Year in Review – Belgium Law in 2016

EU Audit Regulation: Since June an audit engagement for listed companies, banks, insurers and settlements institutions is limited to 10 years, extendable to 20 years if re-tendered out at least every 10 years. There are also changes to audit committees and to rules on non-audit services. Contractual clauses which restrict or limit a choice of auditor are prohibited and unenforceable.

Disclosure of significant holdings: Notification obligations now relate to both physically-settled as well as cash-settled financial instruments. For the calculation of the thresholds, all financial instruments with similar economic effect relating to the same issuer must be aggregated. For financial instruments which provided exclusively for cash settlement, the number of voting rights must be calculated on a “delta-adjusted” basis. Read more

Market participants adapt to new EU Market Abuse Regulation (“MAR): MAR introduced a new EU-wide framework for market abuse, investment recommendations, disclosure of inside information, insider lists and dealings by senior managers from 3 July 2016. It included a new regime for market soundings which has had significant impact, and many new procedural requirements. A revised law on criminal sanctions is expected to be passed by the Belgian parliament in the coming months. Read more

New Belgian regulatory framework for investment firms: Two new laws (on stockbroking firms and on portfolio management firms and investment advice companies) changed the legal framework regulating Belgian investment firms significantly. The changes are a consequence of the transposition of CRD IV and preparatory steps for MiFID II. The legal regime governing stockbroking firms is brought closer to the regime of credit institutions since stockbroking firms can also hold client assets. The rules governing credit institutions were also changed, notably with respect to investor-compensation schemes and branches of non-EU banks.

Solvency II insurance package: The insurance sector has faced considerable regulatory changes in 2016, triggered by the entry into force of Solvency II, the EEA-wide capital adequacy and risk management regime for insurers and reinsurers. The rules regarding the status and supervision of insurance institutions, and organisational and governance requirements were reviewed through various laws and Royal Decrees in 2016.

Belgian Competition Authority (“BCA”) increasingly faces complex merger cases: The BCA has heavily focused on merger control in 2016 and dealt with a number of complex cases, involving structural divestments (e.g. Ahold/Delhaize, cleared in March 2016, marking the first occasion where the BCA, following referral from the European Commission, analysed the Belgian aspects of global merger) or a mix of structural and behavioural remedies (e.g. Kinepolis/Utopolis, cleared in March 2016), as well as purely behavioural commitments (e.g. bpost/AMP and LS Distribution Benelux, cleared in November 2016).

Adoption of the Belgian Competition Authority’s (“BCA”) formal leniency guidelines: The BCA’s formal leniency guidelines are applicable to leniency applications made from 22 March 2016. Besides clarifying procedural points and aligning fine calculation with the European guidelines, they also specify how individuals can apply for leniency and how individual applications interact with applications made by undertakings (since the law of 2013, individuals can be sanctioned with an administrative fine of up to €100,000 for hard-core violations of competition law).

Specialised Real Estate Investment Funds (Fonds d’Investissement Immobilier Spécialisé, “FIIS”): The Belgian government established a FIIS regime (in autumn 2016), which is allegedly the most flexible real estate investment vehicle in Europe. FIIS are non-listed investment vehicles of a more limited duration than a SIR (former SICAFI), the Belgian Real Estate Investment Trust (“REIT”) type of investment vehicle, for institutional and professional investors in specific real estate segments. FIIS benefit from the same attractive tax regime as the REITs.

Public Procurement: The European Directives modifying the regime applicable to public procurements were transposed to Belgium law in June 2016. These have led to less cumbersome procedures, easier access to public procurements for small- and medium-sized enterprises and to a greater focus on social and environmental concerns.

Flemish Decree on commercial establishments: The Flemish government enacted a Decree in July 2016 on the integral policy concerning commercial establishments. This Decree contains a complete integration of the permit for retail activities into the Decree of 25 April 2014 concerning the integrated permit. The bulk of the Decree will enter into force on 1 January 2018.

Reform of criminal proceedings: The “Pot-pourri II” Act, which aims at increasing the efficiency, speed and consistency of Belgian criminal justice, came into force on 29 February 2016. The Act brought, among other things: (i) the introduction of plea bargaining; (ii) the limitation of out-of-court settlements’ availability (no longer available after a first judgment on the merits); and (iii) the new rules applicable to appeals and motions to set aside default judgments. Read more…

Judgment of the Constitutional Court on criminal settlements: In June 2016, the Belgian Constitutional Court declared the criminal settlement regime partly unconstitutional. The Court held that settlements entered into by the prosecutor and the accused after a judge has been seized of the case must not only formally but also substantially be reviewed by the judge. This will henceforth require prosecutors to motivate settlements. It is uncertain whether an amending act will be submitted to the Parliament in the near future.

