Equity capital markets in Belgium: regulatory overview

A Q&A guide to equity capital markets law in Belgium. The country-specific Q&A looks at main equity markets/exchanges, regulators and legislation, listing requirements, offering structures, advisers, prospectus/offer document, marketing, bookbuilding, underwriting, timetables, stabilisation, tax, continuing obligations and de-listing.

To compare answers across multiple jurisdictions visit the Equity Capital Markets Country Q&A tool.

This Q&A is part of the PLC multi-jurisdictional guide to capital markets law. For a full list of jurisdictional Q&As visit www.practicallaw.com/capitalmarkets-mjg.

Thierry L'Homme, Arnaud Coibion, Pia Lavrysen and Matthieu Duplat, Linklaters LLP

Main equity markets/exchanges

1. What are the main equity markets/exchanges in your jurisdiction? Outline the main market activity and deals in the past year.

Main equity markets/exchanges

NYSE Euronext operates the following main equity markets in Belgium (www.euronext.com):

  • Euronext Brussels. This regulated market consists of three compartments based on the issuers' market capitalisation:

    • compartment A, that is, issuers with a market capitalisation greater than EUR1 billion (as at 1 February 2012, US$1 was about EUR0.76);

    • compartment B, that is, issuers with a market capitalisation of between EUR150 million and EUR1 billion;

    • compartment C, that is, issuers with a market capitalisation of less than EUR150 million.

  • Alternext. This is a non-regulated market or multilateral trading facility with a less stringent regulatory regime designed for small and medium-sized companies (SMEs). However, NYSE Euronext has created a body of rules to ensure investor transparency and protection.

  • Free Market (Vrije Markt/Marché Libre). This is a non-regulated market or multilateral trading facility. The requirements for the SMEs listed on this non-regulated market are significantly less demanding (for example, on free float and transparency) than those for companies listed on Euronext Brussels or Alternext.

Alternext and the Free Market are not discussed further in this chapter.

Listings of foreign companies in Belgium are limited. There are, however, notable exceptions. For example, the following companies all have (secondary) listings on Euronext Brussels:

  • GDF SUEZ (part of the BEL 20 index).

  • ArcelorMittal.

  • ING Groep.

  • RTL Group.

  • Saint-Gobain.

  • Total.

Market activity and deals

Equity capital markets in Belgian experienced a quiet year in 2011. All completed transactions in 2011 were secondary issues. The most notable were:

  • Nyrstar's synthetic rights issue (EUR490 million).

  • TiGenix’s rights issue (EUR15.2 million).

No successful IPO by way of a public offering took place on Euronext Brussels in 2011. The public offering of the Médiacité real estate certificates, which would have been the largest IPO of 2011 in Belgium, was aborted in June 2011 due to shifting market conditions.

IPOs can be postponed in a number of situations:

  • After an IPO has been announced through the publication of the intention to float (ItF) (see Question 9, Main documents) but before the start of the offering period, the board of directors of the issuer can decide to postpone the offering period. The board can do this under its own authority if the capital is increased within the framework of the authorised capital, or if only existing shares are offered for sale. If the capital is increased by a decision of the shareholders' meeting, the shareholders' meeting deciding on this increase usually delegates the right to postpone the offering period to the board.

  • After the start of the offering period, the board of directors can decide to either:

    • extend the offering period (in which case a supplement to the prospectus must be published after approval by the Financial Services and Markets Authority (FSMA) (Autoriteit voor Financiële Diensten en Markten/Autorité des services et marchés financiers) (see Question 2, Regulatory bodies); or

    • call off the offering period (through a press announcement).

  • The decision to proceed with the offering will usually contain wording covering that situation. When the demand does not meet the issuer's expectations, it is possible to restructure the deal during the offering period by either:

    • lowering the price below the price range determined at the beginning of the offering period; or

    • reducing the size of the offering.

In this case, the issuer must discuss the appropriate procedure with the FSMA.

2. What are the main regulators and legislation that applies to the equity markets/exchanges in your jurisdiction?

Regulatory bodies

The FSMA is the regulator responsible for Belgium's financial markets (see Question 1). The FSMA has authority to review and approve the prospectus while Euronext Brussels decides on the request for admission to listing (see Question 3).

