BELGIUM Law and Practice Contributed by: Steven De Schrijver, Allegiance Law
6.9 Requirement to Have Certain Funds/ Financing to Launch a Takeover Offer Before initiating a public takeover bid, a bidder is required to formally notify the FSMA of their intention and secure the FSMA’s authorisation to proceed with the announcement. Simultane- ously, 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 typically not per- mitted, 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 institution licensed in Belgium. For exchange offers, the bidder must demonstrate to the FSMA the availability of securities for the exchange, either through ownership, 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, poten- tial bidders typically strive to secure the support of the target company through tactics such as exclusivity commitments and break-fee agree- ments. However, in the Belgian market, the prevalence of break fees is limited – given the difficulty in convincing the target’s board to com- pensate 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 enforceabil- ity may be restricted owing to the overarching obligation of a Belgian company’s board to act in the corporate interest, ensuring equal treat- ment of all shareholders. Notably, potential bid- ders 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 target 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 Mecha- nisms ). If a bidder does not seek to acquire 100% own- ership 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 privileges 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 matters could prove to be a formi- dable 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 transactions frequently incorporate non-com- petition 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, irrevo- cable commitments are commonly employed in
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