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Impact of the law of 28 april 2020 on listed companies: new rules as regards to transactions with related parties


On 28 April 2020, the law implementing Directive (UE) 2017/828 of the European Parliament and of the Council of 17 May 2017 amending Directive 2007/36/CE as regards the encouragement of long-term shareholder engagement (SRD II) and making various provisions relating to companies and associations has been adopted.

The first part of the Law implements SRD II and introduces new obligations for listed companies, in particular with respect to remuneration of directors and managers and to the control of transactions with related parties. The second part is a repair law of the Companies and Associations Code (CCA).

This newsletter deals with the topic of transactions between listed companies and related parties (CCA, art. 7:97 and 7:116) (for the other topics, please refer to our other newsletters).

Scope While until now the CCA regulates transactions between listed companies and affiliated companies, defined in terms of control, the Law extends the scope of the existing procedure by referring to the broader notion of “related party”, within the meaning of Regulation (EC) 1606/2002 (norm IAS 24). This notion is based not only on control but also on significant influence, key personnel management and familial relationships. The Law also extends the procedure to all subsidiaries of listed companies (not only Belgian subsidiaries).

Procedure All decisions and transactions between listed companies and related parties will have to be submitted for assessment to a committee of three independent directors (as currently) but the assistance of the independent committee by an independent expert becomes optional. In addition, if the related party is a member of the board of directors or of the supervisory board, this member may not participate in the decision. If all members are involved, the board of directors or the supervisory board has to submit the decision to approval by the shareholders’ general meeting. If the decision is approved by the shareholders’ general meeting, it can be implemented.

ExceptionsThe Law adapts the existing exceptions as follows. For routine decisions and transactions, the management body has to implement an internal procedure to periodically assess whether decisions and transactions can be qualified as routine. For the de minimis exception, decisions and transactions representing less than 1% of the net assets must be aggregated with all other decisions and transactions with the same related party in any 12-month period.

The Law adds new exceptions: for decisions regarding the remuneration of directors, other managers and daily managers, for the acquisition and alienation of own shares, for the distribution of interim dividends and for the increase of capital without deletion or limitation of the shareholders’ preferential right.

PublicityListed companies have to publicly announce decisions and transactions with related parties no later than at the time of the conclusion of the transaction. The announcement has to include the name of the related party, the nature of the decision or transaction, the date and amount, and other information necessary to assess whether or not the transaction is fair and reasonable, the decision of the independent committee, as the case may be, the reasons for which the management body departs therefrom and the auditor’s assessment.

The yearly report will have to mention all such communications and where they can be consulted.

These rules are without prejudice to the rules on public disclosure of inside information.

Entry into force These new rules will be applicable as from the tenth day after the publication of the Law in the Belgian State Gazette, i.e. as from 16 May 2020.

If you have any questions, please feel free to contact Valérie Simonart & Olivia Szerer.