New shareholders rights law

On 18 April 2011, the bill concerning the exercise of certain rights by shareholders in listed companies, adopted on 20 December 2010 (hereinafter the “Act”), was published in the Belgian Official Journal. Other than its title appears to indicate, the Act establishes not only modifications applicable to companies, the shares of which are entered for trading on a regulated market (hereinafter “listed companies”), but also to certain unlisted companies.

The Act’s objective is to enable shareholders to exercise their rights more easily and effectively, by making use of the new technologies anno 2011.

Consequent to an amendment of the Act adopted on 5 April 2011 and published on 18 April 2011, the Act will come into force on 1 January 2012. At this date, the companies’ articles of association must be reconciled with the new Act if required.

Overview of the most important changes

1. Amendments and new regulations applicable to listed companies

Terms and manner of convening the general meeting (art. 533 § 2 Belgian Company Code (“BCC”))

The new Act brings the notice period for convening the general meeting from 21 to at least 30 days. The notice period remains 17 days if a second summon is necessary, due to the required presence quorum not having been achieved in the first general meeting.

In addition to the publication in the Official Journal and in a national newspaper, the new Act adds an announcement via the company’s website and the media, which we can suppose will encourage an effective circulation in the entire EER. The Financial Services Markets Authority (FSMA) recommends issuers to use as many different distribution channels as possible, such as news agencies, newspapers with international coverage, electronic information providers, etc. A publication in the national press of each EER country is not required. The Act explicitly mandates that the company cannot charge their shareholders any specific fees related the application of this requirement.

Content of the summon

With the introduction of a new Article 533bis in the BCC, the Act considerably extends the minimum requirements for information that should be included in the notice of the general meeting. Not only should the notice at least indicate the place, date and time of the general meeting, it must also specify the agenda, stating the subjects to be discussed and the proposed resolutions. Finally, a clear and precise description of the various possibilities allowing general meeting admittance, as well as the related formalities should be included. This information should be made available on the website of the company and remain accessible during a period of five years from the date of the general meeting to which it relates.

Right to add new topics to the agenda

By the introduction of a new article 533ter BCC, one or several shareholder(s) who individually or collectively hold(s) at least 3% of the share capital, will be entitled to add topics to the general meeting agenda, as well as submit proposals regarding the agenda. Such requests can be submitted in writing up to 22 days before the general meeting and the company must publish the completed agenda no later than 15 days before the general meeting.

Formalities to be fulfilled to attend the general meeting / registration of shares

By virtue of the new Act, registration of shares becomes mandatory. To participate and vote at the general meeting, the shares must be registered in the shareholder’s name on the 14th day (at midnight) prior to the meeting. The shares remain freely transferable afterwards. Consequently, companies with listed shares will no longer be able to force shareholders to deposit and block their shares prior to the general meeting.

In addition, a shareholder is required to inform the company of his intention to attend the general meeting no later than six days before the date of the meeting.

2. Changes for listed and other companies

Remote participation at the general meeting and electronic voting

According to the Act, it is possible to introduce in the articles of association the option for shareholders to remotely participate in and vote at the general meeting (art. 538bis BCC). The interpretation of the ability to remotely participate is left to the companies themselves, but the Act provides that an electronic means of communication is required whereby the shareholder can directly, simultaneously and continuously take note of the discussions at the meeting and vote on all issues on which the meeting is called to decide upon.

In addition to the already existing possibility to vote by letter, the Act introduces the option to provide in the articles of association the possibility to vote electronically before the general meeting if the company is able to verify the nature and identity of the shareholder. Remote electronic voting must be done at the latest one day before the meeting. Remote participation and electronic voting can also be introduced via a provision in the articles of association for unlisted public limited liability companies and private limited liability companies. For limited partnerships however, only remote participation applies.

Right to ask questions

The right to ask questions during the general meeting (in writing or orally) is foreseen for the majority of companies, such as the public limited (listed or unlisted), private limited liability companies, European companies, etc.

3. Conclusion

The Act generates direct consequences for listed companies regarding the organisation of the general meeting and obliges them to amend their articles of association, if necessary, to bring them into conformity with the Act. For companies whose articles of association must be modified, it can be useful to already include the required modifications in the agenda of the annual shareholders meeting, in order to avoid an extra such meeting to this end.

A schematic or complete overview of the changes, as well as a timeline for the organisation of the general meeting of listed companies is available upon request to the authors.