Legislative framework

In addition to the provisions of the Belgian Companies Code, listed companies must also comply with rules on:

  • Regulated markets and market abuse under:

    • Law of 2 August 2002 on the supervision of the financial sector and on financial services;

    • Royal Decree of 5 March 2006 on market abuse.

  • Public offerings and admissions to trading on a regulated market under:

    • Law of 16 June 2006 on public offerings of investment instruments and on admissions of investment instruments to trading on a regulated market (Prospectus Law);

    • Regulation (EC) 809/2004 implementing Directive 2003/71/EC (Prospectus Directive) as regards prospectuses and dissemination of advertisements (Prospectuses Regulation);

    • Royal Decree of 17 May 2007 on primary market practices.

  • Transparency and information under:

    • Law of 2 May 2007 on disclosure of significant shareholdings in issuers whose shares are admitted to trading on a regulated market;

    • Royal Decree of 14 November 2007 on obligations of issuers of financial instruments that are admitted to trading on a regulated market;

    • Royal Decree of 14 February 2008 on the disclosure of significant shareholdings.

  • Takeover bids under:

    • Law of 1 April 2007 on public acquisition offers;

    • Royal Decree of 27 April 2007 on public acquisition offers; and

    • Royal Decree of 27 April 2007 on public squeeze-out offers.


Equity offerings

3. What are the main requirements for a primary listing on the main markets/exchanges?

Main requirements

Any public offering of securities in Belgium and/or admission to trading on Euronext Brussels requires the prior publication of a prospectus (subject to certain exemptions (see Questions 10 and 11)). The application for admission to trading must be filed with Euronext Brussels no later than the filing of the draft prospectus with the FSMA. The draft prospectus must be provided to Euronext Brussels, although it does not formally review or approve the prospectus, which is the FSMA's responsibility (see Question 2, Regulatory bodies).

A foreign company seeking a primary listing must provide evidence of the listing of the issuer's securities on another market, if any. In addition, non-European issuers must provide an audit report (certified by an international audit firm approved by Euronext Brussels) attesting that their legal position and structure accord with applicable laws and regulations.

Minimum size requirements

There are no formal minimum market capitalisation requirements but all securities are assigned to one of three market capitalisation compartments of Euronext Brussels (see Question 1).

Trading record and accounts

At the time of admission to listing, the issuer must have published or filed audited annual financial statements or pro forma (that is, for the sake of form) accounts, consolidated, where applicable, for the preceding three financial years. These must be drawn up in accordance with the accounting standards of the country where the issuer has its registered office, that is, either:

  • International Financial Reporting Standards (IFRS).

  • Any other accounting standards allowed by national regulations for the period covered by the financial information.

If the financial year closed more than nine months before the date of the admission to listing, the issuer must have published or filed audited semi-annual accounts.

Euronext Brussels can grant exemption if it is in the issuer's interests and the issuer has made available the necessary information allowing an informed judgement of the company, its financial position and its business. In this case, Euronext Brussels can impose additional conditions on the admission to listing.

These information requirements are in addition to those required under the Prospectuses Regulation, for example in respect of pro forma financial information and quarterly financial information.

If the head office of the issuer is located outside the EU, Euronext Brussels can request that the issuer's financial statements be restated in Belgian Generally Accepted Accounting Principles (GAAP) and that the restatement is reviewed by an auditor acceptable to it.

Euronext Brussels does not impose any specific working capital requirements in addition to those provided for by the Prospectuses Regulation, which requires the issuer to state that it has sufficient working capital for:

  • Its present requirements.

  • The 12-month period following the date of the prospectus.

Shares in public hands

At the time of admission to listing, at least 25% of the company's subscribed capital represented by the class of shares concerned must be publicly held (that is, there must be a minimum 25% free float), unless:

  • The market can function with a lower percentage in view of the large number of shares of the same class and the extent of their distribution to the public. However, at least 5% of the capital, with a minimum value of EUR5 million calculated on the basis of the offering price, must be publicly held.

  • Euronext Brussels decides otherwise.

4. What are the main requirements for a secondary listing on the main markets/exchanges?

There is no answer content for this Question, as it is a new addition to the template that did not exist at the time of writing.

5. What are the main ways of structuring an IPO?

The most common ways of structuring an IPO are through a public offering and an admission to trading.

A public offering can be either or both a:

  • Public subscription offer (to new shares).

  • Public sale offer (of existing shares).

There must be a retail tranche (that is, a portion of the shares designated for retail investors) in a public offering (see Question 16).

