the case of a self-tender by a company to acquire its own shares. 6.12 Irrevocable Commitments In addition to break fees, no-shop clauses and the authorised capital principle, Belgian M&A transac- tions frequently incorporate non-competition and non- solicitation clauses extending for a period of two to three years following the transaction’s closure. Given that a substantial number of Belgian listed companies are under the control of one or more shareholders, irrevocable commitments are commonly employed in Belgium. It is important to note, however, that share- holders retain the ability to withdraw such commit- ments at any point in time. 6.13 Securities Regulator’s or Stock Exchange Process In Belgium, before initiating a takeover bid, the bid- der must inform the FSMA, which reviews compliance with takeover rules. Once publicly announced, the bid cannot be withdrawn, except in specific circumstanc- es. The FSMA provides the target company’s board with the bidder’s prospectus – a process taking four to six weeks or, where there are antitrust or market controversies, potentially longer. The target’s board has five days to flag issues in the draft. After FSMA approval of the prospectus, the target’s board submits a response memorandum within five days, subject to FSMA review. In friendly bids, this may coincide with prospectus review. The accept- ance period begins five business days after the FSMA approves the prospectus or immediately after response memorandum approval (if earlier). Counter- bids and higher bids must be FSMA-announced at
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