Following is a brief summary of the Belgian legislation on mergers and on acquisitions.

a) Mergers

Mergers may be achieved by either acquisition or the formation of a new company. The operation in both cases consists in the transfer of all assets and liabilities of one or more companies to another company, as a result of which the transferring company or companies are dissolved and their shareholders receive shares in the acquiring company and, sometimes, a limited cash payment.

The procedure and formalities to be complied with have been derived from the rules of the EU Directive.

The Boards of Directors of all companies concerned must draft a merger proposal and a special report. Statutory auditors then review the merger proposal and provide their comments in a written report. The merger proposal, Board report and auditor's report must be made available to the shareholders within a certain time frame. The general meeting of shareholders of each company has then to approve the merger.

b) Acquisitions

General
Acquisition of a Belgian company may be carried out in one of two ways: a purchase of the company's shares or a purchase of its assets. Usually, it is technically easier to organise a sale of the shares rather than a transfer of each item of the company's property. In addition to the multitude of legal technicalities involved in an asset transfer, value added tax (VAT) is due on the value of all non real estate assets, unless the target's entire business or an entire division thereof is transferred at once. As to real estate property, a 12.5% transfer tax is levied on its fair market value upon transfer.

Public Takeover Bids
Acquisition of the shares and equity securities in Belgian publicly traded companies is subject to the relatively strict rules on public bids. Publicly traded companies are companies whose shares, warrants or other equity securities are listed on a Belgian stock exchange or widely spread among the Belgian public. Public bids must be notified to the Banking and Finance Commission (BFC) at least one month in advance. The notification should contain a draft prospectus of the transaction, which must provide information enabling the targeted securities holders to make an informed decision. The offer must last from 10 to 20 days and cover all equity securities of the target. Change of control of a publicly traded company by way of transfers of equity securities made at a price higher than the market price triggers the obligation to launch a public bid on all the remaining equity securities of that company at that price.

c) Antitrust

Modeled after the EU antitrust regulations, Belgium has a national antitrust law which should be taken into account when planning a corporate concentration. The transaction has to be notified to the Competition Council if the two following thresholds are met: (i) the combined consolidated annual turnover of the purchaser and the world-wide turnover of the target exceeds one billion BEF, and (ii) the combined market share of the purchaser and the target exceeds 20% of any Belgian market for products or services. Having notified the Council of the planned merger, the parties must await its decision and may not take irreversible measures with regard to the transaction. The Council's decision must come within a maximum period of one month, which may be extended by another two and a half months.

d) Disclosure Requirements

Transparency Reporting
Each legal person or individual should report its stake in a Belgian company, listed fully or partially on any stock exchange of an EU country, to the BFC and to the company concerned when such person's stake crosses in either direction a threshold line expressed as a percentage of the voting rights in such company. The threshold lines are set at a level of 5% of the total number of outstanding voting rights issued by the listed company, beginning at 5% and ending at 100%. The reporting obligation covers stakes held indirectly by agents or "related" entities on behalf of the reporting person. A listed Belgian limited liability company may set in its articles of incorporation smaller reporting threshold levels, but they may not be less than 3%. Likewise, a non-listed company may elect by a deliberate provision in its charter to have the reporting obligation applicable to acquisitions or sales of its voting stock.

Others
Depending upon the circumstances, in the event of mergers, acquisitions or other corporate concentrations, administrative or other notifications or approvals may be required.

The content of this article is intended to provide general information on the subject matter. It is therefore not a substitute for specialist advice.

De Bandt, van Hecke & Lagae - Brussels. (32-2) 501.94.06.