Technology M&A 2025

Definitive global law guides offering comparative analysis from top-ranked lawyers

CHAMBERS GLOBAL PRACTICE GUIDES

Technology M&A 2025

Definitive global law guides offering comparative analysis from top-ranked lawyers

Contributing Editor George Casey Linklaters

Global Practice Guides

Technology M&A

Contributing Editor George Casey Linklaters

2025

Chambers Global Practice Guides For more than 20 years, Chambers Global Guides have ranked lawyers and law firms across the world. Chambers now offer clients a new series of Global Practice Guides, which contain practical guidance on doing legal business in key jurisdictions. We use our knowledge of the world’s best lawyers to select leading law firms in each jurisdiction to write the ‘Law & Practice’ sections. In addition, the ‘Trends & Developments’ sections analyse trends and developments in local legal markets. Disclaimer: The information in this guide is provided for general reference only, not as specific legal advice. Views expressed by the authors are not necessarily the views of the law firms in which they practise. For specific legal advice, a lawyer should be consulted.

GPG Director Katie Burrington Content Management Director Claire Oxborrow Content Manager Jonathan Mendelowitz Senior Content Reviewer Sally McGonigal, Ethne Withers

Content Reviewers Vivienne Button, Lawrence Garrett, Sean Marshall, Marianne Page, Heather Palomino, Deborah Sinclair, Stephen Dinkeldein and Adrian Ciechacki Content Coordination Manager Nancy Laidler Senior Content Coordinator Carla Cagnina Content Coordinators Delicia Tasinda and Hannah Leinmüller Head of Production Jasper John Production Coordinator Genevieve Sibayan

Published by Chambers and Partners 165 Fleet Street London EC4A 2AE Tel +44 20 7606 8844 Fax +44 20 7831 5662 Web www.chambers.com

Contents

INTRODUCTION Contributed by George Casey, Linklaters p.5

INDIA Law and Practice p.195 Contributed by JSA

BELGIUM Law and Practice p.10 Contributed by Agio Legal Trends and Developments p.36 Contributed by Agio Legal BULGARIA Law and Practice p.41 Contributed by BOYANOV & Co

JAPAN Trends and Developments p.211 Contributed by Nagashima Ohno & Tsunematsu NETHERLANDS Law and Practice p.219 Contributed by Greenberg Traurig, LLP Trends and Developments p.241 Contributed by Greenberg Traurig, LLP PARAGUAY Law and Practice p.249 Contributed by Mascareño Vargas – Asesores Trends and Developments p.264 Contributed by Mascareño Vargas – Asesores

CHINA Law and Practice p.63 Contributed by JunHe LLP

Trends and Developments p.82 Contributed by DaHui Lawyers

COLOMBIA Law and Practice p.89 Contributed by Peña Mancero Abogados Trends and Developments p.107 Contributed by Peña Mancero Abogados DENMARK Law and Practice p.112 Contributed by Bech-Bruun Trends and Developments p.135 Contributed by Bech-Bruun EL SALVADOR Law and Practice p.145 Contributed by Torres Legal Trends and Developments p.160 Contributed by Torres Legal

PORTUGAL Law and Practice p.273 Contributed by PLMJ

SINGAPORE Law and Practice p.290 Contributed by Rajah & Tann Singapore Trends and Developments p.317 Contributed by Rajah & Tann Singapore

SLOVAKIA Law and Practice p.324 Contributed by Ments s.r.o.

SWITZERLAND Law and Practice p.343 Contributed by Loyens & Loeff Trends and Developments p.364 Contributed by Loyens & Loeff

GREECE Law and Practice p.166

Contributed by Zepos & Yannopoulos Trends and Developments p.187 Contributed by Zepos & Yannopoulos

TAIWAN Law and Practice p.372 Contributed by Lee and Li Attorneys-at-Law Trends and Developments p.388 Contributed by Lee and Li Attorneys-at-Law

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Contents

THAILAND Trends and Developments p.395 Contributed by Baker McKenzie UK Trends and Developments p.402 Contributed by Preiskel & Co UKRAINE Law and Practice p.409 Contributed by INTEGRITES Trends and Developments p.427 Contributed by INTEGRITES USA Law and Practice p.435 Contributed by Linklaters LLP Trends and Developments p.458 Contributed by Linklaters LLP

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INTRODUCTION Contributed by: George Casey, Linklaters LLP George Casey, Contributing Editor is Global Chairman of Corporate of Linklaters LLP, a global law firm with 3,100 lawyers across 31 offices in 21 countries. Prior to joining Linklaters, George was the global managing partner of Shearman & Sterling LLP, and has also served as head of M&A and corporate. He has broad experience in US and cross-border M&A transactions, and regularly advises multinational clients on strate-

gic transactions and corporate governance. He combines diverse transactional experience with a deep understanding of clients’ businesses across several industry sectors, including tech- nology. George has been recognised as a lead- ing M&A lawyer by clients and legal directories. He is also an adjunct professor at the University of Pennsylvania Law School and a regular lec- turer at the Sorbonne in Paris.