Less common ways of structuring an IPO are direct listings without a public offering following a private placement (for example, RHJ International) or a spin-off from another listed company (for example, Exmar, Euronav and Cumerio).

The bookbuilding procedure is almost always used for pricing (see Question 16). Other techniques include a fixed price, tender and an auction.

6. What are the main ways of structuring a subsequent equity offering?

The two main ways of structuring a subsequent equity offering are through a rights issue or an accelerated bookbuilt offering.

Rights issue

A rights issue allows existing shareholders to exercise or sell their preferential subscription rights to avoid dilution. It amounts to both a public offering and an admission to trading and therefore requires a prospectus (see Question 10).

Under the Belgian Companies Code, the subscription period for a rights issue, during which the rights trade on Euronext Brussels, must be:

  • At least 15 calendar days.

  • Announced at least eight calendar days in advance through a notice in the Belgian State Gazette.

In a synthetic rights issue, where technically the preferential subscription right of existing shareholders is cancelled, the 15-calendar-day period does not apply, enabling the timetable to be shortened (with the FSMA's prior agreement). Synthetic rights issues have only recently come to prominence in the Belgian market and are still relatively uncommon.

Generally, unexercised rights are converted into and sold as scrips in a private placement, with the net proceeds remitted to the non-exercising shareholders. The price for the scrips is determined following their placement, which lasts for a very limited number of days after the end of the subscription period.

In both traditional rights issues and synthetic rights issues, the issue price has so far been determined before the opening of the subscription period to enable the trading of the right.

There is no limitation on the extent of the discount (on the issue price compared to the share price). However, if the offering is made from existing authorised capital the issue price cannot be lower than the accounting par value of the existing shares.

Accelerated bookbuilt offering

An accelerated bookbuilt offering is a private placement with qualified investors, following the cancellation of the preferential subscription right of existing shareholders. As it is limited to qualified investors, there is no public offer and there is no need to prepare a prospectus, as long as the newly issued shares admitted to trading on Euronext Brussels represent less than 10% of the number of shares of the same class that have already been admitted to trading (calculated during a 12-month period). If this requirement is not met, a listing prospectus is required, but the drafting can be deferred if the listing or admission to trading of the new shares is also deferred.

The issue price is determined after the closing of the subscription period on the basis of a bookbuilding procedure (see Question 16). There must be no agreement with subscribers on allocation or price before the bookbuilding starts. If that requirement is not met and the preferential subscription right is deemed to be cancelled in favour of determined persons, the issue price must be set at or above the average closing share price over the 30-day period preceding launch (Article 598, Belgian Companies Code).

Given the accelerated nature of this transaction, the board of directors must decide the capital increase within the framework of the authorised capital, avoiding the considerably lengthier process of a shareholders' meeting to issue new shares. This also means that the issue price cannot be below the accounting par value of the existing shares (see above, Rights issue).

7. What are the advantages and disadvantages of rights issues/other types of follow on equity offerings?

There is no answer content for this Question, as it is a new addition to the template that did not exist at the time of writing.

8. What are the main steps for a company applying for a primary listing of its shares? Is the procedure different for a foreign company and is a foreign company likely to seek a listing for shares or depositary receipts?

The main requirements are the same as for equity offerings, see Question 3. The procedure is not fundamentally different for a foreign company, which usually seeks a listing for its shares.


Advisers: equity offering

9. Outline the role of advisers used and main documents produced in an equity offering. Does it differ for an IPO?

Investment banks

The investment banks assume several roles in an equity offering, including:

  • Advising the issuer on the timing and the structuring of the offering.

  • Advising the issuer on the implementation of the offering, for example:

    • compliance with listing rules;

    • drafting of the prospectus;

    • update on market conditions; and

    • pricing.

  • Advising the issuer on its marketing, for example:

    • road shows;

    • briefing of research analysts.

  • Acting as underwriters for the offered shares (whether they are newly issued shares or existing shares).

  • Managing the offering process (one or several of the banks involved will act as lead managers or co-ordinators).

  • Acting as stabilisation manager (see Question 19).

In addition, research reports are prepared by the analysts of the investment banks' research departments. Information barriers (that is, Chinese walls) apply between the employees of the banks advising on the offering and the research analysts.

International investment banks are used in global offerings, together with domestic banks.

