Amendments to Belgian corporate law to facilitate remote shareholders’ meetings

Since the outbreak of the COVID-19 pandemic, the provisions of the Companies and Associations Code (the “CAC”) on the functioning of corporate bodies have proved to be too restrictive, particularly with regard to the remote organisation of shareholders’ meetings for listed companies or companies having many shareholders.

remote shareholders meetings - loi 20 décembre 2020 - belgium

Facilitating remote shareholders’ meetings

Following the Royal Decree No. 4 of 9 April 2020 (as extended by the Royal Decree of 28 April 2020) which has expired, the Law of 20 December 2020 has been adopted notably to facilitate the remote shareholders’ meetings of companies and (international) non-profit associations (A(I)SBL/(I)VZW) on a long-term basis.

In its current version, the CAC required a specific authorisation in the articles of association to organise a shareholders’ meeting using electronic means of communication. This requirement disappears with the newly adopted measures (for the SA/NV, see the new text of article 7:137 of the CAC).

For all companies (listed or not) and associations (“ASBL”/”VZW”), the option to hold a remote shareholders’ meeting is now at the discretion of the management body. However, the meeting will always need to be held at the same time in a “presential” form. Consequently, unlike what was provided for in the Royal Decree no. 4, directors may not refuse the physical presence of shareholders at the meeting.

Members of the bureau are required to participate in person. The directors and, where applicable, the statutory auditor can attend remotely provided they are able to answer the shareholders’ questions with the used communication means.

Conditions to organise remote shareholders’ meetings

Several conditions have to be met by companies and associations wishing to organise a remote shareholders’ meeting:

  • The entity must be able to verify the capacity and identity of its shareholders/members. The means used should be adapted to the shareholding/membership structure. The Parliamentary works list as examples: Teams, Zoom, Skype or a similar system.
  • The convening notice to the shareholders’ meeting must contain a clear and precise description of the procedure to participate remotely. If the company or the ASBL/VZW has a website, the procedure must be made accessible on it.
  • A “two-direction” communication is mandatory. Accordingly, shareholders or members must be able to directly, simultaneously and continuously follow discussions, exercise their voting rights, actively participate in the debates and ask questions. However, the new regulation allows for a one-way communication – not allowing shareholders or members to actively participate in the discussions – until 30 June 2021 provided it has valid reasons to do so which are justified in the convening notices. Shareholders or members who wish to actively participate in the discussions will then have to attend the meeting in person.

Our analysis

The Covid-19 outbreak has proved the importance to dispose of legal and technical resources to organise remote participation and voting to shareholders’ meetings. In addition, remote participation may encourage certain shareholders to participate in shareholders’ meetings. From this perspective, the adaptations made to the CAC are welcome.

However, contrarily to the measures taken during the first lockdown, the legislator did not leave a certain margin of appreciation to allow the management body to prohibit shareholders’ physical presence. Thus, shareholders’ meetings will, at most, remain hybrid meetings. This may be problematic if the social distancing measures are extended for several months, especially as the period for organising the shareholders’ meetings, notably for listed companies, is coming. One way to limit the number of shareholders present in person may be to encourage the granting of proxies to a single person suggested in the convening notices.

In addition to the amendments concerning remote meetings, the newly adopted measures extend to the members of an ASBL/VZW the possibility to (i) take unanimously and in writing all decisions which fall within the powers of the shareholders’ meeting, except for the amendment of the articles of association and (ii) to vote at a distance before the shareholders’ meeting by way of electronic means if the articles allow it.

The amendments summarised above entered into force on 24 December 2020.

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For additional information or guidance, please contact Sandrine Hirsch or Nikita Tissot

sandrine.hirsch@simontbraun.eu
nikita.tissot@simontbraun.eu
+32 (0)2 543 70 80

Our Corporate and Real Estate teams recognised in Leaders League

Leaders League is a legal guide with an international reach that ranks the best law firms by country and by area of practice.

