Mergers and Acquisitions in Belgium
Mergers and Acquisitions in BelgiumUpdated on Monday 23rd January 2023
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Why is Belgium attractive for foreign investors
Belgium has experienced a very dynamic period since 1998 when it comes to the companies’ mergers and acquisitions, as it has seen spectacular growth in terms of investments.
When it comes to foreign investments, Belgium offers many advantages, such as its strategic location, at the center of Europe. In addition, Belgium is very developed when it comes to businesses targeted to middle class families, and therefore there are companies opened in Belgium especially addressed to the consumer market industries such as food, beverages, and consumer products. As these companies are more open to private equity investments, foreign private equity companies and investment funds find interest in this Belgium market.
Takeover regulations according to the European Directive
Takeover Regulations implemented the European Directive dated April 21, 2014 into the Belgian law. The respective regulations refers to the law set on April 1, 2007 regarding public takeovers, and the Royal Decree of April 27, 2007.
The new European Directive implies that public takeovers must be examined in the light of the law dated June 8, 2008 regarding cross border mergers, and the Council Regulation concerning the control between undertakings. FSMA, Financial Services and Markets Authority, is the main regulatory authority for the Belgian public offers and a successor of the former Banking, Financial and Insurance Commission (“CBFA”). Its main purpose is to monitor the compliance with the legislation for the takeover offers.
Authority on mergers in Belgium
The relevant merger authority in Belgium is the Belgian Competition Authority. The Competition Authority is an administrative body, which is composed of the President and his service, the Competition College, the Steering Committee and the College of Competition Prosecutors. Notifications are submitted to the Prosecutor-General, which designates a Competition Prosecutor to lead the investigation and transmits the notification to the President, who will in turn compose the Competition College that makes the final decision.
The Belgian legislation for mergers
Book IV, also known as Protection of competition, part of the Code of Economic Law, holds the provisions that govern the Belgian merger control. They were set on September 6, 2013.
The Royal Decree of August 2013 is the main decree implemented and it relates to regulations of Belgian mergers of undertakings, as well as with protection of competition.
Belgian legislation does not provide any special treatment for foreign mergers. If the thresholds are met, then the Code of Economic Law includes foreign mergers.
The special liquidation tax in Belgium
The former Belgian legislation states that a merger or division can cause the liquidation of the transferring Belgian company, leading to a special liquidation-tax. Therefore, tax-free mergers are impossible to practice in Belgium. The law transformed the third and sixth EG Directive that concerned domestic mergers and divisions into national legislation in Belgium, allowing mergers and divisions of domestic companies to occur without the liquidation of the acquired company.
In Belgium, banks are hesitant to finance takeovers that are not funded by the acquirer’s equity and therefore advisers must find alternative financing to permit their clients to increase the capital. In addition, negotiation processes can take a longer time, as buyers have more requirements. Given this situation, many deals are canceled before they manage to be closed.
Once the M&A process is complete, investors can rely on the services provided by our Belgian accountants. We help companies not with bookkeeping and general ledger reviews, but also with information about tax liability, paying taxes and making the needed filings and submissions, as well as special accounting services, such as budgeting, special reports, or start-up consulting.
But our lawyers in Belgium are here to advise and provide profesional legal consultancy on this topic, so our clients can benefit from a hassle-free merger or aquisition in Belgium. Do not hesitate to contact our law firm!