Legal advisers

The issuer obtains legal advice from a law firm. Essentially, the issuer's counsel will assist its client in relation to:

  • The structuring of the transaction.

  • The prior re-organisation of the issuer's group.

  • Due diligence with a view to the drafting of the prospectus.

  • The drafting of the main offering documents, including the prospectus and any supplements.

  • The communication with the FSMA in relation to the submission and the approval of the offering documents.

  • The drafting of the corporate resolutions.

The underwriters usually obtain external legal advice from a law firm. Essentially, the underwriters' lawyer will assist its clients in:

  • Due diligence on the issuer (to the extent that the underwriters' liability could be put at stake).

  • The drafting or review of the main offering documents, including the prospectus and any supplements (to the extent that the underwriters' liability could be put at stake).

  • The drafting and the negotiating of the underwriting agreement.

  • The drafting of publicity guidelines and research guidelines (see Question 13).

When part of the offered shares are already issued shares sold by shareholders, the main selling shareholders usually obtain legal advice from a different law firm than the issuer's law firm. In some transactions, the issuer and the main selling shareholder are advised by the same law firm, which is possible only to the extent that the interests of both parties do not materially diverge.

Issuer's statutory auditor

The issuer's auditor issues a comfort letter at the time of approval of the prospectus, addressed to the underwriters and the issuer stating that, among other things, the auditor has done a review sufficient to ensure that financial statement information in the prospectus is correctly prepared to the best of its knowledge.

For Belgian transactions that involve the application of Rule 144A (that is, a US rule providing a safe harbour from the registration requirements of the Securities Act of 1933 for certain offerings of securities to qualified institutional buyers), separate comfort letters are issued for the offering in the US and outside the US. The comfort letter for the offering in the US must be prepared in accordance with Statements on Auditing Standards 72. The auditors will accept different levels of liability for each offering. For the offering outside the US, Belgian auditors typically argue, on the basis of a circular of the Belgian Institute of Auditors of 20 December 2006, that their liability should be capped at EUR12 million in relation to issuing comfort letters, under the Law of 22 July 1953 establishing the Belgian Institute of Auditors. The auditors will ask the issuer and the lead managers to agree to this interpretation.

Financial public relations agents

On major offerings, the issuer often instructs a specialised public relations agent to help with marketing and the media.

Main documents

The main documents produced in an equity offering are the following:

  • An engagement letter relating to the purpose for which the investment banks are instructed.

  • An arrangement letter relating to the purpose for which the auditor is instructed.

  • Publicity guidelines.

  • Research guidelines.

  • In the case of an IPO, the ItF (that is, a statement by the board of directors of the issuer informing the public that the company is planning an IPO in the near future).

  • An underwriting agreement.

  • Board resolutions recommending the offering to the shareholders (where it is necessary to issue new shares and the authorised capital is not used, so that shareholder approval is required) and approving the prospectus.

  • Shareholders' resolutions approving the issue of new shares or board resolutions to the same effect if the board makes the decision within the framework of the authorised capital.

  • The prospectus and any supplements to the prospectus (see Questions 9 to 12).

  • An application to the FSMA for approval of the prospectus.

  • An application for admission on Euronext Brussels.

  • Comfort letters issued by the issuer's auditor (see above, Issuer's statutory auditor).

  • Legal opinions by various legal advisers (see above, Legal advisers).


Equity prospectus/main offering document

10. When is a prospectus (or other main offering document) required? What are the main publication, regulatory filing or delivery requirements?

A prospectus is required for any:

  • Public offering of investment instruments in Belgium.

  • Admission of investment instruments to trading on Euronext Brussels.

The FSMA must make a decision on a request for prospectus approval within ten banking days of a complete application. The time period is extended to 20 banking days if, during the previous ten years, the FSMA has not approved any registration document or any prospectus in relation to a public offering of securities or an application for admission to trading on Euronext Brussels by the same issuer. In practice, the timetable for prospectus approval is usually agreed on informally with the FSMA when the proposed transaction is presented to it.

Once approved, the prospectus must be made public at least three banking days before the end of the public offering and, in any case, at the latest on the day of opening of the public offering. For an IPO, the prospectus must be made public at least six banking days before the end of the public offering. If an admission to trading on Euronext Brussels takes place without any public offering, the prospectus must be made public at the latest on the first day of the admission.