The first part of the 2021 rankings has just come out, and we are happy to be featured in the following categories:

  • Mergers & Acquisitions: Highly recommended
  • Real Estate: Highly recommended
  • Private Equity: Recommended

Congratulations to our teams!

All current Simont Braun’s rankings are available here, but we will have to be patient for the other 2021 results to come out… Stay tuned.

Flash News | New moratorium for enterprises in difficulty

Belgium has recently adopted extra measures to combat the negative economic impact of Covid-19.

The Law of 20 December 2020, which entered into force on 24 December 2020, provides for a second moratorium for companies in difficulty up until 31 January 2021 (included).

The scope of application of these measures is, however, more restrictive than during the first lockdown in March 2020. They only concern enterprises subject to closure pursuant to the Ministerial Orders of 28 October and 1 November 2020 (e.g. Horeca establishments, establishments in the cultural, festive, sports and events sectors, companies in the “contact business” sector, etc.).

In addition, as under the Royal Decree n°15, the concerned enterprises cannot have already been in a state of suspension of payments on 18 March 2020 to benefit from these measures.

As to the protection measures, they are identical to those created by the Royal Decree n°15. Please refer to our news of May 2020 for a description of the latter.

The Law of 20 December is available here.

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For any question or guidance, please contact Fanny Laune

fanny.laune@simontbraun.eu
+32 2 543 70 80

Highlights 2020 and upcoming events in 2021

What happened in 2020, and what is to expect in 2021?

Every day in December, Simont Braun shared legal highlights of 2020 and upcoming events for 2021 in its End-of-Year Countdown.

Here is a recap of each highlight by area of practice:

1. Corporate law
2. Intellectual property
3. Digital finance & Financial services
3. Civil law and Dispute resolution
4. Real Estate & Public law.

 

Corporate law

 

Golden year of remote corporate meetings and e-signatures

Since 1 January 2020, the new Companies and Associations Code allows remote shareholders and board meetings in writing or via electronic means of communication under certain conditions. With Covid-19, the Belgian government further facilitated the process and temporarily removed the legal obligation for such remote meetings to be authorised by the articles of association.

An ambitious draft bill of 27 October 2020 now notably proposes to incorporate this measure into the Companies and Associations Code.  Let’s see how it progresses in 2021…

The growing use of electronic signature in business relations also plays a major role in organising these remote corporate meetings. For more information, see our previous news here authored by Sandrine Hirsch, Axel Maeterlinck and Maxime Born.

Simpler rules for companies’ internal regulations

Since 1 January 2020, the new Code of Companies and Associations applies to companies and associations created before 1 May 2019. The new Code modernises and simplifies Belgian corporate law.

Recently, the Constitutional Court further softened the rules regarding internal regulations (“règlement d’ordre intérieur” / “intern reglement”), stating that they may even contain provisions affecting the rights of shareholders or members, the powers of the corporate bodies and the organisation and procedures of the general meeting. In such cases, these internal regulations must be approved by a resolution meeting the attendance and majority requirements for an amendment of the articles of association.

The impact of the Shareholder Rights Directive II (SRD II) on listed companies

The SRD II has now effect in Belgium.

The law of 28 April 2020 amends the Companies and Associations Code, for example, concerning the regulation of intra-group conflicts, which is likely to apply much more frequently following the extension of its scope of application to “related parties” as defined in IAS 24.

This law also modifies the Transparency Law, allowing listed companies to request information from the relevant intermediary regarding the identity of their shareholders and their shares whatever the importance of their holdings.

The Belgian law is available here. Let’s see how it goes in practice…

UBO Register: new obligations

Since 11 October 2020, all entities reporting to the UBO Register must file any document proving that the information on their ultimate beneficial owners is “adequate, accurate and up-to-date”. These documents can be, for example, the share register, articles of association, notarial deeds, etc. Their access is restricted to the competent authorities.

We remind you that all modifications must be recorded in the UBO-register within a one-month period and that the information recorded must be confirmed annually.

For more information, see our previous news here authored by Sandrine Hirsch and Nikita Tissot.