Contributing Editor

George Casey is Global Chairman of Corporate of Linklaters LLP, a global law firm with 3,100 lawyers across 31 offices in 21 countries. Prior to joining Linklaters, George was

strategic transactions and corporate governance. He combines diverse transactional experience with a deep

understanding of clients’ businesses across several industry sectors, including technology. George has been recognised as a leading M&A lawyer by clients and legal directories. He is also an adjunct professor at the University of Pennsylvania Law School and a regular lecturer at the Sorbonne in Paris.

the global managing partner of Shearman & Sterling LLP, and has also served as head of M&A and corporate. He has broad experience in US and cross-border M&A transactions, and regularly advises multinational clients on

George Casey 1290 Avenue of the Americas New York NY 10104 USA Tel: +1 212 903 9300 Email: george.casey@linklaters.com Web: www.linklaters.com

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INTRODUCTION Contributed by: George Casey, Linklaters

Overview Welcome to the fourth edition of Chambers’ Technology M&A Guide. Continuing with the momentum that has been built over the last three editions, we are pleased to broaden the scope of this year’s guide and, along with welcoming back our previous con- tributors, we extend a heartfelt welcome to our new participants from various countries. Notwithstanding major challenges that the industry has been facing over the last few years, technology M&A remains an important priority for many investors and companies. The growth in technology deals reflects both continuing con- solidation within the tech industry itself as well as the increasing direct investment in technolo- gies by traditional corporates in recognition of the strategic importance of staying at the fore- front of digital transformation. Artificial Intelligence (AI) continues to dominate the tech headlines and has quickly become a critical business asset across various sectors. Once just a futuristic concept for the majority of the population, AI (and particularly generative AI) has burst into our lives over the last two years and captured everyone’s imagination. Executives are constantly assessing how AI will change their businesses and industries, and many compa- nies have integrated or are planning to integrate the technology into their day-to-day operations. Lloyds Bank’s recently published ninth annual Financial Institutions Sentiment Survey high- lighted that two thirds (63%) of financial institu- tions invested in AI in 2024, a 32% increase from the previous year. The rise of generative AI is quite clearly bringing a digital change, and this is driving investment in

advanced technologies and digital infrastructure as a whole. Investing in Digital Infrastructure Powered by greater connectivity (including great- er adoption of 5G) and mobility, the increasing adoption of technologies such as AI, the inter- net of things and enterprise cloud computing are driving greater demand for higher computing capacity and data storage for the growing mass of digital data created and consumed worldwide. Despite the challenging macro environment and economic conditions, the outlook for digi- tal infrastructure investments – particularly data centres – remains positive globally. Additional data will need to be filtered in as gen- erative AI algorithms require massive amounts of training data to learn. As the algorithms become more complex, they also need to make multiple copies of that data. Large language models such as ChatGPT require vast amounts of comput- ing power to create and improve, which will also drive the need for data centres and supporting such specialised, high-performance computing platforms. The rise of “edge” computing (placing computing and data storage closer to where the processing takes place) is also driving the need for development of more data centres closer to cities and populations. The number of deals involving data centres has increased steadily over the years, recording a compounded annual growth of 32% from 2017 to 2022. After a relative lull in 2023, data from the Synergy Research Group shows that data centre-oriented M&A deals have bounced back in 2024 and are once again poised to pass the USD40 billion milestone.

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INTRODUCTION Contributed by: George Casey, Linklaters

Expanding or building more digital infrastruc- ture is not just about the challenges of rais- ing or deploying greater investments in digital infrastructure. Different jurisdictions and regions globally face different challenges in expand- ing their digital infrastructure, including foreign investment regulations, local planning restric- tions and the need for stable electricity connec- tivity for certain digital infrastructure (such as data centres and telecommunications towers). Regulatory Tightening As deal making in the technology industry has become increasingly more global, and with technology often being viewed as a strategic, defence and national security priority, regula- tors in different jurisdictions have been tight- ening requirements in their markets. Antitrust authorities have been challenging technology transactions more aggressively (even challeng- ing perceived dominance of tech companies in a particular market), while foreign direct invest- ment (FDI) regulations have been tightened in different parts of the world to protect nascent technologies from being acquired by foreign buyers. For example, foreign investment regulators have been scrutinising the scope for data centres to provide hostile actors access to sensitive data, or control of the data centre to cause disrup- tion or otherwise compromise national security interests. Specifically, the USA recently strength- ened its FDI regulations and introduced manda- tory filings, with a specific focus on the technol- ogy industry. France, Germany and the UK have adopted stricter requirements for acquisitions of tech companies in their jurisdictions, and the EU has adopted new co-ordination regulations across the region for sharing information and collaborating in FDI enforcement.

The US antitrust regulatory landscape, in par- ticular, has seen significant developments in 2024. After more than two years of drafting, and following a public consultation period, on 10 October 2024 the FTC announced final chang- es to the HSR filing form applicable to report- able transactions. These changes significantly increase the burden of disclosure requirements on filing parties, including more expansive docu- ment productions, narratives on market dynam- ics, and information on the board membership of the acquiring person’s officers and directors. Given the increasing cyber-threat landscape, governments are also focusing on cybersecu- rity for critical infrastructure. In 2025, we expect to see an increase in cyber-specific regulation in The first half of 2024 saw a moderate rebound in global tech investment after a consistent decline since reaching an all-time high in 2021, and with private equity and venture capital (VC) sponsors holding a record level of dry powder, the momen- tum is likely to continue through the end of the year. Investment activity involving data centres and cloud services has been a major highlight in 2024, with US-based data centre operator Van- tage (USD9.2 billion) and cloud infrastructure platform Coreweave (USD8.6 billion) securing the largest funding rounds in Q1 and Q2, respec- tively. Continuing with the theme of the year, AI- related deals have also been a major factor in 2024, led by the USD6 billion VC investment in xAI (a US-based developer of AI platforms) and the USD4 billion late-stage funding in Anthropic (a US-based AI company). the EU and the USA. Volume of M&A Deals Tech M&A also experienced a mild recovery in 2024, largely due to the lowering of interest rates from the European Central Bank, the Bank of

