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 shares that belong to the common property of the spouses (for instance, shares that the seller, married under the legal regime, has acquired with common funds that are not subject to the exception regime of art. 1401, °5 Belgian Civil Code[1]), the seller has the right to negotiate and sign the share purchase agreement individually, which implies that he/she is entitled to sell the shares without the knowledge and intervention of his/her spouse.
With regard to the personal assets of a married person, the underlying principle is that he/she administers these assets solely, which implies that only this person can sell the shares that belong to his/her personal property; the same principle applies for shares whose membership rights, pursuant to art. 1401, °5 Belgian Civil Code, are deemed to be his/her personal property. With regard to the common property of spouses, the legislator has foreseen the so-called “concurring” administration, which implies that each spouse can administrate the common property individually and that the other spouse has to respect his/her act of administration. This means that each spouse can sell the shares that belong to the common property.
However, a purchaser assisted by professional advisors, will often require from a married seller that his/her spouse gives his/her explicit consent to (the terms and conditions of) the planned transaction. A cautious purchaser will do so to prevent that the representations and warranties provided by the seller in the share purchase agreement (or the associated compensation mechanism and the provided securities) could be declared invalid by the seller’s spouse in virtue of the protection provided to spouses by the so-called primary matrimonial regime. It has to be noted that this protection applies to all spouses, regardless of the chosen matrimonial property regime, including the system of separation of property.
By obtaining the consent of the seller’s spouse, the purchaser aims more concretely the elimination of art. 224, §1, 4 Belgian Civil Code, that enables the spouse to claim before the family court the nullification of “the personal securities provided by one of the spouses, which jeopardize the family interests” In principle, this protection only applies in case of “personal securities” which guarantee the payment of third parties. The personal obligations of the seller covered by the share purchase agreement (including the obligation to provide compensation for violation of the representations and warranties provided by the seller) do not fall under the scope of art. 224, §1, 4 Belgian Civil Code. For this reason, they cannot be declared null and void. Art. 224, §1, 4 Belgian Civil Code only targets the additional securities that the seller would provide and that would guarantee the liability or the obligations of third parties (for instance, the joint and several liability between the sellers with regard to the obligation to pay compensation, through which each seller provides more guarantees than his own share; or the provision of a guarantee for the payment of debts incurred by the acquired company).
For the avoidance of doubt, it is not because the seller provides additional securities and does so without the consent of his/her spouse, that this should automatically lead to the nullity of these acts. This shall only be the case if the provided securities would jeopardize the “family interests”, which, in my view, will be highly exceptional. The transaction must always be considered in its entirety and it is in the view thereof that it has to be decided whether the provided personal securities are disproportionate and capable of jeopardizing the family interests.
In practice however, most of the M&A advisors will ask the consent of the seller’s spouse, even if, strictly spoken, it doesn’t concern additional personal securities. Indeed, given the fact that there is only very little case-law on this issue, it is not clear up to which extent the court will interpret and apply this provision.
Most of the time, the spouse will give his/her consent through a separate document that the seller will hand over to the purchaser at the signing of the share purchase agreement or at the closing of the transaction. In this document, the seller’s spouse declares to be informed of the (terms and conditions of the) transaction and confirms that the transaction does not harm the family interests. As an alternative, the seller’s spouse can also co-sign the share purchase agreement for approval.
Finally, art 224, §1, 4 Belgian Civil Code only provides protection to married persons, not to legal or factual cohabitants. This implies that sellers who are not married but are living legally or factually together, do not need the consent of their partner.
Matthias Jans, intui attorneys
[1] Pursuant to art. 1401, 5° Belgian Civil Code, must be considered as personal assets (free translation): irrespective of the time of acquisition (….) the membership rights associated to company shares that are acquired with common funds and are registered by the name of only one of the spouses, including the right to act as holder of these shares, insofar as it concerns, whether a company that is subject to legal or statutory rules, or agreements between associates restricting the transfer of shares; whether a company in which only the spouse in question exercises a professional activity as manager or director.
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