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
Conflicts of interest under the new CAC – new rules, new questions and points of attention
The regulation set out in the Companies Code (CC) to manage conflicts of interest in cases of directors having conflicting proprietary interests is complicated, since it depends on the situation. Just think about the appointment of an ad hoc trustee in private limited companies (‘BVBA’ / ‘SPRL’) having no collegial board; the duty to abstain imposed on directors of listed public limited companies (‘genoteerde NV’ / ‘SA noteé’) which does not apply on directors of unlisted companies; the lack of statutory regulation for directors of non-profit organizations (‘VZW’ / ‘ASBL’) – the list goes on. The legislator has taken the opportunity offered by the new Companies and Associations Code (CAC) to harmonize the regulation managing conflicts of interest. Here we provide an overview of the most significant changes: Duty to abstain becomes the general rule. The director having a conflict of interest must abstain at all times, which implies that s/he will no longer be allowed to participate in the
Opt-in only becomes applicable after publication of the amendment to the articles of association – practical implications
The new Companies and Associations Code (CAC) entered into force on 1 May 2019. This implies that newly incorporated companies whose deed of incorporation has been deposited at the registry on or after 1 May 2019, will be governed by the new CAC. For existing companies, a transition period is provided for until 1 January 2020. Until that date, they will still be governed by the former Companies Code. From 1 January 2020, the mandatory provisions of the CAC (including the additional provisions unless derogated from in the articles of association) will become applicable. The legislator enables existing companies however to be governed by the new CAC even before 1 January 2020 by using the ‘opt-in’ mechanism. If they decide to do so, the CAC will become applicable in its entirety. Indeed, it will not be possible to only apply part of the Code. The opt-in must be achieved by amending the articles of association, stipulating that the company decides