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INTRODUCTION Contributed by: George Casey, Linklaters

England and the Federal Reserve, along with robust stock market performance and stronger expectation of a soft economic landing in the USA – all of which have given deal makers the optimism required to end the year on a strong note. Tech Exits Technology companies that decide to continue their journey as independent players on their path to profitability can choose from a variety • a de-SPAC transaction (ie, a merger with a special purpose acquisition company – although de-SPACs have significantly declined as an option for a number of rea- sons). Global exit value has seen a significant decline after reaching a record high in 2021, largely driv- en by M&A and IPO exits. Tech exits declined further in the first half of 2024. IPOs 2023 proved to be another challenging year for the IPO market with the number of tech IPOs continuing to decline after a record year in 2021.The number of IPOs increased slightly in Q2 2024; however, it remains significantly lower than levels seen in 2021. SPACs of forms: • an IPO; • a direct listing; or SPACs are set up by raising money from public investors for the specific purpose of finding an acquisition opportunity. If a SPAC finds it, the private target:

• is merged into the SPAC in a so-called de- SPAC transaction (yet another alternative to a traditional IPO); • gets additional funding through a PIPE invest- ment; and • becomes a publicly traded company at clos- ing. As an alternative to an IPO, a de-SPAC trans- action is more likely to be pursued by less established, younger companies. Prevalent in the USA, SPACs started pursuing cross-border deals in 2021, and some countries were devel- oping regulations to facilitate SPAC listings in their markets. During the COVID-19 pandemic, SPACs pro- vided an alternative path for a company to go public. However, the SPAC market has been in steady decline since 2022, with fewer SPAC and de-SPAC transactions completed. According to SPAC Analytics, SPAC IPOs have made up the following percentages of total US IPOs since 2020: • 55% in 2020 (and 46% of total US IPO pro- ceeds); • 63% in 2021 (and 49% of total US IPO pro- ceeds); • 73% in 2022 (and 59% of total US IPO pro- ceeds); • 43% in 2023 (and 15% of total US IPO pro- ceeds); and • 38% in 2024 (and 19% of total US IPO pro- ceeds). According to Dealogic, the number of complet- ed de-SPAC transactions (for SPACs registered with the SEC) has also been in steady decline, including: • 64 in 2020;

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INTRODUCTION Contributed by: George Casey, Linklaters

Using This Guide As cross-border technology deals are often very complex and involve different legal regimes and cultures, we have organised this guide by country and asked each country’s contributor to address the same set of issues that a technol- ogy company going through its lifespan faces – from incorporation, early funding and VC rounds to the ultimate goal of being a public company or being sold at a high premium. We hope that you find this guide useful as you consider global deals.

• 199 in 2021; • 101 in 2022; and • 89 in 2023.

The decline in SPAC activity has been attrib- uted to the overall disruption of the IPO market and high-profile failures of SPACs. However, a major factor has been the stricter regulations of SPACs across various jurisdictions. As the trend in SPAC transactions reversed, so did the desire of regulators and exchanges to facilitate them, with a number of regulators adopting a stricter approach to SPACs. For example, in 2024 the SEC adopted new rules that aim to align de- SPAC transactions more closely with traditional IPOs, by mandating specific disclosures and increasing the potential liability of deal partici- pants. Spin-offs Spin-offs of subsidiaries by parent companies, to achieve various corporate and financial pur- poses, have also continued to be explored by technology companies. Tech companies are not new to spin-offs, as many of them came into being as independent companies because of a spin-off. In 2024 spin-offs continue to be a viable strategy for well-known value companies, including For- tive Corporation’s spin-off of its Precision Tech- nologies segment.

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BELGIUM Law and Practice Contributed by: Steven De Schrijver Allegiance Law

Netherlands

Brussels Belgium

Germany

Luxembourg

France

Contents 1. Market Trends p.13 1.1 Technology M&A Market p.13 1.2 Key Trends p.13 2. Establishing a New Company, Early-Stage Financing and Venture Capital Financing of a New Technology Company p.14 2.1 Establishing a New Company p.14 2.2 Type of Entity p.14 2.3 Early-Stage Financing p.15 2.4 Venture Capital p.16 2.5 Venture Capital Documentation p.16 2.6 Change of Corporate Form or Migration p.16 3. Initial Public Offering (IPO) as a Liquidity Event p.17 3.1 IPO v Sale p.17 3.2 Choice of Listing p.17 3.3 Impact of the Choice of Listing on Future M&A Transactions p.18 4. Sale as a Liquidity Event (Sale of a Privately Held Venture Capital- Financed Company) p.18 4.1 Liquidity Event: Sale Process p.18 5.1 Trends: Spin-Offs p.19 5.2 Tax Consequences p.20 5.3 Spin-Off Followed by a Business Combination p.20 5.4 Timing and Tax Authority Ruling p.20 6. Acquisitions of Public (Exchange-Listed) Technology Companies p.20 6.1 Stakebuilding p.20 6.2 Mandatory Offer p.21 6.3 Transaction Structures p.21 6.4 Consideration and Minimum Price p.22 6.5 Common Conditions for a Takeover Offer/Tender Offer p.22 6.6 Deal Documentation p.22 4.2 Liquidity Event: Transaction Structure p.18 4.3 Liquidity Event: Form of Consideration p.19 4.4 Liquidity Event: Certain Transaction Terms p.19 5. Spin-Offs p.19

