A Royal Decree stipulating some important amendments to the Belgian rules governing public takeover bids was published on 5 October 2018 (the “Royal Decree”). The Royal Decree follows the new Belgian Prospectus Law of 11 July 2018.
The amendments at stake relate to, among others, the financing of public takeover bids, the disclosures of transactions during the offer period, the squeeze-out procedure, and the rules applying to companies listed on certain markets (other than regulated markets).
This newsletter discusses the implications for listed companies and offeror(s).
Cross-border financing of public takeover bids
The Royal Decree broadens the definitions of “credit institutions” and “stockbroking firms” to the extent whereby any credit institution or stockbroking firm established in an EEA member state will be allowed to:
- warrant the availability of the funds needed to carry on the public takeover bid (either because it holds the funds in a blocked account or because it has entered into an irrevocable and unconditional credit arrangement with the offeror, the sole purpose of which is to finance the payment of the offer price by the offeror); an
- act as receiving and paying agent.
Previously, only credit institutions or stockbroking firms established in Belgium (or having a Belgian branch) could have such a role.
Disclosure of transactions during the offer period
Several transaction disclosure obligations that must be performed during the offer period are amended. These amendments state that:
- for a public offering of exchange of securities, persons who acquire or dispose of shares in the offeror don’t have to disclose the transaction to the FSMA unless the offeror’s shares are offered as compensation in the context of the offer;
- the disclosure obligation that applies to persons holding at least 1% of the shares in the offeror is abrogated; and
- the disclosure obligation that applies to lending of securities is also abrogated.
Buy-back of own listed debt instruments
Specific – simplified – rules are created regarding the buy-back of own listed debt instruments. In such a case, no prospectus or response memorandum needs to be drawn up. A statement from the offeror has to be published on its website, after this statement is approved by the FSMA.
The minimum-required items in the contents of this statement are outlined in the annex to the Royal Decree.
Amended squeeze-out rules
The rules applying to squeeze-out have also been amended so that they take into account the evolution of Belgian case-law on the subject matter since 2007.
The main purpose of the amendments at stake is to ensure that the FSMA has enough information at its disposal when it deliberates on whether to authorize the launch of the squeeze-out.
In a nutshell:
- the terms and conditions of the bid – including its price – should not jeopardize the interests of the holders of securities in the target company (note that this criterion is now drafted as a negative obligation;
- the documents that are to be filed with the FSMA must now include documents pertaining to the process that the offeror must follow for appointing the independent expert: at least three service providers must have been consulted, and the offeror must explain why and how the independent expert was selected;
- new rules regarding the remuneration, the expertise, and the experience of the independent expert apply in order to warrant the quality of his or her fairness opinion;
- the contents of the fairness opinion is also broadened, and the independent expert must declare – without reservation – that the price offered to the holders of securities in the target company does not jeopardize their interests;
- the independent expert must also justify how he or she meets the criteria pertaining to independence and professionalism inherent in his or her position;
- the response memorandum must (i) be filed with the FSMA no later than 15 business days after the offer announcement, (ii) include the opinion of the target company’s board regarding whether the offered price jeopardizes the interests of the holders of securities in the target company, and (iii) contain any dissenting opinion from any of the target company’s board members;
- the powers of the FSMA are extended; the FSMA has the power to, among others, appoint a new independent expert if it is of the opinion that the independent expert appointed by the offeror (or that the fairness opinion delivered by the said independent expert) does not meet the criteria set out in the new squeeze-out rules;
- in the latter case, if the new independent expert considers that the price offered could jeopardize the interests of the holders of securities in the target company, the offeror has 10 business days from the date of publication of the second independent expert’s fairness opinion to announce whether it gives up launching the squeeze-out bid or whether it amends the terms and conditions of the bid.
Public takeover bids launched by an offeror controlling the target company
The specific provisions applying to public takeover bids launched by an offeror who controls the target company are also amended to reinforce the criteria that must be met by the independent expert and the justification of the methods and means used by the independent expert in its opinion.
Mandatory takeover bids relating to securities admitted to trading on Euronext Growth or Euronext Access
For companies exclusively listed on Euronext Growth (previously Alternext Brussels) and/or Euronext Access (previously the so-called “Free Market”), the threshold triggering a mandatory public takeover bid has been increased from 30% to 50% of the voting securities in the target company