 

Intellectual property

 

The protection of geographical indications under international trade agreements

Since 26 February 2020, the Geneva Act of the Lisbon Agreement on Appellations of Origin is binding the EU Member States.

We are eager to learn the next step: which PDO-PGI will be placed on the multilateral register and deserve protection in all countries of the Lisbon Union?

We guess all 3732 current records on the EU’s e-Ambrosia GI register will not have the privilege, but only a few reputed geographical product names. Let’s wait and see!

New regulatory framework for patent attorneys

On 1 December 2020, the first part of the reform came into force. It includes the rules governing access to the profession of patent attorney and the creation of a Belgian Institute for Patent Attorneys, which will notably represent the patent attorneys active in Belgium, enforce ethical rules and organise continuous training.

For a pragmatic overview of the new law by Emmanuel Cornu and Charlotte Behets Wydemans, click here.

Don’t forget to stay tuned for the second part of the reform coming in 2021.

Design protection under review by the EU Commission

Are you a designer or a company owning IP rights? Be aware that the EU Commission thinks about reforming national and EU design laws.

The 6 key lines of attack are:

  • raising awareness on the benefits of design protection,
  • increasing harmonisation of the protection across the EU,
  • simplifying the design registration process,
  • ensuring consistency with trademark and copyright laws,
  • taking better account of the increasing digitalisation and
  • introducing rules on spare parts, crucial in the automotive sector.

The full examination and its highlights are available here. We will keep you posted!

What does 2021 hold for the Vertical Block Exemption Regulation (VBER)?

The VBER is currently under review by the EU Commission. Will it be prolonged, revised, replaced? How will the future rules impact current and upcoming business models?

Let’s see what 2021 has in store for us!

For more information, see the European Commission’s press release here.

 

Digital finance and financial services

 

The impact of Brexit on the Belgian payments scene

The 2016 UK Brexit referendum results will finally kick in on 1 January 2021, but a lot has already happened.

Several UK e-money and payments institutions, mainly focusing on money remittance, FX and B2B services, have chosen Belgium as their post-Brexit EU hub. Around 20% of all Belgian payment institutions have now a Brexit background, adding a lot of maturity to the sector.

2021 will be a stress test and reveal how smooth the migration will be for payment service users.

A European legal framework for crypto-assets in 2021?

In September 2020, as part of its digital finance strategy, the European Commission proposed a draft regulation on markets in crypto-assets (MiCA) to regulate crypto-assets and related services not yet captured by existing EU regulations.

By bringing a legal framework for crypto-assets, MiCA intends to facilitate digital innovation while ensuring consumer protection and financial stability.

If adopted, this regulation will be a major development for FinTechs in 2021. We will keep you posted!

An EU single AML/CFT supervision body for financial institutions and an EU AML Regulation in 2021?

In November 2020, the EU finance ministers agreed to set up a single EU supervision body to prevent money laundering and terrorist financing. It would have direct supervisory competences regarding some categories of obliged entities (among which, credit institutions, payment institutions, e-money institutions and virtual asset service providers), and the power to take over supervision from national supervisors under exceptional circumstances.

They further agreed to support and invite the EU Commission to present a legislative proposal for an anti-money laundering and counter-terrorist financing regulation with a view to an even application of the provisions throughout the EU.

The Commission is expected to present legal proposals in this respect in early 2021. For more information, click here.

Outsourcing and cloud services under the financial supervisors’ radar in 2021?

On 1 January 2021, the EIOPA’s Guidelines on outsourcing to cloud service providers will come into force. Existing cloud arrangements will have to be put in line with these new requirements by 31 December 2022.

These guidelines show the supervisors’ increasing focus on (cloud) outsourcing arrangements. With the development of technology, many if not all financial actors outsource IT and other related services to external providers, thereby spreading the risk of the financial sector to non-related actors (e.g. ICT).

The EU and national supervisors have noticed this trend, and we can expect an increasing and direct control of key ICT providers by the financial supervisors in the near future.