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BELGIUM CONTENTS

6.7 Minimum Acceptance Conditions p.23 6.8 Squeeze-Out Mechanisms p.23 6.9 Requirement to Have Certain Funds/Financing to Launch a Takeover Offer p.24 6.10 Types of Deal Protection Measures p.24 6.11 Additional Governance Rights p.24 6.12 Irrevocable Commitments p.24 6.13 Securities Regulator’s or Stock Exchange Process p.25 6.14 Timing of the Takeover Offer p.25 7. Overview of Regulatory Requirements p.25 7.1 Regulations Applicable to a Technology Company p.25

7.2 Primary Securities Market Regulators p.26 7.3 Restrictions on Foreign Investments p.26 7.4 National Security Review/Export Control p.27 7.5 Antitrust Regulations p.27 7.6 Labour Law Regulations p.28 7.7 Currency Control/Central Bank Approval p.30 8. Recent Legal Developments p.30 8.1 Significant Court Decisions or Legal Developments p.30 9. Due Diligence/Data Privacy p.31 9.1 Technology Company Due Diligence p.31

9.2 Data Privacy p.32 10. Disclosure p.33 10.1 Making a Bid Public p.33 10.2 Prospectus Requirements p.34 10.3 Producing Financial Statements p.34 10.4 Disclosure of Transaction Documents p.34 11. Duties of Directors p.34 11.1 Principal Directors’ Duties p.34 11.2 Special or Ad Hoc Committees p.35 11.3 Board’s Role p.35 11.4 Independent Outside Advice p.35

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BELGIUM Law and Practice Contributed by: Steven De Schrijver, Allegiance Law

Allegiance Law is a Belgian independent law firm with offices in Brussels, boasting a strong team of lawyers with specialisations in areas including corporate, commercial, IT/IP/privacy. Whether facing complex mergers, restructur- ing, or seeking to professionalise business op- erations, Allegiance Law tailors solutions by as- sembling specialised teams. The firm supports national and international clients strategically by helping them to choose the best legal and financial structure for their business opera-

tions and transactions, transcending traditional methods and thinking outside the box. Alle- giance Law’s focus lies on IP and data-driven deals, of which the majority have a cross-border character. The firm operates regularly alongside among US, UK, French, Dutch, German and Swiss law firms, working seamlessly together. The team is specifically well equipped in the ar- eas of technology, life sciences, media, adver- tising and entertainment.

Author

Steven De Schrijver is a partner at Allegiance Law, with more than 30 years of expertise in M&A, corporate, IT, media, data protection and outsourcing law. Steven advises some of the

element. Noteworthy projects include pioneering projects in mobile telephony, cable TV and streaming platforms, major acquisitions of Belgian technology companies by foreign investors, numerous outsourcing projects for multinational companies, and large data protection compliance projects. Steven is a member of several legal associations and has earned multiple prestigious awards for his work.

largest Belgian and foreign technology companies and innovative-economy companies on complex transactions and commercial contracts and projects in the TMT sector – almost always with a cross-border

Allegiance Law Sinter-Goedeleplein 14 1000 Brussels Belgium Tel: +32 476 60 91 82 Email: sds@allegiance.law

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BELGIUM Law and Practice Contributed by: Steven De Schrijver, Allegiance Law

1. Market Trends 1.1 Technology M&A Market

1.2 Key Trends ESG Considerations

Formerly considered a risk to be avoided, ESG is currently recognised as one of the most sub- stantial opportunities for value creation and transformative industry shifts in our era. This is particularly relevant given the upcoming enforcement of certain obligations under the EU’s Corporate Sustainability Reporting Direc- tive (CSRD). Specifically, large public interest entities and companies currently subject to the EU’s Non-Financial Reporting Directive (NFRD) must demonstrate compliance with these requirements by 2025. With sustainability considerations becoming more influential, Belgian companies are facing greater pressure to align their operations with these principles. This marks a clear shift towards integrating sustainability values into the core of business strategies and decision-making pro- cesses. Demonstrating a proactive stance in sustainability not only sets companies apart, but acts as a pivotal factor in fostering long-term goals such as establishing valuable supplier relationships, meeting rising customer expecta- tions and attracting acquirers seeking to bolster their ESG profiles. Forging partnerships across the value chain is crucial, enabling the scaling of progress, resource combination, and the enhancement of data gathering and protocols in pursuit of sustainable initiatives. Such partnerships can be forged through strategic M&A transactions to further increase customer penetration and accelerate growth. AI One of the key cornerstones for a successful deployment of an AI ecosystem is access to human capital in AI. Consequently, some target

There has been a noticeable increase in inter- est among corporate and financial players in pursuing carve-outs and strategic acquisitions, driven by the need to adapt to shifting global challenges such as technological disruption, cli- mate change, and economic uncertainties. While corporations are focusing on divesting non-core assets to align with their strategic transforma- tions, financial investors show a renewed inter- est in acquiring carved-out assets, aiming to cre- ate future value by reorienting these businesses. A particular shift from 2021 highlights the rising interest of corporate buyers in M&A as a tool for growth and resilience, supported by PwC’s finding that 45% of CEOs anticipate significant transformations to ensure their companies’ long- term viability. Looking ahead, corporations and financial inves- tors alike are strategising to balance expansion with financial stability. Corporations are increas- ingly considering joint ventures and partner- ships to facilitate international growth and find attractive acquisition targets in Belgium, while financial investors look to ramp up their acquisi- tions, often alongside family businesses or other financial entities. As traditional financing sources become less attractive, cost reduction and stra- tegic partnerships are taking centre stage, with both corporate and financial players expected to actively pursue M&A opportunities to fuel trans- formation and operational efficiencies in 2025. Despite some geopolitical and economic risks, the M&A market is anticipated to see an upturn, with corporations and financial investors well- positioned to adapt their strategies accordingly.

