Loyalty Shares For Belgian Listed Companies: Fundamental Change On The Way

Author:Mr Matthieu Duplat, Thomas Flament and Aurélie Cautaerts
Profession:Jones Day

In Short

The Background: On June 4, 2018, a draft law designed to substantially reform the Belgian Companies Code was submitted to the Belgian Parliament for review ("New Companies Code").

The Result: The New Companies Code seeks to enhance flexibility and competitiveness for Belgian companies, and notably introduces an optional double-voting right for loyal shareholders of listed companies.

Looking Ahead: Under the New Companies Code, existing listed companies could take advantage of this new double-voting right as of January 1, 2020, upon introducing loyalty shares into their articles of association.

On June 4, 2018, the Belgian Council of Ministers submitted to the Belgian Parliament a draft law designed to substantially reform the Belgian Companies Code in view of promoting greater flexibility and competitiveness for Belgian companies.

The New Companies Code envisages many changes, notably including enabling Belgian listed companies to grant double-voting rights to shareholders who have registered their shares for a period of at least two years. Such a fundamental move echoes the current European focus on long-term share ownership in listed companies. Other EU Member States, including France and Italy, have adopted similar regimes.

New Companies Code—Expected Timing

While the parliamentary review process for the New Companies Code is at an early stage, its targeted date of applicability is January 1, 2019, for any company incorporated from such date.

For existing companies, the mandatory provisions of the New Companies Code would be applicable as of January 1, 2020. The New Companies Code's full set of modifications, including its default provisions would apply as of the first date on which a company modifies its articles of association, but no later than January 1, 2024.

Existing companies seeking to benefit from the more flexible provisions of the New Companies Code as of 2019 may decide to opt-in earlier by modifying their articles of association to comply with the New Companies Code.

Loyalty Shares for Listed Companies—A New Regime for Multiple Voting Rights

A prohibition on multiple voting rights has existed in Belgium since 1934 (excluding cooperative companies). This means that one share equals one vote. The New Companies Code would waive this prohibition for both listed and nonlisted companies that opt for multiple voting rights. The one share/one vote rule would become the default rule only.

Nonlisted companies may bypass the...

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