Irregular share repurchase: no obligation for the shareholder to refund the purchase price received?
On 27 March 2025, the Court of Appeal in Antwerp delivered a judgment on the consequences of non-compliance with the statutory conditions governing the repurchase of a company’s own shares.[1] Case law in this area is scarce, primarily because the parties involved in such transactions generally do not suffer any direct disadvantage as a result of the failure to comply with these legal requirements. However, the consequences for creditors may be significant. When KT Company was declared bankrupt, it emerged that the company had paid an amount of 17.500 euros to a shareholder in connection with a repurchase of its own shares. The receivers took the view that this transaction had been carried out in breach of both the articles of association and the mandatory provisions of the Belgian Companies and Associations Code (CAC), and therefore sought repayment of the amount. The court held that the mandatory rules governing the repurchase of own shares had indeed not been complied with.
Can a confidentiality obligation without a time limit be terminated at any time?
confidentiality obligation without a time limit be terminated at any time? In M&A practice, confidentiality obligations are an essential part of the acquisition process. It seems self-evident that sensitive or confidential information should be protected by means of a confidentiality agreement. Before sharing information, parties want assurances that this information will be shielded against improper use and will not be disclosed to persons not involved in the transaction. A duration is not always stipulated for this obligation. Sometimes this is even done deliberately: the information should remain confidential at all times. According to Article 5.75 of the Civil Code, an agreement without a time limit is in principle considered an agreement of indefinite duration, which can in principle always be terminated subject to a reasonable notice period. From this logic, a confidentiality obligation without an explicit time provision could therefore be unilaterally terminated, allowing confidential information to be disclosed to third parties after all. To avoid such uncertainty, contracting parties
The compensation for statutory withdrawal and exclusion remedies in the Belgian BV: one of the biggest anomalies in company law
The subsidiary rule for the valuation of the compensation in the event of a statutory withdrawal or exclusion of a shareholder in a BV or CV is that a shareholder receives his actual paid-in and non-refunded contribution unless it exceeds the net asset value of the shares as shown in the last approved annual accounts. In the latter case, the budget is based on the net asset value. (Sections 5:154-5:165 and 6:120-6:123 CC) This subsidiary valuation method is stricter than under the previous Companies Code, where the withdrawing or excluded shareholder was entitled to the net asset value of his shares. Moreover, both a valuation at net asset value and at historical contribution value are static valuation methods: they do not account the goodwill. This legal premise therefore leads to an absurdly compensation. Why is this a problem and how can it be addressed? 1. The rationale behind the low compensation This anomaly can only be explained by looking at
Written decision-making by the general meeting – a useful yet often misunderstood tool
We previously wrote in this blog about legal alternatives to the physical presence of shareholders at a general meeting (see “Out of sight, but not out of mind: alternatives to physical attendance at general meetings”). A tool commonly used, and often advised by us, is the technique of the general meeting in writing (“éénparige schriftelijke besluitvorming”). In practice, however, we find that there are still often misconceptions about what written decision-making is and is not, and will go into this in more detail in this blog post. The general meeting of a company or a non-profit organization (“vzw”) has a number of powers in which it must make decisions, for example approving the annual accounts or appointing and dismissing directors. A general meeting can reach a valid decision through two procedures, which are independent of each other: The traditional way, namely a physical meeting of shareholders at which, after deliberation, the decision is taken; or The general meeting in writing.
The extent of the obligation of a seller of non-fully paid up shares to pay up in full
Article 5:66 (besloten vennootschap or BV) and 7:77 (naamloze vennootschap or NV) of the Companies and Associations Code (CAC) provide for the joint and several liability of both the transferor and the transferee of non-fully paid up shares to pay up. This statutory provision is of mandatory law and does not allow the parties to contractually stipulate otherwise. The transferor is released from this joint and several liability only after five years have elapsed since the (opposability of the) transfer. If the transferor is held liable, he does have a recourse claim against the transferee (unless contractually stipulated otherwise). The liability consists in a liability for the amount for which the shares were not paid up, regardless of when the company’s debts arose. However, the provisions of the CAC only apply to transfers that took place after the entry into force of the CAC (January 1, 2020, or May 1, 2019 for companies incorporated after that date or existing companies
FDI Regulations – mandatory notification and screening of non-EU investments in Belgium – broader scope than you think!
Just over a year after the entry into force of the Belgian Cooperation Agreement of 30 November 2022 establishing a foreign direct investment screening mechanism[1] , we see that in practice, too little attention is (still) being paid to the broad scope of those so-called Foreign Direct Investment (FDI) regulations. Under those regulations, certain transactions must be notified prior to their realisation. Involved parties or advisers are sometimes unaware of this and erroneously assume that the regulations in question only apply to “larger” transactions or those involving non-EU companies. However, this is without taking into account the broadly formulated scope of the Cooperation Agreement. As a reminder: the Cooperation Agreement was concluded between the Belgian federal government and the various federated entities and created a screening mechanism that – formulated in general terms – allows control of non-EU investments in Belgium. The Cooperation Agreement aims to be able to identify and subject to certain conditions, incoming investment flows from outside