Confirmation of the right to be forgotten: On 29 April 2016, the Court of Cassation reviewed the balance between two fundamental rights privacy and freedom of the press-concluding that the anonymisation of a press article without deleting it does not exceed the acceptable restrictions to the freedom of the press. In doing so, the Court confirmed the right to be forgotten recognised by the Court of Justice of the European Union (Google Spain Case C-131/12 of 13 May 2014). Read more…

Entry into force of a new data retention law: The law of 29 May 2016 on the collection and storage of data in the electronic communication sector has been enacted, imposing on providers of publicly available electronic communications services or networks an obligation to retain certain communication data for an average period of 12 months. The purpose is to give access to such data to judicial authorities, intelligence and security services and police.

Panorama freedom: From 15 June 2016, certain works can be reproduced and communicated to the public without the consent of the author (e.g. architecture or sculptures) provided they are permanently located in public places (in its current setting), and that this does not conflict with the normal exploitation of the work or unreasonably prejudices the legitimate interests of the author. 

Right to death-in-service cover: Since 1 January 2016, employees who leave their employer in the course of their career (dismissal or resignation) have one more option regarding their occupational pension benefits: they may leave their acquired reserves in the pension scheme of their former employer without any modifications being made to this scheme. Consequently, such reserves will continue to be insured in case of death before retirement. 

Social law provisions for pension benefits of (self-employed) managers: The Act of 18 December 2015 introduced additional measures with respect to occupational pensions for self-employed managers. The legislator: (i) clarified the notion of retirement age, with a view to aligning it with the statutory retirement age; (ii) ensured the point at which occupational pension benefits are paid out corresponds to the point at which affiliated company managers start benefiting from their statutory pension; and (iii) prohibited the application of favourable calculation methods for early payment of occupational pension benefits.

EU State Aid: In the Spanish goodwill case, the European Court of Justice clarified that the “only relevant criterion” in order to establish the selectivity of a national tax measure is whether the measure in question is such as to favour certain undertakings over other undertakings which, in the light of the objective pursued by the general tax system concerned, are in a comparable factual and legal situation to those that are subject to the general tax system.

Base Erosion and Profit Shifting measures (“BEPS”): Belgium implemented several BEPS measures such as (i) the abolition of the patent income deduction regime (subject to transitional measures) and the introduction of a deduction for innovation income which will be a highly effective tax incentive for conducting R&D activities in Belgium and (ii) introduced extensive transfer pricing documentation such as the local and master files and a country-by-country reporting.

Hybrids and anti-abuse rules: Belgium implemented changes to the EU Parent-Subsidiary Directive in relation to hybrids and anti-abuse rules.

Year to Come – Belgium Law in 2017

Anti-Money Laundering Law: The Belgian legislator is working on a new Anti-Money Laundering Law that will replace the existing law of 11 January 1993, with a view to implementing the fourth Anti-Money Laundering Directive 2015/849. No official text is available yet. The changes are expected to enter into force in early 2017 since the directive applies by June 2017.

Revised Prospectus Regulation: This is expected to come into force in Q2 of 2017 and be phased in, simplifying content and procedural requirements and with broader exemptions.

Anticipated General Data Protection Regulation (“GDPR”) with an amendment to the Data Protection Act (“DPA”): An amendment to the DPA has been introduced in Parliament providing enforcement powers to the Privacy Commission and the means to sanction infringements through administrative fines. The bill also introduces data breach notification requirements.

Increasing enforcement of data protection rules in anticipation of the GDPR: The Privacy Commission intends to make enforcement its priority, as already illustrated by the Facebook case which is still pending before the courts (in summary proceedings and on the merit). Pleadings on the merit are planned for October 2017. Read more: French or Dutch.

Local implementation of the EU Network Information Security Directive (“NIS Directive”): The NIS Directive will introduce security standards for digital service providers as well as operators of essential services. The Law of 1 July 2011 currently ensuring the cyber safety of critical infrastructures will need to be adapted before 9 May 2018, as there is yet no express legal obligation to report cybersecurity incidents, except in some specific sectors.

Translation regime European patents: Effective as of 1 January 2017, European patents granted in English, in which Belgium is designated, no longer need to be translated into one of the official languages of Belgium (i.e. Dutch, French or German).  This means that the Belgian validation of a European patent can, as of that date, be done without further translation requirements.

