BELGIUM Law and Practice Contributed by: Michel Bonne, Hannelore Matthys and Virginie Lescot, Van Bael & Bellis
10.3 “Broken-Deal” Disputes As mentioned in 10.1 Frequency of Litigation , court judgments in Belgium are in general not published, and if decisions are published, there is often a delay. There is thus very little infor - mation on “broken-deal” disputes and how fre - quently they occur. It is still recommended to enter into a detailed term sheet before entering into further negotia - tions to avoid misunderstandings as to the gen - eral terms and conditions of the transaction at a later stage. Shareholder activism in Belgium is not common as minority shareholders within large Belgian companies often lack an incentive to take such action. Large shareholders usually own sufficient shares to control the company and can, there - fore, often significantly impact the appointment of directors and the strategy of the company. In view of this, it is very difficult for minority shareholders to have any influence on the cor - porate decision-making process. Additionally, the minority shareholders can piggyback on the efforts of larger shareholders. However, with respect to certain topics, such as director remu - neration, shareholder activism has increased. It should be noted that when shareholder activism does occur, it seems to find its source in organi - sations located in neighbouring countries and not in Belgium itself. 11.2 Aims of Activists Generally, shareholders in Belgian companies tend to limit their activism to reacting to the behaviour of the company to protect their own interests. It is unusual for a shareholder in a Bel - 11. Activism 11.1 Shareholder Activism
receipt of a first offer, it is recommended for directors to have at least initial talks regarding the offer to avoid any personal liability. The directors of the target do, however, need to draft a memorandum in reply to the takeover offer. If directors take a different position, in this memorandum, to the shareholders, this could influence the shareholders’ positions. Regard - less of the position of the directors, the share - holders make their own assessment of the offer and decide on the offer independently. For more information on disclosure require - ments in the case of a public takeover bid, see 7.1 Making a Bid Public . As court judgments in Belgium are not (immedi - ately) published, it is hard to assess the frequen - cy of litigation in connection with M&A deals. The trend, however, seems to be that litigation is becoming increasingly common (but still far less common than in, for example, the USA). If the deal concerns a hostile takeover (which does not occur often), litigation is a common strategy to frustrate or delay the bid. 10.2 Stage of Deal Pre-closing litigation is rather common in the event of a hostile takeover (see also 10.1 Fre- quency of Litigation ). In the case of private M&A deals, the vast major - ity of litigation proceedings occur in the post- closing stage. In such cases, purchasers often seek damages for breaches of representations, warranties or specific indemnities. 10. Litigation 10.1 Frequency of Litigation
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