Structure and process, legal regulation and consents


How are acquisitions and disposals of privately owned companies, businesses or assets structured in your jurisdiction? What might a typical transaction process involve and how long does it usually take?

Acquisitions and disposals of privately owned companies between a seller and a purchaser generally take place through the execution of a share purchase agreement if the shares in a company are being transferred, or an asset purchase agreement if all or part of the assets, liabilities, or both, of a company are being transferred. Alternatively, it is also possible for an investor to acquire a participation in a company by subscribing to a capital increase whereby new shares in the company are issued, in which case an investment agreement will generally be entered into. Share purchase agreements, asset purchase agreements and investment agreements partly differ due to their particular subject matter, but are also comparable in numerous respects (eg, they often include comparable indemnification and limitation mechanisms).

Transaction processes can largely be divided into two categories: bilateral transactions whereby a purchaser directly approaches a seller or vice versa and negotiations are entered into directly; or auction processes, often managed by a corporate finance firm or investment bank that contacts various potential bidders in the framework of a competitive process.

In a direct bilateral transaction, the structure will depend on the type of business and the parties involved, but generally this will consist of a preliminary negotiation phase during which parties will discuss the proposed transaction, after which a letter of intent may be issued or a (binding or non-binding) term sheet may be agreed upon, together with a non-disclosure agreement that should contain clean team arrangements if target and purchaser are competitors of each other. Following this preliminary stage, due diligence will often take place, followed by the drafting and negotiating of detailed transaction documents. The length of this process can vary significantly from a couple of weeks or months to up to a year. This will very much depend on the interest and motivation of the parties involved, given that there will be no formal organised process, as is the case in an auction.

An auction process generally starts with the preparation and distribution of an information memorandum to potential bidders and the signing of a non-disclosure agreement. When the interest of potential bidders is still unclear, they may initially only be provided with a teaser, which in essence is a summary of a more comprehensive information memorandum. In the next stage, non-binding bids will be solicited on the basis of which bidders will be selected to proceed to the next round, in which they will generally be allowed to perform due diligence on the target. This due diligence process may be facilitated by the provision of a vendor due diligence report to the bidders. The larger a transaction, the more likely it is that a vendor due diligence report will be provided. During the due diligence stage, draft transaction documents will be provided by the seller to the bidders. At the end of the due diligence stage, bidders will be requested to submit binding bids together with mark-ups of the transaction documentation. On the basis of said bids, the seller will choose one or more bidders to continue negotiations with until an exclusive bidder remains and the final transaction documentation is entered into. The duration of an auction process will depend on the size of the target and can range from two to six months or more.

Legal regulation

Which laws regulate private acquisitions and disposals in your jurisdiction? Must the acquisition of shares in a company, a business or assets be governed by local law?

Belgian corporate law is set out in the Belgian Code of Companies and Associations. Certain less common company types remain partially subject to the old Code of Companies. These company types are less relevant in an international M&A context.

The Code of Companies and Associations includes the basic principles on the transferability of shares and various procedures for corporate restructurings for the various types of companies in Belgium. Additionally, it will need to be assessed whether a merger filing is required by applicable national and European competition laws. In the case of a transfer of assets or liabilities, further regard must, inter alia, be had to legislation governing the transfer of employees, tax legislation, legislation governing the transfer of contracts, title to (real) property, permits and government authorisations and intellectual property.

Share or asset transactions can be governed by foreign laws provided that certain local law formalities (eg, registration of a transfer of shares in the share register of the company and registration of a transfer of real estate in the mortgage register) are complied with. Moreover, the Code of Companies and Associations provides for some procedures for transfers of assets or liabilities. These procedures are characterised by certain advantages (eg, transfer of assets or liabilities by law). These benefits can be taken advantage of only if Belgian law procedures are followed.

Legal title

What legal title to shares in a company, a business or assets does a buyer acquire? Is this legal title prescribed by law or can the level of assurance be negotiated by a buyer? Does legal title to shares in a company, a business or assets transfer automatically by operation of law? Is there a difference between legal and beneficial title?

In Belgium, full legal title to shares or assets is generally transferred and sellers usually give unlimited warranties in the transaction documentation that they have full, valid and unencumbered title to the shares or assets they are transferring, as well as the capacity to perform such a transfer.

Title to the shares in a company, in principle, transfers upon signing of the contract, but such a transfer is in practice always postponed until the closing of the transaction, if the closing does not coincide with signing. The transfer of title to the shares becomes effective towards the target company and third parties upon the registration of the share transfer in the share register of said company. Title to assets, in principle, transfers upon there being a valid transfer agreement (provided that there may be certain transfer formalities for certain assets such as real estate, permits, intellectual property, contracts, etc), but can also transfer by operation of law if one of the special asset transfer procedures set forth in the Code of Companies and Associations is complied with.

In Belgium, the full ownership of shares or assets can be split up into bare ownership and (temporary) usufruct; however, in private M&A, the full ownership of shares and assets is generally transferred, and such distinction is not made. If real estate is involved in the transaction the situation might be different, because land ownership can be structured and split up in different manners (eg, the granting of rights to build, long lease rights and easements).

Multiple sellers

Specifically in relation to the acquisition or disposal of shares in a company, where there are multiple sellers, must everyone agree to sell for the buyer to acquire all shares? If not, how can minority sellers that refuse to sell be squeezed out or dragged along by a buyer?

The principle is that for all the shares in a company to be transferred, all shareholders will need to agree to such a transfer. When there are different shareholders, a shareholders’ agreement will often be in place that may include provisions regulating the transfer of shares in the company, such as a drag-along provision pursuant to which certain shareholders can force the other shareholders to sell their shares in certain circumstances. Such provisions can also be set forth in the articles of association of the company.

