BELGIUM: FSMA Opinion on the Standstill Period Provided for in the Royal Decree on Takeover Bids

Tuesday May 21 2019

The Financial Services and Markets Authority (FSMA) have published their opinion on the Standstill Period Provided for in the Royal Decree on Takeover Bids. When a Person owns, following an acquisition, more than 30% of the voting securities of a listed company, it is in principle required to launch a takeover bid (OPA) on all the securities of the company. The obligation to launch an offer assumes not only that the threshold of 30% has been crossed, but also that this threshold crossing is the consequence of an acquisition of securities with voting rights.

The conjunction of these two conditions implies, for the parties to a concerted action agreement, the following:

• there is an obligation to launch an offer when the parties to such an agreement (which initially owned together less than 30% of the voting securities of the listed company) exceed the 30% threshold following an additional acquisition of securities with voting rights by one of them;
• there is no obligation to launch an offer when two or more persons already holding together more than 30% of the voting securities of the listed company conclude, without an agreement of action of concert, the crossing of the 30% threshold following the conclusion of such an agreement which is not accompanied by an acquisition of securities.

The absence of an obligation to launch an offer in this second situation creates the risk that parties will intentionally differ from the conclusion of a concerted action agreement until they hold together more than 30% of the securities with voting rights so as to avoid the obligation to launch an offer.

According to the doctrine, Article 50, § 7, 1 °, of the OPA order ims in particular to counter such circumvention of the obligation to launch an offer. This provision provides that parties that together hold more than 30% of the voting securities and enter into a share agreement in concert, may not acquire additional voting securities for a period of three years (” period of standstill “).

Further questions arose as to whether the standstill period also applies to parties that together hold more than 30% of the voting securities and conclude a concerted action agreement less than three years prior to the first admission to the listing of voting securities. If the answer to this question is “yes”, the parties to a concerted action agreement concluded for example one year before the IPO, will be subject to the obligation to launch an offer if they acquire additional securities with voting rights for the first two years after the IPO, the remaining two years of the standstill period.

The FSMA considers, however, that the standstill period does not apply to parties that together hold more than 30% of the voting securities and enter into a concerted action agreement prior to the first admission to the listing of the securities with the right to vote. vote. It bases its opinion on the fact that the Belgian regulations on takeover bids apply, for mandatory offers only from the company’s stock market listing.

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