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BELGIUM Law and Practice Contributed by: Steven De Schrijver, Allegiance Law

2. Establishing a New Company, Early-Stage Financing and Venture Capital Financing of a New Technology Company 2.1 Establishing a New Company New start-up companies are typically incor- porated in Belgium as a private limited liability company ( besloten vennootschap (BV)/ société à responsabilité limitée (SRL)). Belgian corporate law provides a flexible corporate framework for the organisation of companies. There is no initial capital requirement for incorporation of a private limited liability company, but it requires a suf- ficient equity for the first three years to perform the envisaged activities, as shown in a financial plan that is filed with the notary at incorporation. To establish a limited liability company in Bel- gium, the primary time-consuming tasks involve obtaining a bank account and crafting a financial plan. Once these prerequisites are fulfilled, the incorporation process necessitates the execu- tion of a notarial deed before a Belgian notary, which typically takes approximately two weeks. 2.2 Type of Entity Entrepreneurs are commonly encouraged to opt for a private limited liability company (BV/SRL). This business structure is specifically crafted to offer flexibility, allowing entrepreneurs to cus- tomise incorporation documents according to their specific requirements. In contrast to the public limited liability company ( naamloze ven- nootschap (NV)/ société anonyme (SA)), there is no requirement of a minimum capital, but the assets must be sufficient in the light of the activ- ity envisaged. A contribution of assets without the issuance of new shares in the private limited liability company can proceed simply by a deci- sion by simple majority taken by the sharehold- ers.

companies have been early-stage enterprises with no revenue or have been acquired for the sake of adding skilled talent. Belgium, known for its human capital, stands as a pivotal hub attracting global attention – not only for its inno- vative advancements but also as an increas- ingly attractive destination for M&A within the realms of technology and life sciences, fostering a dynamic environment that consistently fuels growth, collaboration and investment opportu- nities. A current trend in the AI industry is the increas- ing use of AI in healthcare, particularly in areas such as disease diagnosis, drug development and personalised medicine. Thanks to fertile cross-pollination between biotech, medtech, pharmaceuticals and healthcare, Belgium offers a unique life sciences ecosystem that is under- pinned by a robust financing landscape as well as a supportive government. The 2022 global market downturn significantly impacted listed companies across the world. Amid these formidable challenges, the Belgian life sciences sector faced its share of difficulties. Nevertheless, the resilience shown by Argenx and privately funded biotech firms supported the industry, enabling it to withstand the turmoil. Presently, the biotech landscape in Belgium has rebounded, reaffirming its standing as Europe’s second-largest biotech market – trailing behind only Denmark.

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BELGIUM Law and Practice Contributed by: Steven De Schrijver, Allegiance Law

Nonetheless, any choice of business structure should be considered from a tax perspective. It is advisable to consult a legal and tax adviser for more detailed advice on which company struc- ture is best suited to specific needs. 2.3 Early-Stage Financing Early-stage financing, also known as seed invest- ment, for start-ups can be sourced from various channels – each with its own unique characteris- tics. Here are some of the key providers and their respective documentation processes. • Using own funds – the providers and their documentation processes are as follows. (a) Providers – entrepreneurs themselves provide the early-stage financing. (b) Documentation – no formal documenta- tion is required, but keeping clear records of personal investments is advisable. • Involving family, friends and fans – the provid- ers and their documentation processes are as follows. (a) Providers – individuals in the entrepre- neur’s personal network provide the early- stage financing. (b) Documentation – the respective docu- mentation requirements are: (i) co-shareholders – formal agreements outlining the terms of co-ownership; (ii) borrowing – clear loan agreements specifying terms and conditions; and (iii) win-win loans – documented loan agreements with specific conditions (government support involves annual tax discounts). • Crowdfunding – the providers and their docu- mentation processes are as follows. (a) Providers – early-stage financing is provided by the general public or private investors through online platforms. (b) Documentation – the process varies by

platform but typically involves detailed project descriptions, financial plans, and rewards or equity distribution. Regula- tion (EU) 2020/1503, effective from 10 November 2021, establishes a unified framework for crowdfunding service pro- viders (CSPs) operating digital platforms, facilitating connections between investors and businesses seeking funding by way of loans (lending-based crowdfunding) or acquisition of transferable securities (investment-based crowdfunding). To operate under Regulation (EU) 2020/1503, CSPs must be authorised by their national competent authority and can then extend their services across EU member states. Additionally, Regulation (EU) 2020/1503 imposes operational requirements, including restrictions on inducements, credit risk assessments, due diligence on project owners, and investor protection measures such as fair marketing, entry knowledge tests, a reflection period, and the involvement of a licensed payment service provider. • Venture capital – the providers and their documentation processes are as follows. (a) Providers – early stage-funding is provid- ed by public and private venture capital- ists (business angels). (b) Documentation – comprehensive invest- ment agreements outlining terms, condi- tions and expected returns are required. • Corporate loans – the providers and their documentation processes are as follows. (a) Providers – early-stage funding is pro- vided by regional public institutions that support economic investment initiatives in Flanders, Brussels and Wallonia and provide corporate loans that are tailored to SMEs and large companies and do not involve bank loans.