 

Civil law and dispute resolution

 

Judicial reorganisation procedure (“PRJ/WCO”): two upcoming laws

The first draft bill facilitates access to the PRJ/WCO.

The second one applies to PRJ/WCO by transfer under judicial authority and requires the assignee to motivate its choice not to take over certain employees of the transferred enterprise on technical, economic & organisational grounds independent of the transfer itself.

Read here the key takeaways of these two draft bills by Fanny Laune and Maxime Born.

Stay tuned to learn more about these upcoming novelties in insolvency law!

Alternative dispute resolution (‘ADR’) is the new black in Brussels

On 3 September 2020, the Brussels French-speaking court for enterprises created a special section dedicated to conciliation, a well-known ADR mode.

A hearing before this section aims to help the parties reach a settlement with the support of a conciliator judge trained to ADR.

This measure is a big step to foster ADR in Brussels.

The roaring twenties’ complete makeover of the 1804 Belgian Civil Code

On 1 November 2020, the brand new Civil Code and the book on evidence came into force. On 1 September 2021, it will be the turn of the book on property law.

Recently, the new Belgian government also confirmed its commitment to proceed, in 2021, with the reform of the Law of obligations prepared by an expert commission including Rafaël Jafferali and Sander Van Loock.

This reform strikes a new balance between strengthening party autonomy and expanding the courts’ role where necessary.

New rules on evidence: same old same old?

On 1 November 2020, the new book VIII on evidence of the new Civil Code entered into force. Although the new rules do not seem to deviate from the old ones radically, new principles might prove to be game-changers and will at least modify the way litigators deal with evidence.

For the 10 key takeaways of the new book VIII, see our previous news here authored by Béatrice Thieffry and Charles-Edouard Lambert.

The most iconic change is probably that the judge may now shift the burden of proof in exceptional circumstances and with a special motivation.

 

Real estate and public law

 

Upcoming (r)evolution of Belgian property law?

Manuela von Kuegelgen explains 10 key practical takeaways of the upcoming reform here.

On 1 September 2021, Book III of the new civil Code on property law will come into force. The new rules are more transparent, flexible and modern, but many questions remain, and discussions will be intense for a while…

Don’t wait until the last minute to adapt your contracts. How? Where to start? Read our highlight here or contact our team for assistance.

The strengthening of public cooperation

When can public authorities cooperate without going through a public procurement procedure?

Laura Grauer highlights the conditions for such cooperation here, based on the CJEU’s recent decision clarifying the requirements that such cooperation must fulfil to remain outside the scope of public procurement rules.

Compulsory insurance in the construction sector: perfectly imperfect

One year ago, it became mandatory for service providers others than architects to cover for their civil liability and professional indemnity.

Nevertheless, in 2020, it is still not clear what needs to be insured by whom.

Thomas Braun and Alexia Faes clarify the existing rules here.

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Thank you for following our End-of-Year Countdown! Our lawyers are happy to assist you should you need any guidance.

Don’t forget to sign up to our LinkedIn page never to miss our regular legal updates.

 

 

Judicial reorganisation procedure: two draft bills pending under the benefit of urgency

The legislator has tabled two draft bills, respectively on 10 June 2020 and 21 October 2020, to amend a.o. the provisions relating to the judicial reorganisation procedure (PRJ/WCO) governed by Book XX of the Code of Economic Law (CEL).

The review of these draft bills is being carried out under the emergency procedure notably because of the current economic crisis and its impact on the continuity of enterprises.

The first draft bill of 10 June 2020

It aims at adapting the PRJ/WCO to the needs of the economic crisis caused by the Covid-19 pandemic, notably by facilitating access to it, especially for SME’s.

