Transactions Blog

The Belgian Official Gazette of 18 January 2012 includes the publication of the Act of 8 January 2012 modifying the Companies Code pursuant to Directive 2009/109/EG regarding reporting and documentation requirements in case of mergers and demergers (the “Act”). This Act modifies the procedure applicable for merger and demergers.

Intervention independent expert

Until now, the following reports of an independent expert (i.e. the company’s statutory auditor or an external auditor or accountant) were required:

•  For mergers: a report on the merger proposal (the “merger report”), but this merger report could be waived by unanimous decision of the shareholders. Based upon unclear drafting of the law, there was however some discussion in legal practice as to whether in case of such waiver, it was required to provide for a report on the capital increase by contribution in kind at the level of the acquiring company (the “contribution report”)
•  For demergers: a report on the demerger proposal (the “demerger report”), which could be waived by unanimous decision of the shareholders and a report regarding the capital increase by contribution in kind in the receiving companies (the “contribution report”), which could not be waived.

The requirements for both mergers and demergers have now been aligned and clarified.

For both mergers and demergers:

• The (de)merger reports can be waived by unanimous decision of the shareholders.
• In case of such a waiver, a contribution report at the level of the acquiring company / receiving companies will be required.

In other words: the intervention of an independent expert will be required both for mergers and for demergers, either to draft a (de)merger report on the (de)merger proposal or to draft a contribution report on the contribution in kind.

It is to be noted that the foregoing does not apply to simplified mergers (between a parent company and its 100% subsidiary). There, the situation remains unchanged: no expert’s report at all is required.

Other important changes

Besides the above, other important changes are made to the company law procedure applicable for mergers and demergers, such as:

• if all shareholders agree, the special report of the board of directors on the merger can be waived;
• if all shareholders agree, no intermediary statement of assets and liabilities is required anymore;
• if all shareholders agree, the intermediary information duty (in case of important changes to the assets and liabilities of the companies involved between the date of the (de)merger proposal and the extraordinary general shareholders meeting) can be waived;
• an extract of the (de)merger proposal must be published in the Belgian Official Gazette (instead of a mere notification) or a hyperlink to the website of the company where the full text can be found.

Entry into force

The new procedure applies for all (de)mergers for which the (de)merger proposal is filed after 28 January 2012.

For more information, please contact:

Karin Winters                                              
Partner                                                               
+ 32 2 710 74 04               
karin.winters@pwc.be  

Bart Vanstaen
Legal Counsel
+ 32 2 710 43 10
bart.vanstaen@pwc.be
       

Selling a business can be the most important deal of an entrepreneur’s career with far-reaching financial and emotional consequences. Most of the time, the seller is in the unique position to prepare and plan well before any information about a potential sale is known in the market. Regardless the size or turnover of the business, there are a number of steps that can be taken to maximise the sales value. In addition to financial performance, there are a couple of other factors that can enhance but also destroy the value of the business.

How to uncover such issues prior to the sale of your company and how to negotiate remaining risks with prospective buyers? How to control and accelerate the process? Will I optimise the sale of the non-core part of my business through a carve-out or through the sale of existing entities?

Find out by downloading the presentation here! M&A_9 November 2010_BLOG

The 7^th and last session of this year’s M&A Academy cycle took place on 29 April looking at “HR integration after a merger”. Turbulent economic times are making many organisations undertake a transaction, whether a merger, an acquisition, a divestiture, a carve-out or a spin-off. Every transaction creates turmoil, uncertainty and opportunities for people.

Peter De Bley, Partner at PwC Belgium, introduced the subject before handing over to our guest speaker, Wim De Wit, HR Director, retail & private banking Belgium, BNP Paribas Fortis, who presented his views on the strategic added value of HR in times of changes and the future challenges for his company.

Download the presentation: “HR integration after a merger”

More info about the M&A Academy season (programme, subscriptions, etc.).