Apart from contractual arrangements or arrangements in the articles of association, the Code of Companies and Associations does not provide for a general drag-along procedure for private companies. A squeeze-out procedure can be triggered by shareholders holding 95 per cent or more of the shares of a limited liability company (NV/SA or BV/SRL). However, each remaining shareholder may object to the squeeze-out; thus, this procedure is hardly ever used in a private M&A context. Only in exceptional circumstances is it possible to claim the exclusion of a shareholder in court.

Exclusion of assets or liabilities

Specifically in relation to the acquisition or disposal of a business, are there any assets or liabilities that cannot be excluded from the transaction by agreement between the parties? Are there any consents commonly required to be obtained or notifications to be made in order to effect the transfer of assets or liabilities in a business transfer?

There are two main options for structuring the sale of a business or assets and liabilities in Belgium: either the assets and liabilities to be transferred are chosen specifically, or the transaction is structured through one of the procedures set forth in the Code of Companies and Associations as a sale of a business branch or universality.

In the case of a transfer of individual assets and liabilities, parties can at their discretion determine the scope of the assets and liabilities to be transferred, provided that for each asset and liability the legally required transfer formalities are complied with (eg, notifications to or consents from counterparties to contracts).

Structuring the transaction through one of the procedures in the Code of Companies and Associations has the advantage that the transfer takes place by operation of law, without the need to comply with the specific transfer formalities per asset or liability (subject to certain exceptions). On the other hand, such a procedure entails that all the assets and liabilities that are part of the transferred business branch or the whole business are transferred without the possibility of cherry-picking.

In addition to the above and irrespective of the corporate procedure that is chosen, if the Belgian regulations regarding transfers of undertakings, as laid down in the Belgian national Collective Bargaining Agreement No. 32-bis, are applicable, the buyer is obliged to take over all rights and obligations that arise from the employment agreements regarding the employees who are part of the transferred business, as these employees are, in principle, automatically transferred to the buyer.


Are there any legal, regulatory or governmental restrictions on the transfer of shares in a company, a business or assets in your jurisdiction? Do transactions in particular industries require consent from specific regulators or a governmental body? Are transactions commonly subject to any public or national interest considerations?

When shares in a company, a business or assets are transferred, the applicable competition laws should be regarded. In Belgium, pursuant to the Code of Economic Law, mergers need to be notified to the Belgian Competition Authority when the involved undertakings jointly realise a turnover in Belgium exceeding €100 million, and at least two of the undertakings involved each realise a turnover of at least €40 million in Belgium. However, if the transaction meets the turnover thresholds set out in the EU Merger Regulation, and hence a notification to the European Commission is required, no separate notification will be required in Belgium.

Besides merger control, transactions in Belgium are generally not subject to government approval, nor are they subject to public or national interest considerations (but exceptions may exist in very specific sectors). That said, government-issued permits, concessions and the like may be subject to change of control, transfer or similar restrictions, which may indirectly result in government consent being required to properly effect a transaction.

Are any other third-party consents commonly required?

A sale of shares in a company, in principle, does not require any third-party consents other than approval by the competition authorities if the relevant thresholds are met. However, contractual arrangements, subsidies, public tenders, etc, may include change of control provisions requiring the notification or prior approval of a contemplated share transaction.

If a sale of assets is structured through one of the procedures in the Code of Companies and Associations, the transfer takes place by operation of law, and third-party consents will, in principle, not be required (subject to exceptions, such as very specific transfer restrictions in contracts). However, if an asset sale is not structured through such procedure, the formalities applicable to each asset will need to be complied with to effect its transfer. This will likely include the requirement to obtain consent from counterparties to contractual arrangements if obligations under such contracts are transferred and the requirement to notify debtors if rights are transferred. Additionally, the transfer of certain assets will require registration or notification (eg, in the mortgage register in the case of a transfer of real estate, changes to intellectual property registrations and notification of a transfer of an environmental permit) for the transfer to be effective towards third parties.

Regulatory filings

Must regulatory filings be made or registration (or other official) fees paid to acquire shares in a company, a business or assets in your jurisdiction?

Transfers of shares, in principle, do not require regulatory filings or the payment of registration fees. If assets are transferred through the procedures provided in the Code of Companies and Associations, the intervention of a notary public will be required, which will entail notary costs and the requirement to pay certain nominal registration duties.

If real property is transferred in the context of an asset sale, real estate transfer tax (at a rate of 12 per cent in the Flemish Region or 12.5 per cent in the Brussels or the Walloon Region) will be due. Such real estate transfer tax is, in principle (provided there is no abuse), not due if shares are sold in a company that owns real estate. Furthermore, an exemption exists for certain restructurings, such as mergers, demergers or contributions of a business branch, provided that all conditions for such exemption are met.

If other assets are transferred that require registration, additional limited registration fees may be due (eg, to change intellectual property registrations).

The transfer of a business or assets often requires government notifications with respect to the transfer of (or, as the case may be, reapplication for) permits. The transfer of real estate might specifically also give rise to soil investigation and remediation measures that will require government filings.

If the transfer of shares results in a change of the ultimate beneficial owners of the target company, the management body of the target company will be required to update the information disclosed in the ultimate beneficial owner register accordingly within one month of closing. If the transfer of shares results in all shares being held by a single shareholder, the identity of the single shareholder must be filed with the clerk office of the competent court. If the transfer of shares results in a change of the directors, registered office or articles of association of the target company, these changes will have to be filed with the clerk office of the competent court.