Either of the following means of publication can be used:

  • Making the prospectus in printed form freely available from the issuer at its registered office and the offices of the financial intermediaries placing or trading the relevant investment instruments, including the paying agents.

  • Posting the prospectus on the website of the issuer and, where applicable, on the website of the financial intermediaries placing or trading the relevant investment instruments, including the paying agents.

When the prospectus is made available in printed form, it must also be posted on the issuer's website. In addition, when the prospectus is made public in electronic form only, it must be communicated in printed form, free of charge, to any investors requesting it.

An electronic version of the prospectus must be sent to the FSMA for posting on its website. If not disclosed in the prospectus, final terms of the offering are disclosed in a press release, which must receive prior approval by the FSMA.

The prospectus can be composed of several documents, such as a registration document and a securities note, and/or include information incorporated by reference. In this case, the documents and information composing the prospectus can be published separately, provided that the publication is made in accordance with the rules.

11. What are the main exemptions from the requirements for publication or delivery of a prospectus (or other main offering document)?

Exemptions for offerings

A prospectus is not required when it is not a public offering because the:

  • Offering is addressed solely to qualified investors.

  • Offering is addressed to investors other than qualified investors belonging to a limited circle of fewer than 100 investors per member state of the European Economic Area (EEA).

  • Offering is addressed to investors acquiring at least EUR50,000 worth of the investment instruments.

  • Offering relates to investment instruments with a minimum denomination of at least EUR50,000.

  • Total amount of the offering is less than EUR100,000 over a 12-month period.

A free allocation of investment instruments does not constitute an offering and, therefore, does not require a prospectus. However, in that case, a document containing limited information may need to be prepared. This document is not subject to the FSMA's approval.

A prospectus is also not required for the following public offerings:

  • Investment instruments offered in connection with a public exchange offer, if a document containing information equivalent to a prospectus is made available and filed with the FSMA for review.

  • Securities allocated in connection with a merger or contribution in kind (provided such transactions constitute an offering), if a document containing information equivalent to a prospectus is made available and filed with the FSMA for review.

  • Dividends paid in the form of free shares belonging to the same class as those giving entitlement to the dividends, if a document containing the number and nature of the shares and the reasons and details of the offering is made available.

  • Under certain conditions, securities offered to board members or employees, if a document containing the number and nature of the securities and the reasons and details of the offering is made available.

However, if any of these offers concern new investment instruments to be listed on Euronext Brussels, a prospectus must be submitted for the FSMA's approval unless one of the exemptions apply.

Exemptions for admissions to trading

Admission to trading of the following investment instruments requires no prospectus:

  • Shares that represent, during a 12-month period, less than 10% in shares of the same class already listed on Euronext Brussels.

  • Investment instruments offered in connection with a public exchange offer, if a document containing information equivalent to a prospectus is made available and filed with the FSMA for review.

  • Securities offered or allocated in connection with a merger or contribution in kind, if a document containing information equivalent to a prospectus is made available and filed with the FSMA for review.

  • Dividends paid in the form of free shares belonging to the same class as those giving entitlement to the dividends, if a document containing the number and nature of the shares and the reasons and details of the offering and the admission is made available.

  • Under certain conditions, securities offered to board members or employees, if a document containing the number and nature of the securities and the reasons and details of the offering and the admission is made available.

  • Shares resulting from the conversion or exchange of other securities or from the exercise of rights conferred by other securities if the shares belong to the same class as those already admitted to trading on Euronext Brussels.

  • Securities already admitted to trading on another regulated market, subject to certain conditions.

12. What are the main content or disclosure requirements for a prospectus (or other main offering document)? What main categories of information are included?

The prospectus must contain all information that is necessary to enable investors to make an informed assessment of the:

  • Assets and liabilities, financial position, profit and losses, and prospects of the issuer and of any guarantor.

  • Rights attached to those securities.

What is necessary depends on the particular nature of the issuer and of the securities. The information must be presented in an easy to analyse and comprehensible form. The minimum information to be included in the prospectus is set out in the Prospectuses Regulation.

Supplements to the prospectus must be made detailing any significant new factor, material mistake or inaccuracy relating to the information included in the prospectus, which:

  • Is capable of affecting the assessment of the securities.

  • Arises or is noted between the time when the prospectus is approved and the time:

    • of the final closing of the offering to the public; or

    • when trading on Euronext Brussels begins.

