BELGIUM Law and Practice Contributed by: Steven De Schrijver and Carl Dotremont, Allegiance Law
11.3 Board’s Role In general, the initiation of a takeover bid does not necessitate approval from the target’s board. However, the target’s board has the option to provide input on the bid through commenting on the completeness and potentially misleading aspects of the draft prospectus and formulating a response memorandum that may incorporate dissenting views. Nevertheless, practical considerations often lead the response memorandum to align with the opinions of the (controlling) share- holders, owing to their substantial representation on the board. Additionally, a defensive tactic employed by the tar- get’s board against (hostile) takeovers involves lev- eraging the concept of “authorised capital”, granting the board discretionary power to increase the target’s capital as deemed necessary. Directors can take defensive measures as long as these are in the com- pany’s best interest. In this context, the target board must – in particular – take into account the interests of all security holders, as well as those of its employees and creditors. 11.4 Independent Outside Advice In the context of a business combination, companies typically enlist the support of investment banks and legal professionals – occasionally seeking guidance from consultants and other experts to provide insights on the proposed transaction. As a standard part of due diligence, the board of directors and supervisory directors often obtain fairness opinions from financial advisers in order to evaluate the appropriateness of the transaction price. Although seeking advice does not absolve directors of their responsibilities, it can be considered a mitigating factor when evaluating their actions in a legal context later on.
articles of association, encompass the overall man- agement of the company, formulation of its strategic direction, and representation in dealings with external parties. Directors are obliged to exercise reasonable care and diligence – all while upholding confidential- ity and prioritising the company’s interests. Specific obligations arise in the context of M&A transactions, especially within corporate restructuring procedures outlined in Chapter 12 of the Belgian Code on Com- panies and Associations. For publicly traded companies, the Public Takeover Act imposes additional duties on the governing body of the target. This includes a preliminary declaration to verify the draft prospectus for omissions or mislead- ing information and a subsequent memorandum in response to the approved prospectus. This memoran- dum addresses various aspects such as comments on the prospectus, statutory clauses affecting securities transferability, opinions on the offer’s consequences, the bidder’s strategic plans, and the opportunity for security holders to sell their securities. The company must treat shareholders and certifi- cate holders who are in similar circumstances in the same way. The articles of association may provide that shares of a particular class or designation have special controlling rights in the company under the articles of association. Notably, Belgian law does not prescribe specific duties for controlling shareholders in M&A transactions. 11.2 Special or Ad Hoc Committees Belgian law does not require the formation of a special committee in respect of a takeover offer.
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