Pledge on shares - what to check in case of due diligence: the pledge registry or the share register of the company?

Pledge on shares – what to check in case of due diligence: the pledge registry or the share register of the company?

After some delay, the new Pledge Act finally came into force on 1 January 2018[1]. This new legal framework introduced the ‘registered pledge’. This kind of pledge becomes valid and opposable without requiring a dispossession. This implies that the pledgor can remain in possession of the pledged goods. To make this pledge opposable to third parties, it needs to be registered in the ‘national pledge registry’ that has been set up for that purpose (https://pangafin.belgium.be/#?lang=NL). The pledge registry is publicly accessible: any person who holds a Belgian electronic identity card is able to conduct searches in the pledge registry. Every…


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Does the spouse of the seller of shares have to consent to the planned transaction?

Does the spouse of the seller of shares have to consent to the planned transaction?

If the seller of the shares is a natural person who is married, the question arises whether he/she can negotiate and sign the transfer agreement on his/her own, or needs to inform his/her spouse of the planned transaction and obtain the spouse’s consent to achieve a legally valid purchase/sale of shares. Both in the hypothesis that it concerns shares that, pursuant to the matrimonial property law, belong to the personal property of the seller (for instance, shares that the seller has acquired with his own money or through inheritance or donation), as well as in the hypothesis that it concerns…


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Conditions for validity of non-competition clauses in share purchase agreements and mitigation power of the court

Conditions for validity of non-competition clauses in share purchase agreements and mitigation power of the court

As set out in a former blog article (“Non-competition clause in acquisition agreements: a necessity?” – Matthias Jans, 14 April 2016 – see link), the buyer of shares who wants to prevent that the seller conducts competing activities after the transfer, must explicitly include a non-competition clause in the share purchase agreement. Pursuant to the French d’Allarde Decree of 1791, the freedom of trade and industry prevails. This principle is now included in Book II of the Code of Economic law, Title 3 (Freedom of enterprise). As a non-competition clause restricts this freedom, the parties have to consider a certain…


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Update: tolerance period until 31 December 2019 for the mandatory registration of the ultimate beneficial owner(s) of enterprises

Update: tolerance period until 31 December 2019 for the mandatory registration of the ultimate beneficial owner(s) of enterprises

In our blog post of 21 December 2018, updated by our blog post of 2 April 2019, we informed you about the legally required transparency as to the ultimate beneficial owners of enterprises, by means of registration in the so-called UBO-register. According to the royal Decree of 30 July 2018, the information concerning the ultimate beneficial owners of the enterprise had to be registered for the first time at the latest on 30 November 2018. The FPS Finance however allowed to postpone the registration until 30 September 2019. Meanwhile, the FPS Finance announced a tolerance period until 31 December 2019….


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Transfer of shares not fully paid up: can the transferor be held liable for calls made for the unpaid portion?

Transfer of shares not fully paid up: can the transferor be held liable for calls made for the unpaid portion?

Shares that were not fully paid up at the time of issue can of course be transferred. But who is held liable for calls on these shares: the transferor or the transferee? The (old) Belgian Company Code included complex regulations for public limited companies (‘NV’ / ‘SA’): both the transferor and the transferee could be held liable up to the amount of the unpaid portion for the payment of company debts incurred before the transfer became effective, i.e. before registration in the share register if the claim is made by the company, or before publication of the list of shareholders…


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Update: additional postponement of the mandatory transparency about the ultimate beneficial owner(s)

Update: additional postponement of the mandatory transparency about the ultimate beneficial owner(s)

In our blog post of 21 December 2018 we informed you about the new legally required transparency as to the ultimate beneficial owners of enterprises, by means of registration in the so-called UBO-register. According to the royal Decree of 30 July 2018, the information concerning the ultimate beneficial owners of the entreprise had to be registered for the first time at the latest on 30 November 2018. After a first postponement of the deadline, until 31 March 2019, the FPS Finance announced that entreprises are allowed to postpone the registration until 30 September 2019.   This blog post has been…


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Mandatory transparency about the ultimate beneficial owner(s) of the enterprise

Mandatory transparency about the ultimate beneficial owner(s) of the enterprise

The new legally required transparency as to the ultimate beneficial owners of an enterprise is an important additional action point in the M&A practice after completion of an acquisition (“post-closing action”). What? Belgian Companies, (international) non-profit organisations, foundations, trusts and legal entities that are comparable to trusts, have the following new obligations under the Belgian “Law of 18 September 2017 on the prevention of money laundering and terrorism financing and on the restriction of the use of cash”: The Law adds to the Belgian Companies Code (Articles 14/1 and 14/2) and to the Belgian NPO and Foundations Law[1] (Articles 58/11…


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My resignation as director has not been published yet in the Belgian Official Gazette: can I still be held liable?

My resignation as director has not been published yet in the Belgian Official Gazette: can I still be held liable?

The acquisition of a company often implies that the transferor must resign from his office as (managing) director of the company/companies he is transferring. This resignation must be published in the Annexes of the Belgian Official Gazette, but this fact is sometimes overlooked by the company (under control of the buyer), which may lead to an important time gap between the resignation and its official publication. The bill on the new Companies and Associations Code provides an answer by allowing the former directors themselves to publish their resignation in the Annexes of the Belgian Official Gazette. Even if the company…


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Claim notification periods under representations and warranties: don't just agree on them – also remember them and communicate them!

Claim notification periods under representations and warranties: don’t just agree on them – also remember them and communicate them!

An acquisition agreement often obligates the buyer of the shares to notify the sellers of any claims against the sellers arising from an infringement of the provided representations and warranties within a certain term (e.g. 2 months) after becoming aware of the fact causing the infringement. The reason behind this is that timely notification enables the sellers to take action to restrict the damage. A second purpose of imposing a term is to establish legal certainty between parties. Terms of 30 days, 2 months, etc., which at the time of the negotiations may have seemed long enough for the buyer,…


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