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BELGIUM Law and Practice Contributed by: Steven De Schrijver, Allegiance Law

2.4 Venture Capital Venture capital funds secure their funding pre- dominantly from family offices, private funds, and individual angel investors. Although less common, additional investors in venture capital funds may include government-backed insti- tutions and investment companies, such as Noshaq, Participatiemaatschappij Vlaanderen NV, Limburgse Reconversiemaatschappij NV, Federale Participatie-en Investeringsmaatschap- pij NV and Belgian Growth Fund Comm V. 2.5 Venture Capital Documentation Belgium does not have specific nationwide regu- lations or standards governing venture capital documentation. The structuring and documen- tation of venture capital deals must be in line with general contractual and corporate law and typically depends on negotiations between the parties involved – investors, start-ups and legal professionals. 2.6 Change of Corporate Form or Migration Belgian corporate law offers a highly flexible framework for organising companies, eliminating the necessity for start-ups to undergo changes in their corporate structure as they progress in development. Notably, even a private limited liability company (BV/SRL) can be listed on a securities exchange, enhancing the versatility of Belgium’s corporate landscape. Given Belgium’s appeal as a conducive home for companies across all developmental phas- es, the need to migrate to another jurisdiction is infrequent. Only if a start-up plans significant international expansion might it explore options that facilitate global operations, such as setting up subsidiaries in other jurisdictions.

(b) Documentation – detailed loan agree- ments specifying amounts, terms and conditions are required and can be subor- dinated or non-subordinated. • Bank financing – the providers and their documentation processes are as follows. (a) Providers – early-stage financing is pro- vided by various banks offering govern- ment-supported options. (b) Documentation – the following respective documentation requirements apply. (i) Investment loans from the European Investment Bank (EIB) – an agree- ment with the European Investment Bank and partner banks is required. This investment credit scheme includes (in)tangible investments within the EU of less than EUR25 million. It aims to support investment projects of European SMEs of fewer than 250 employees, as well as mid- sized enterprises of fewer than 3,000 employees. (ii) Guarantee schemes – detailed agree- ments outlining guaranteed amounts by the government and conditions are required. • Non-bank financing (leasing) – the providers and their documentation processes are as follows. (a) Providers – early-stage financing is pro- vided by ccredited leasing companies. (b) Documentation – formal leasing agree- ments, with on-balance and off-balance leasing options, are required. Each financing option has its specific require- ments and documentation procedures. Entre- preneurs should carefully consider the terms and conditions of each source and engage legal and financial professionals to ensure clarity and compliance with financial regulations.

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BELGIUM Law and Practice Contributed by: Steven De Schrijver, Allegiance Law

3. Initial Public Offering (IPO) as a Liquidity Event 3.1 IPO v Sale Belgium primarily emphasises its support for SMEs, a sector that may not find significant advantages in IPOs. Consequently, Belgian companies often turn to private equity transac- tions or other funds as a means to secure fund- ing and enhance their financial standing. IPOs are notably infrequent as an exit strategy in Bel- gium. Although the IPO is widely acknowledged as a prestigious and lucrative way to gather funds, secondary sales and trade sales are frequently favoured for achieving a complete exit by share- holders. In contrast to the IPO, where sharehold- ers often retain their positions, secondary sales and trade sales tend to result in a complete exit for shareholders. Dual-track processes are typically adopted by investors seeking optimal flexibility and foster- ing competitive tension between the M&A and IPO paths. Owing to the substantial internal resources required, dual-track processes are generally reserved for companies exceeding a certain minimum size threshold. 3.2 Choice of Listing Euronext Brussels Euronext is a pan-European exchange that combines the stock exchanges of Amsterdam, Brussels, Lisbon and Paris into a single mar- ket. Euronext also has representatives in Ger- many, Switzerland, Spain and Italy. From young, growth-oriented companies to long-established enterprises, Euronext offers various types of markets with multiple entry points to provide issuers with a tailor-made listing offer.

Euronext Brussels is cited as a centre of excel- lence in biotech and has distinguished itself in regulated real estate companies. If the company is active in these sectors, listing on Euronext Brussels may be strategic because of the knowl- edge and investor community present. If the company already operates in Belgium, it may be familiar with local regulations and Euronext Brussels listing requirements. This can ease the process of an IPO compared with exploring a foreign exchange. Euronext has recently invested in new tech- nologies to automate the trading of financial products and has indicated its desire to grow by attracting new companies to list their shares on the exchange. Although there are challenges, such as regulatory issues and growing competi- tion from other exchanges, Euronext Brussels has a strong position as a major player in the Belgian economy and as part of the European stock exchange. Primary Equity Markets on Euronext Brussels Euronext Brussels classifies issuers into three compartments based on their market capitali- sation: • compartment A (large capitalisations) – issu- ers with a market capitalisation exceeding EUR1 billion; • compartment B (medium capitalisations) – issuers with a market capitalisation ranging from EUR150 million to EUR1 billion; and • compartment C (small capitalisations) – issu- ers with a market capitalisation less than EUR150 million. Alternative Trading Platforms Euronext Growth (formerly Alternext) is designed for mid-cap companies, offering a less stringent regulatory environment to avoid International

