International Law Office - Legal Newsletters, Law Firm Directory and Legal News

Belgium

Commercial Property

Belgian real estate investment trusts have a maximum debt ratio of 65% and, to preserve their near-exemption from corporate taxation, must distribute at least 80% of net profits to shareholders. This may conflict with the rule that a company cannot distribute a shareholder dividend if its net assets have fallen below the share capital. A draft decree promises structural reform to allow investors to capitalise on a recovering market.

Company & Commercial

The UNIDROIT Convention on International Factoring is in force in Belgium. It governs the assignment, by a supplier to a factor, of receivables arising from commercial contracts for the sale of goods (including the supply of services) between the supplier and its customers. Although its regime is largely uncontroversial, one aspect - the overruling of 'no assignment' clauses - has been the subject of a government declaration.

The Corporate Governance Act introduces new rules for publicly quoted companies and some state-owned companies. It aims primarily to strengthen remuneration controls, introducing new checks and limits on salary packages and setting performance-related elements in a long-term context. It also contains new rules on individuals who are banned from acting as director following bankruptcy or a criminal conviction.

By introducing a new law on audit committees, the government has sought to reinforce the quality of financial reporting. Most large Belgian companies already have an audit committee, but all such companies should review the new criteria, particularly the rule that independent directors may not have had significant business relationships with the company.

Corporate Finance/M&A

Since the start of 2009 financial assistance has been allowed in Belgium on certain conditions. However, the new rules have been received unenthusiastically because some of the conditions are considered too burdensome, particularly the requirements to make public the price of the share transfer and to create an unavailable reserve for an amount equal to the aggregate financial assistance.