The FSMA must approve the supplement within seven banking days and the supplement must be published using the same methods that were applied when the original prospectus was published. Investors who have already agreed to purchase or subscribe for the securities before the supplement is published have the right, exercisable within two banking days after the publication of the supplement, to withdraw their acceptances.

13. How is the prospectus (or other main offering document) prepared? Who is responsible and/or may be liable for its contents?

The prospectus is generally prepared by the issuer's legal advisers, with input from the issuer, the statutory auditors and the investment banks (see Question 9).

The prospectus must designate the persons responsible for the content of the prospectus, which can include any of the following:

  • Issuer and its administrative, management or supervisory bodies.

  • Offeror.

  • Person requesting the admission to trading on Euronext Brussels.

  • Guarantor.

The persons responsible must declare that, to their knowledge, the information contained in the prospectus is in accordance with the facts and that the prospectus makes no omission likely to affect its content. They are jointly and severally liable towards investors for damage caused due to any misleading or inaccurate information in the prospectus or its supplements, or lack of information required to be contained in the prospectus or its supplements (Article 61, Prospectus Law). Except if proven otherwise, damage is presumed to result from this cause where the misleading or inaccurate information or lack of information was liable to either:

  • Create a positive climate on the market.

  • Positively affect the price of the financial instruments.


Marketing equity offerings

14. How are offered equity securities marketed?

The marketing of an IPO consists of:

  • Analyst presentation. The analysts are given a briefing on the issuer and on the offering, as well as research guidelines, to allow them to prepare research reports.

  • Pre-marketing. The investment banks contact a limited number of institutional investors to:

    • generate and, to some extent, test investors' interest;

    • identify issues to be addressed by management on the road shows.

  • Road shows. During the offering period, the issuer's management organises presentations to the investor community (mostly institutional investors, although separate presentations to retail investors are sometimes organised) to present the:

    • equity story (that is, the reasons why the shares should be bought by investors);

    • main features of the offering.

  • Advertisement. During the offering period, broader advertising means are also used by the issuer and the investment banks, the extent to which depends on the expected interest of retail investors.

In the case of a secondary offering, insider dealing rules limit the marketing process. In principle, the issuer will not be able to test the market before it has made public its intention to make the offering.

15. Outline any potential liability for publishing research reports by participating brokers/dealers and ways used to avoid such liability.

Potential liability

There is potential liability for the issuer, and investment banks that advise the issuer, from research reports prepared by analysts connected to the investment banks, if and to the extent that such reports are either:

  • Perceived as issued on behalf of, or at least with the authority and approval of, the issuer and/or the investment banks.

  • Regarded as forming part of the prospectus (while they are unlikely to be prepared to the same standards as the prospectus or to cover the same areas).

In these circumstances, the issuer can incur liability in the same way as for a flaw in the prospectus under Article 61 of the Prospectus Law (see Question 13). The investment banks can be liable in tort.

Methods to avoid or limit liability

Generally, the following methods are taken:

  • A prohibition on distributing the research reports during the blackout period. The blackout period is a period starting immediately after the publication of the research reports and ending after the date of listing. It can sometimes be up to 40 days after the listing date. However, there is no legal requirement as to the blackout period and its duration. The blackout period's purpose is to ensure that sufficient time elapses between publication of the research reports and the offering period to be able to argue that investors relied on the prospectus to make their investment decision, rather than on research reports.

  • Information barriers must be put in place between the research department of the investment bank and the team working on the offering within the same bank.

  • Clear and prominent disclaimers are usually contained in the research report.

  • Restrictions on distribution of research reports, which can include:

    • no electronic distribution before the blackout period (see above);

    • in many cases, limiting the distribution to institutional investors.

These measures are usually set out in the research guidelines.



16. Is the bookbuilding procedure used and in what circumstances? How is any related retail offer dealt with? How are orders confirmed?

The bookbuilding procedure is almost invariably used to price an IPO on Euronext Brussels. The price range is typically determined based on pre-marketing and made public concurrently with the prospectus at the start of the offering period. The final offer price is then determined, within the price range, on the basis of a bookbuilding process conducted during the offering period in which only institutional investors participate. The final offer price is subsequently published in a separate pricing statement.

Where an IPO involves a public offering in Belgium, which is almost always the case (Royal Decree of 17 May 2007):

  • At least 10% of the shares must be reserved for retail investors.