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BELGIUM Law and Practice Contributed by: Steven De Schrijver, Allegiance Law

Financing Reporting Standards publication requirements. It maintains rules for investor transparency and protection. Euronext Access (formerly Free Market) is a non-regulated trading facility with significantly relaxed requirements for SMEs – for example, While listings of foreign companies in Belgium are limited, exceptions include notable compa- nies such as argenx (BEL 20 index member), Shurgard Self-Storage, Brederode, and Acacia Pharma. Some foreign companies also have sec- ondary listings on Euronext Brussels, including Ahold Delhaize, Aperam (BEL 20 index constitu- ent), ENGIE, Euronext, ING Groep, Saint-Gobain, Suez and Total. These foreign listings constitute less than 15% of the total listed companies. 3.3 Impact of the Choice of Listing on Future M&A Transactions The decision to list on a foreign exchange does not impede the possibility of a future sale. Bel- gian corporate law and financial law will still govern minority squeeze-out rules and other corporate restructuring measures, regardless of a foreign listing. Nevertheless, managing trans- actions across two or more jurisdictions does introduce additional complexities to the process of a future sale. 4. Sale as a Liquidity Event (Sale of a Privately Held Venture Capital- Financed Company) 4.1 Liquidity Event: Sale Process The sale of a company held by venture capital is often orchestrated as an auction, strategically harnessing competitive tension to its maximum on free float and transparency. Foreign Listings in Belgium

potential. A positive correlation can be estab- lished between the use of competitive auctions and the transaction value. More than three out of four transactions with values exceeding EUR100 million are preceded by a competitive auction. In contrast, only one in three transactions with val- ues between EUR10 million and EUR100 million involve such auctions, and competitive auctions occur in less than one in five transactions valued below EUR10 million. In the present market landscape, initiating bilat- eral negotiations from the outset is the excep- tion rather than the rule. It is important to note, however, that not every auction maintains its competitive intensity until the final phase. In numerous instances, only a handful of bidders remain actively engaged until the closing stages, and – occasionally – certain bidders successfully secure exclusivity. 4.2 Liquidity Event: Transaction Structure The typical structure for the sale of a privately held technology company involves the sale of shares, as corporate capital gains on shares are 100% tax-exempt as long as the following con- ditions are met. • Subject-to-tax condition – the shares in ques- tion from which the dividends derive must fulfil the dividends-received deduction condi- tions. • One-year holding period – the company must hold the shares for an uninterrupted period of at least one year. • Participation condition – an implied minimum participation threshold of at least 10% or an acquisition value of at least EUR2.5 million in the share capital is required.

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BELGIUM Law and Practice Contributed by: Steven De Schrijver, Allegiance Law

If any of the above-mentioned conditions are not fulfilled, corporate entities pay a 25% capi- tal gains tax. Consideration for asset transactions usually arises when there are significant tax advantag- es, if shareholders prefer to sell specific assets exclusively, or if the acquiring party has con- cerns about potential legacy liabilities within the company. Prospective bidders may propose that active founders continue their involvement in the company for a specified duration, often linked to the inclusion of a deferred consideration ele- ment, such as an earn-out. 4.3 Liquidity Event: Form of Consideration Transactions primarily involve cash considera- tions – although there are instances where a minor portion of the consideration is settled in stock (ie, the company’s shareholders receive shares of the acquiring entity). Complete stock- for-stock transactions are rare. 4.4 Liquidity Event: Certain Transaction Terms Founders and venture capital investors are typi- cally tasked with supporting representations, warranties, and a comprehensive tax indemnity. This responsibility extends to specific indemni- ties concerning significant liabilities unearthed during due diligence, such as those related to pensions, litigation and environmental matters. Investors and venture capitalists, however, often seek to shift this responsibility onto the selling founders or management of the company. The use of an escrow account is typical, being used in around 28% of all transactions. The war- ranty and indemnity (W&I) insurance mechanism bypasses the need to block part of the purchase price as a security for potential liability claims.

Mainly owing to the involvement of larger and more sophisticated foreign investors and pri- vate equity funds, W&I insurance is present in more than one in four cases for Belgian transac- tions with a value of more than EUR100 million. In contrast, only a small percentage of trans- actions with a deal value up to EUR10 million adopt W&I insurance, as the cost thereof may be too high. Where sellers are in a strong posi- tion (eg, competitive auctions), the use of W&I insurance is more likely. W&I insurance may be used more frequently in tech M&A because pri- vate equity funds and financial investors do not want to assume long-lasting representations and warranties for IP, privacy and cyber-risks and also may be used to preserve relations with the founder who sold their equity and the manage- ment that rolled over a portion of their equity. Spin-offs thrive across various domains, includ- ing universities, research institutes and govern- ment entities. The Interuniversity Microelectron- ics Centre (IMEC), an esteemed international research and development organisation head- quartered in Belgium, specialises in nanoelec- tronics and digital technologies. With a rich history, IMEC has consistently fostered the emergence of innovative start-ups through spin- offs within these domains. 5. Spin-Offs 5.1 Trends: Spin-Offs Corporate spin-offs are a strategic tool frequent- ly employed by large corporations to divest non- core businesses. Although they may not be the predominant restructuring method, certain spin- offs have garnered substantial public attention. A notable example is the Euronext Brussels-list- ed chemical company Solvay, which announced plans to undergo a separation into two distinct

