The leonine clause in the CCA – risk-free shareholdership henceforth possible
To limit the risk which is inherent to entrepreneurship, entrepreneurs can choose to conduct their business through the use of a company. Depending on the type of company, the shareholders can benefit from a limited liability. This implies that their loss, if any, will be limited (in principle) to the loss of their contribution in the company. Is it possible for a shareholder to go even further and even safeguard his contribution in the company? In other words, can he participate as a risk-free shareholder in the company? The most common strategy to create a risk-free participation makes use of put options. Shareholder A (the risk-free participating shareholder) holds a put option on his shares, which gives him the right to sell his shares to shareholder B, while shareholder B commits himself to buy these shares. The transfer price is determined as equivalent to the subscription price at which shareholder A acquired his shares. If the suffers losses, resulting in
Reform of the matrimonial property law: implications for the spouse who is professionnaly active through a company
Common shares of which the membership rights are own. In case of spouses who are married under the legal regime with community of acquisitions, the professional income generated by each individual spouse is considered as community property. In this context, each spouse continues to have professional autonomy and can make his own professional choices, without the interference of the other spouse. To strengthen this professional autonomy, the 2018 reform of the matrimonial property law clarified and further developed the former rules provided for in article 1401,5° of the Civil Code regarding the membership rights of common shares. Today, the membership rights of shares acquired with common funds and registered in the name of one of the spouses, are the property of the spouse in whose name the shares are registered. The membership rights also include the right to act as owner of these shares. Their asset value however, is part of the community property (article 1405, §1, 5° of the
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
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 number of limits while drawing up such clause. As such, a non-competition clause must be restricted (1) in time; (2) in space and (3) with regard to its object[1]. Firstly, the clause must be restricted in time. The non-competition period must be restricted to the period that the buyer needs to build out its customer base or to develop customer
Update: reply to parliamentary question about the opt-in: the EGM having decided to opt-in, can immediately take other decisions applying the CAC
In a former blog article, we pointed out the practical implications of the fact that the legislator, quite unfortunately, has linked the entry into force of the opt-in to the publication of such decision in the annexes of the Belgian Official Gazette and not to the actual time of the decision itself. In our opinion, it was not possible, after the ‘opt-in’ decision, to take other decisions by already applying the new CAC, and include them all in the same deed. We considered that the decisions other than the one related to the opt-in could only be taken applying the CAC after the publication of the ‘opt-in’ decision. See our former blog article: link. An answer to a parliamentary question should eliminate this undesirable consequence: see link. The minister replies that the EGM may decide that the ‘opt-in’ decision is valid among the shareholders as from the date that the decision is taken, provided that the decision is published. The
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. No sanctions will be imposed in case of non-compliance with the registration obligation before that date. Kim Van Herck, intui attorneys kim.vanherck@intui.be www.intui.be