BELGIUM Law and Practice Contributed by: Michel Bonne, Hannelore Matthys and Virginie Lescot, Van Bael & Bellis
subsidiaries relating to an affiliated individual or company that is not a subsidiary. This special committee, composed of three independent directors and one or more independent experts, prepares a written and motivated report to advise the board of directors on the envisaged decision or transaction. 8.3 Business Judgement Rule Belgian courts may not substitute directors’ decisions with their own personal judgement when those decisions lie, within the discretionary powers of the directors. Courts can only review such decisions under a marginal test within the context of director liability disputes – ie, whether the decision falls outside of the margin of pos - sible decisions that a careful, diligent and rea - sonable director placed in similar circumstances would take. 8.4 Independent Outside Advice Depending on the size and scope of the busi - ness combination, directors will often appoint independent outside advisers to consult on financial, legal and tax aspects of the business combination and assist with the due diligence and valuation of the target. Independent expert advice may be required in certain circumstances; for example, within the context of (de)mergers or the takeover bid of a controlling bidder on shares of a listed company. 8.5 Conflicts of Interest Under Belgian company law, a conflict of inter - est is defined as a personal direct or indirect interest, of a financial nature, of a director of a company that conflicts with the interests of that company. A functional conflict of interest – eg, both the acquiring and the target company shar - ing a director – does not trigger the conflict-of- interest procedure under Belgian law.
A director with a conflict of interest must inform the other directors thereof before any decisions in this regard are adopted and may no longer participate in the deliberations or the voting. As a preliminary remark, relatively few judgments of Belgian courts are published and, as a result, not many judicial decisions are publicly avail - able. That being said, conflicts of interest of directors of a target company in a public takeover context have been the subject of judicial scrutiny in two notable cases before the Brussels Commercial Court and Brussels Court of Appeal. The case law has established that the mandatory statu- tory conflict of interest procedure is not appli - cable in the mere context of a public takeover bid whereby conflicted directors of the target do not abstain themselves from the preparation of the response memorandum, even where those directors are also directors in the bidder. Within the context of a public takeover bid, the prospectus should mention the intention of the bidder regarding the (mandate of the) direc - tors of the target. This should allow the target’s shareholders to accordingly weigh the response memorandum, should it be overwhelmingly pos - itive or negative.
9. Defensive Measures 9.1 Hostile Tender Offers
Hostile tender offers are allowed, yet sporadic, in Belgium. Recommended takeovers are by far the most frequently occurring type of takeo - ver. This is mainly due to the nature of Belgian listed companies, which are often family-owned or controlled by one or several shareholders. Consequently, in such cases, irrevocable com -
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