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BELGIUM Law and Practice Contributed by: Steven De Schrijver, Allegiance Law

independent public companies in December 2023. This strategic move involves establishing one entity for its traditional chemicals business and another dedicated to its high-technology materials and solutions. 5.2 Tax Consequences In Belgium, spin-off transactions can be struc- tured as tax-free transactions. For a movable pre-tax dividend in the form of shares of a new or existing company following the transfer of a business division, the following requirements must be met. • State resident – the transferee of the dividend must be a state resident, meaning that the exemption is intended for taxpayers subject to personal income tax. • Listed shares – the shares of the distributing company must be listed on a stock exchange of an EU member state under the conditions of Directive 2001/34/EC or of a third state with equivalent conditions of admission. • Dividend in the form of listed shares – the dividend must be paid in the form of shares of the acquiring company of the branch’s contribution, which are also listed on a stock exchange. • Contribution of a branch of activity – the com- pany being restructured must have trans- ferred part of its assets as part of a contribu- tion of a branch of activity to a newly formed company or an existing company, against the issue of shares issued by the acquiring com- pany of the contribution. • One and the same restructuring operation – the contribution of a branch of activity and the issue of shares must be the subject of one and the same restructuring operation. • Double taxation agreement – the transaction must take place in a state with which Belgium has concluded an agreement or convention

for the avoidance of double taxation that allows the exchange of information regarding tax matters. • Tax-neutral or tax-exempt – the restructuring operation must be considered tax-neutral or tax-exempt in the state where it takes place. 5.3 Spin-Off Followed by a Business Combination Although a spin-off followed by a business com- bination is technically permissible under Belgian law, it is important to note that such a sequence of transactions is not a standard practice in Bel- gium. 5.4 Timing and Tax Authority Ruling The execution of spin-offs necessitates meticu- lous preparation, encompassing operational, business, tax and legal considerations to ensure day-one readiness. As a result, the entire spin- off process typically extends over a minimum of one year. Although obtaining a ruling from the Belgian tax authorities is not mandatory before finalising a spin-off, such a ruling offers a level of assurance regarding the tax implications of a transaction that has not yet incurred fiscal con- sequences. 6. Acquisitions of Public (Exchange-Listed) Technology Companies 6.1 Stakebuilding A strategic approach for a potential bidder involves: • accumulating a stake in the target company; • offering various advantages such as signalling the seriousness of intentions to the target’s board; • reducing overall share acquisition costs; and

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BELGIUM Law and Practice Contributed by: Steven De Schrijver, Allegiance Law

6.2 Mandatory Offer Any acquisition, regardless of the quantity (even a single share), may be subject to prohibition or necessitate a mandatory bid for the target if it increases the shareholder’s aggregate holding to 30% or more. Nevertheless, the Belgian takeo- ver rules outline specific circumstances where there is no obligation for a mandatory bid, even if a person passes the 30% threshold in out- standing voting securities. It is crucial to note that a mandatory bid, being a legal requirement, cannot be made conditional and is irrevocable once initiated. The procedural rules for a man- datory public takeover bid align with those for a voluntary bid, except in terms of conditionality and price considerations. 6.3 Transaction Structures In Belgium, most transactions are share deals, mostly for tax reasons (in the absence of a capi- tal gains tax, see 4.2 Liquidity Event: Transac- tion Structure ). In 90% of all transactions, the purchase price is entirely paid in cash. Payment in shares or loan stock is very uncommon. On the other hand, a deferral of the payment of the purchase price is quite usual, being applied in 57% of all transactions. On average, around 22% of the purchase price is deferred for around 24 months. The use of an escrow account is also typical, being used in around 28% of all transac- tions. In certain cases, a takeover may take the form of a corporate merger, wherein the merger becomes effective upon approval by the gen- eral shareholders’ meeting of the companies involved. This structure involves either merging both companies into a new entity or absorbing one company into the other. Opting for a corpo- rate merger offers advantages over a takeover bid, allowing the merging companies to com-

• potentially discouraging rival bidders. Any transactions by the bidder or those acting in concert may be publicly disclosed before or at the start of the offer period, with general rules for significant shareholding disclosure applying throughout a public takeover bid. If a potential bidder begins accumulating a stake, disclosure is mandatory once voting rights exceed specified thresholds, which are typically at 5% and multiples thereof (10%, 15%, etc) – although some listed companies may have lower thresholds (often 3%). Consideration must also be given to voting securities held by par- ties in concert, including affiliates and existing shareholders with specific arrangements. Upon announcing the public takeover bid, the bidder must disclose its existing voting securities in the target. Subsequent disclosures are required by the target, bidder, parties in concert and others involved, with daily updates during the takeover bid period submitted to the Belgian Financial Services and Markets Authority (FSMA) regard- ing the acquisition or disposal of relevant securi- ties. Under the authority of the FSMA, individuals who make statements – directly or through interme- diaries – that raise questions about their intent for a public takeover bid can be compelled to make an announcement within a maximum peri- od of ten business days (“Put up or shut up”). Those confirming their intention must launch the bid within an agreed-upon timeframe with the FSMA. Failure to confirm within the set period bars both the individual and those acting in con- cert from initiating a takeover bid for the target company’s securities for six months following the announcement’s publication or the expiry of the FSMA-imposed declaration deadline, which- ever is later.

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