Market studies chave shown that over the last years the total accounting value of all lands and buildings of the 30.000 biggest BelCo’s amounts to EUR 50 billion. When you know that the market value of said assets equals minimum 3 times their accounting value, this represents a dramatic hidden value in the current market environment. Indeed, when companies face difficulties to access the capital market, releasing such potential should be high on their agenda. In a broad sense, this can involve OpCo-PropCo structures either internally or externally financed, straight disposals, or joint-ventures with professional real estate investors.

During the sixth session of our M&A Academy on Thursday, 25 March, we shared with you how to free up cash from real estate, by tackling the corporate tax, VAT and registration duties matters to be taken into account while splitting up real estate from operational structures. We led you through the current environment, pitfalls and opportunities of this developing market.

Download: “How can real estate become a financing means for your company today?”

More info about the M&A Academy season (programme, subscriptions, etc.).

2008 and 2009 are challenging times for the M&A market due to the lack of available funding. Many investors and international groups are looking for cost-cutting opportunities and cash optimisation.

During the 5th session of our M&A Academy, we tried to evaluate how reshaping your conventional business model towards a more flexible structure can help you in for example the improvement of your business model or the optimisation of your tax credits and/or cash position.

Since business restructurings trigger multiple tax issues, not only transfer pricing aspects, this module also focused on the following aspects:

• the arm’s length risk allocation to restructured group entities;
• the potential ‘exit charges’ and indemnifications upon restructuring;
• the recognition, by tax authorities, of restructuring transactions.

Download “Tax implications of business restructuring”

More info about the M&A Academy season (programme, registrations, etc.)

A new Tax Act Implementing the EU Tax Merger Directive into Belgian law was published in the Belgian Official Gazette on the 12th January and came into force immediately.

The act introduces a tax-free regime for cross-border reorganisations. In addition, it also brings the existing tax provisions applicable to internal reorganizations in line with the EU Merger Directive.  Most provisions are applicable as of the date of publication.

The EU Merger Directive of July 23, 1990 (as amended by the EU Directive of February 17, 2005) provides for a tax-neutral regime for cross-border reorganizations such as mergers, demergers, partial demergers, share-for-share transactions, contributions of assets and transfers of registered offices. Tax neutrality is provided both at the level of the companies involved in the reorganisation as well as in the hand of their shareholders.

Until now the EU Tax Merger Directive was not implemented in Belgian tax law, meaning that cross-border reorganisations were not covered by appropriate tax legislation. This situation is now resolved with the publication of the new Act.

The Act provides for a tax-neutral regime for cross-border reorganisations involving Belgian entities and/or Belgian permanent establishments. Moreover, various existing tax provisions applicable to internal reorganisations have also been aligned with the EU Tax Merger Directive. Other improvements have also been implemented to the existing general tax provisions relating to reorganisations.

Under specific conditions, Belgian tax resident entities and/or Belgian permanent establishments can now be involved in pan-European tax neutral reorganizations, where previously, for most cross-border reorganisations, tax-neutral regimes were not available.

The Act deals in particular with cross-border (inbound / outbound) mergers, demergers and cross-border (inbound / outbound) contribution of assets (lines of business / permanent establishment) and exchange of shares.

Because of the importance of this new legislation, the PwC Transactions team is organising a half-day conference in our office in the afternoon of 3 February 2009. PwC will give a thorough update on the changes that will be introduced by this new legislation and the opportunities it will bring for your business.

During this session, it will be explained how you will be able to carry out cross-border reorganisations tax-neutrally (whether in the form of a merger, demerger, contribution of a business, transfer of a seat of management, share-for-share deal, etc.). Among other innovations, it will allow you to utilise cross-border tax losses or simplify your group structure by reducing the number of entities in it, which will even become more and more important given the current market environment. It goes without saying that such reorganisations also have important social law aspects. PwC will also address these issues during the conference.

In addition, we take this opportunity to discuss the recent corporate law developments (regarding a.o. acquisitions of own shares, financial assistance and cross border mergers) and their impact on reorganisations.

Check the PwC M&A Academy website for more information.