Merger Control thresholds: The European Commission’s proposals on procedural and jurisdictional aspects of EU merger control are expected later in 2017 and will likely include changes to the jurisdictional thresholds. It has consulted specifically on transactions which are significant from a market perspective, but do not meet current turnover thresholds and thus escape review, and invited views on further simplification. Read more…

Increased antitrust powers: The European Commission is expected in early 2017 to propose increasing national competition authorities’ enforcement powers (eg fining, leniency and independence). Read more…

Continued use of settlement procedure by Belgian Competition Authority (“BCA”): Three further cases have been settled since the BCA adopted its first ever settlement decision in 2015: the National Lottery settled an investigation into abuse of dominance by misuse of information (September 2015); battery producers settled a price-fixing investigation (February 2016); and river cruise organisers settled an investigation into collusion (May 2016). This increasing use of settlements can be expected to continue in 2017.

Implementation of the new permit regime in the Flemish Region:  The Flemish government has enacted a Decree (15 July 2016) which integrates the building permit and the environmental permit into one new “single environmental permit”. The decree will come into force on 23 February 2017.

Implementation of the Code du Développement Territorial (“CODT”):  It is expected that the CODT, the new code on urban planning in the Walloon Region, will come into force in the second half of 2017. However, the date is still unknown. In the meantime, the current legislation remains fully applicable.

Reform of the Brussels Town Planning Act: The government of the Region of Brussels-Capital wishes to reform the Brussels Town Planning Act (Code Bruxellois de l’Aménagement du Territoire/ Brussels Wetboek van Ruimtelijke Ordening) in order to simplify and rationalise the current rules.

Introduction of a criminal record for legal entities: The final bill of the “Pot-pourri IV” Act is currently pending in the House of representatives. The passing of the act is expected in 2017 and will bring a large number of new provisions. Among them, the bill provides for the introduction of a criminal record for legal entities, which is a logical next step after the Act of 4 July 1999, introducing the criminal responsibility of legal entities. This continues the move towards a comparable criminal treatment of natural persons and legal entities.

Improved access to a lawyer during interrogations: On 27 November 2016, a new Act on certain rights for interrogated persons came into force in transposition of the European directive 2013/48/EU. The reform, called Salduz-bis, significantly increases the right to legal assistance in the course of criminal proceedings and strengthens the role of the lawyer assisting during the interrogations. Read more…

Upcoming changes in civil proceedings: Further changes to the rules of civil procedure will include an increased use of electronic communications in the course of court proceedings and tougher conditions of admissibility for the motions to set aside default judgments (opposition/verzet). A commission of experts set up by the Minister of Justice should also suggest additional reforms focusing on appeal proceedings.

Implementation of the Antitrust Damages Directive: By the end of 2016, Member States had to implement the EU Directive on Antitrust Damages Actions, which aims to promote and facilitate private redress. The effects (particularly on choice of forum) will likely start to be felt during 2017. Read more

Belgian gender quota: The one-third quota requirement, ensuring gender diversity on boards of listed companies and autonomous state enterprises, and the rule according to which any director appointment that does not comply with this requirement is null and void apply to financial years commencing on or after 1 January 2017. Read more

Law on security over movable assets: The Belgian Security Law, once entered into force, will make important reforms to the regime governing security over movable assets, including an electronic national security register allowing perfection without dispossession, a simplified enforcement regime and the possibility to use a security agent. The Security Law was set to come into force by 1 January 2017 at the latest, but this date was postponed to 1 January 2018 at the latest pursuant to an amending law which provides for reparation provisions and cohesion with other laws. The amending law further aims to improve the functioning of the Security Law by addressing practical issues identified during the development of the new National Pledge Register and by incorporating suggestions made by practitioners.

Tax at EU level: A decision to endorse the European Common (Consolidated) Corporate Tax Base is expected.

Tax at Belgian level: Belgium will have to make crucial choices relating to the options for implementation of the ATAD 1 Directive and the OECD Multilateral Convention. Finally, we are hoping to have a Belgian (corporate) income tax reform with a substantial tax rate reduction.

State aid challenges to tax rulings: The European Commission investigated whether tax rulings by some tax authorities amounted to unlawful state aid and ordered the recovery of a record €13bn (plus interest) of what it decided was unlawful Irish aid. Other investigations continue, and some decisions have been appealed to the EU Courts. This has resulted in uncertainty for Member States and companies, with multinationals potentially having to pay for up to a decade of taxes that they thought were not due. Read more…

Medical Devices Regulation: This new Regulation, which aims to modernise and harmonise existing legislation laying down safety requirements for medical devices, is expected to be published officially in early 2017 and covers a diverse range of products - from plasters and pregnancy tests, to state-of-the-art pacemakers, X-ray machines and genetic tests.  The Regulation envisages greater pre-sale scrutiny and tighter market surveillance. It will establish a unique device identification system that makes it easier to eliminate counterfeit devices and recall defective products.