The Belgian Act of 31 July 2009 (the “Financial Sector Acquisitions Act”) implements into national law Directive 2007/44/EC of 5 September 2007 (the “Directive”), which provides new procedural rules and evaluation criteria for the prudential assessment of acquisitions of and increases in holdings in credit institutions, insurance and reinsurance undertakings, investments firms and UCITS management companies (“Regulated Undertakings”). The Directive is intended to encourage cross-border mergers and acquisitions in the financial sector. The Financial Sector Acquisitions Act was published in the Belgian State Gazette on 8 September 2009 and will enter into force on 18 September 2009.
The Financial Sector Acquisitions Act amends the existing notification thresholds, sets out clear notification and decision-making processes for the Belgian supervisory authority, the Banking, Finance and Insurance Commission (“CBFA”), and introduces prudential criteria to assess proposed acquisitions or increases.
With the entry into force of the Financial Sector Acquisitions Act, the following legislation will be amended to include identical rules on the abovementioned subject matter:
- the Act of 22 March 1993 on the status and supervision of credit institutions;
- the Act of 9 July 1975 on the supervision of insurance undertakings;
- the Act of 16 February 2009 on reinsurance;
- the Act of 6 April 1995 on the status and supervision of investment firms; and
- the Act of 20 July 2004 on certain forms of collective management of investment portfolios.
According to the new harmonized rules, any natural or legal person or any such persons acting in concert (a "Proposed Acquirer") that has taken a decision to acquire, directly or indirectly, a Qualifying Holding (as defined below) in a Regulated Undertaking or to further increase, directly or indirectly, a Qualifying Holding, as a result of which the proportion of voting rights or capital held by that person or persons in the Regulated Undertaking would reach or exceed 20%, 30% or 50% or the Regulated Undertaking would become its subsidiary (a “Proposed Acquisition”), must notify its decision to the CBFA in advance
A Qualifying Holding is a direct or indirect holding in a Regulated Undertaking which represents 10% or more of the capital or voting rights of the Regulated Undertaking or which renders it possible for the Proposed Acquirer to exercise a significant influence over the management of the Regulated Undertaking.
The Financial Sector Acquisitions Act sets out clear rules and timeframes for the notification and assessment of Proposed Acquisitions:
- The Proposed Acquirer must notify the CBFA of the Proposed Acquisition in writing indicating the size of the proposed holding and providing any information necessary for the CBFA to carry out its assessment (the information required will be published on the CBFA’s website).
- The CBFA must acknowledge in writing receipt of the Proposed Acquirer’s notification within two working days following receipt of the notification and the relevant information.
- The CBFA has a maximum of 60 working days as from the date of the aforementioned acknowledgement of receipt to assess the Proposed Acquisition.
- During the assessment period, the CBFA may, if necessary and in any event no later than the fiftieth working day of that period, request in writing any information necessary to complete its assessment. The assessment period is suspended between the date of the CBFA’s request for information and receipt of the Proposed Acquirer’s response thereto. In any case, the period of suspension may not exceed 20 working days, unless the Proposed Acquirer is established outside the European Economic Area (“EEA”) or is not itself a Regulated Undertaking, in which case the period of suspension may last up to 30 working days.
- The CBFA may request in writing any necessary information after the fiftieth working day of the assessment period but, in that case, the assessment period shall not be suspended.
- If the CBFA, upon completion of its assessment, opposes the Proposed Acquisition (there must be reasonable grounds for doing so or the information provided by the Proposed Acquirer must be incomplete), it shall notify the Proposed Acquirer in writing of its decision within two working days and in any event before expiry of the assessment period.
- The Proposed Acquirer may request the CBFA to make the reasons for its objection available to the public.
- If the CBFA does not object in writing to the Proposed Acquisition within the assessment period, the Proposed Acquisition shall be deemed approved.
Prudential assessment criteria
Under the new rules introduced by the Financial Sector Acquisitions Act, the CBFA shall, in order to ensure the sound and prudent management of Regulated Undertakings in which acquisitions are proposed, and having regard to the Proposed Acquirer’s likely influence on the undertaking in question, weigh the suitability of the Proposed Acquirer and the financial soundness of the Proposed Acquisition against the following criteria:
- the reputation of the Proposed Acquirer;
- the reputation and experience of any person who will conduct the business of the Regulated Undertaking as a result of the Proposed Acquisition;
- the financial soundness of the Proposed Acquirer, in particular in relation to the type of business pursued and envisaged in the Regulated Undertaking in which the acquisition is proposed, specifically whether the group of which it will become a part has a structure that makes it possible to exercise effective supervision and effectively exchange information and determine the allocation of responsibilities amongst the competent authorities;
- whether the Regulated Undertaking will be able to comply and continue to comply with the prudential requirements based on its status as a Regulated Undertaking after completion of the Proposed Acquisition;
- whether there are reasonable grounds to suspect that, in connection with the Proposed Acquisition, money laundering or terrorist financing is being or has been committed or attempted or that the Proposed Acquisition could increase the risk thereof.
On 18 December 2008, CERS, CEBS and CEIOPS published joint guidelines for the prudential assessment of acquisitions and increases in holdings that are subject to the Directive. The CBFA shall use these guidelines in order to make publicly available on its website a list of information necessary for its assessment of Proposed Acquisitions.