There are three main proposals to this end:

1. The broadening of the possibility to appoint one or more judicial representatives for debtors in difficulty

  • by allowing the debtor himself to ask the president of the competent Court of Enterprise to appoint a judicial representative
  • when “exceptional circumstances or events […] endanger or are likely to endanger all or part of the proper functioning of the economic activities of the debtor” ;

2. The creation of a new provisional guarantee system

With this new system, the debtor could obtain, under the supervision of the court and, if necessary with the help of a company mediator, certain temporary payment facilities. Those facilities notably consist in a suspension period during which the obligation to pay remains intact, but is suspended without any sanction being imposed.

As far as the creditors are concerned:

  • They keep their right of set-off, their right of retention and the possibility to invoke the defence of non-performance;
  • They can also oppose these provisional measures throughout their duration before the president of the Court of Enterprise. In that case, it is up to the president of the Court to decide by assessing the interests of each party;
  • The creditors cannot terminate a contract during the suspension period. In addition, the penalty clauses are deemed unwritten.

3.  The relaxation of the formal admissibility requirements by abolishing the inadmissibility sanction of the application in case of failure to file a specific document/exhibit.

This being said, the debtor shall justify “in a detailed manner” the reason why he is unable to provide the requested document/exhibit. Such an impediment can only be temporary.

Certain documents (see art. XX.41, §2, 5° to 9° of the CEL) must be filed at least 48 hours before the hearing on the application for the PRJ/WCO. If it remains impossible for the debtor to provide these documents within the time limit indicated by the Court, the debtor may file an explanatory note in the register to justify this impossibility.

The second draft bill of 21 October 2020

It notably aims at incorporating the Plessers ruling of the Court of Justice of the European Union in Articles XX.84 and seq. of the CEL regarding the PRJ/WCO by transfer under judicial authority.

The legislator proposes to impose upon the assignee an obligation to motivate his choice not to take over certain employees of the transferred enterprise on technical, economic or organisational grounds that are independent of the transfer itself. The insolvency Court shall check this motivation when the authorisation of the transfer is granted.

Conclusion

Given the uncertain times we are living in now, the measures proposed by these two draft bills should be well received by enterprises.

The first one enables enterprises, particularly SMEs, to obtain the help of a judicial representative and some temporary payment facilities according to a procedure that is simpler, faster and more discreet than the PRJ/WCO. And if this procedure should prove insufficient, access to the PRJ/WCO would then be facilitated.

These measures are in line with the requirements of the European directive on frameworks for preventive restructuring, debt forgiveness and forfeiture, and measures to be taken to increase the efficiency of insolvency proceedings. Our legislator is apparently already anticipating the implementation of this Directive which should be transposed by 17 July 2021.

As for the measures proposed in the second draft, they clarify the rules on the maintenance of employees’ rights in the event of a PRJ/WCO by transfer under judicial authority to avoid such transfer operations under Belgian law to be questioned under the recent European case law.

We will of course monitor these next developments in the insolvency world closely, so stay tuned.

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Fanny Laune and Maxime Born

Should you have any question, do not hesitate to contact Fanny Laune:
fanny.laune@simontbraun.eu

Simont Braun advises the shareholders of Sopura on its sale to Kersia

Simont Braun successfully assisted the shareholders of the Belgian group Sopura, a world leader in cleaning solutions for the food and beverages industries and more particularly for brewers, in its sale to the French group Kersia, the reference in food safety worldwide.

Established in 1946, Sopura is a Belgian family-owned group with a global reach and presence in over 100 countries, with 15 subsidiaries and 5 production sites. It has become a reference in the production and sales of chemicals and their applications in cleaning, sanitizing and water treatment processes for the brewery, beverage and food industry. Its acquisition by Kersia is part of the latter’s wide expansion strategy started in 2016 and will foster its presence in the beverage market.

Simont Braun has assisted the client in all legal aspects of this cross-border transaction alongside the financial advisor Deloitte Financial Advisory (Belgium).

The Simont Braun team was led by partner Sandrine Hirsch, with the assistance of senior associate Thomas Selvais.

For any question, please contact Sandrine Hirsch: sandrine.hirsch@simontbraun.eu – +32 (0)2 533 17 64

This deal has been reported in L’Echo. The article authored by Simon Souris is available here.