  • The conditions of the offering, including, in particular, the price of the tranche reserved for retail investors, must in principle be the same as those offered in the tranche reserved for qualified investors.

This means that the offer price must be identical for retail and institutional investors. However, a limited discount for retail investors is allowed.

In addition, the retail tranche cannot be closed before the tranche reserved for qualified investors unless the prospectus specifically provides for this and sets out the circumstances in which the retail tranche can be closed earlier. In that case, measures must be taken to ensure that the book remains confidential until all tranches have been closed.

Retail applications are binding as they amount to the acceptance of a public sale offer or public subscription offer. The prospectus, therefore, typically provides that:

  • Retail investors are legally bound to purchase or subscribe to the number of shares indicated in their application form at the offer price. The final offer price can be lower than the lower end of the price range (see Question 1, Market activity and deals).

  • The final price for retail investors will not exceed the upper end of the price range.

The bookbuilding procedure is also a common way of structuring and pricing a secondary offering when it takes the form of an accelerated bookbuilt offering (see Question 6, Accelerated bookbuilt offering). As the offering is not public in this case, the mandatory retail tranche does not apply.


Underwriting: equity offering

17. How is the underwriting for an equity offering typically structured? What are the key terms of the underwriting agreement and what is a typical underwriting fee?

Under the underwriting agreement, the underwriters must find subscribers or purchasers for all or a portion of the securities. In addition, depending on the type of underwriting, the agreement can provide that if the underwriters fail to procure subscribers or purchasers for the securities, the underwriters themselves will purchase or subscribe for them (hard underwriting).

The fee to be paid by the issuer and/or the selling shareholders to the underwriters is usually structured as a percentage of the aggregate price of the shares offered and supplemented by a discretionary fee. Fee levels vary depending on a number of factors, such as the type and size of the offering, its expected success rate, the situation of the issuer or whether the underwriting commitment is soft or hard. For example, in the case of a hard underwriting for a standard rights issue, the fee can range from 1.5% to 2.5% as well as a discretionary fee of between 0.25% and 1%.

The underwriting agreement also sets out the terms of any lock-up of significant shareholders and any over-allotment option that the bank(s) can be given for stabilisation purposes.

In addition, underwriting agreements contain covenants, representations and warranties made by:

  • The issuer and/or selling shareholders with respect to information on the issuer and the offering of securities.

  • The underwriters with respect to selling restrictions in connection with their placement of the securities.

A breach of the covenants, representations and warranties entitles the non-breaching party to terminate the underwriting agreement. Underwriting agreements also typically indemnify the underwriters for false or misleading information in the issuer's offering document.

Underwriting agreements are subject to a number of conditions and usually contain a material adverse change (MAC) clause triggered if certain material adverse events affect the issuer's:

  • Assets.

  • Results.

  • Financial condition.

  • Indebtedness.

  • Business activities.


Timetable: equity offerings

18. What is the timetable for a typical equity offering? Does it differ for an IPO?

A typical simplified timetable for an institutional and retail IPO (where "T" is the date of closing and settlement) would be:

  • T minus 5 to 4 months. In this period, the issuer and, when appointed, its advisers, should:

    • draft a business plan and equity story;

    • analyse and determine the offering structure;

    • prepare the company for listing (through due diligence, restructuring, if needed, and compliance with conditions for listing).

  • T minus 4 to 3 months. The issuer and its advisers should:

    • begin preparation of key documents, such as the prospectus;

    • informally present the IPO project to the FSMA and Euronext Brussels.

  • T minus 2 months. The issuer should file an initial draft of the prospectus with the FSMA and apply for admission to trading with Euronext Brussels. The issuer is presented to financial analysts. The ItF press release is published (see Question 9, Main documents).

  • T minus 1 month. Analysts' research is published and pre-marketing starts.

  • T minus 3 to 2 weeks. The FSMA approves the prospectus, which is then published. The retail offering and institutional offering (bookbuilding) start, usually based on a price range. Road shows are started.

  • T minus 4 days. The retail offering and institutional offering close.

  • T minus 3 days. The final price is determined. The underwriting agreement is signed. Shares are allocated to the investors. Trading starts on an if-and-when issued or delivered basis. The stabilisation period starts.

  • T. Closing and settlement.

  • T plus 27 days. The stabilisation period ends. This is the final date for exercise of any over-allotment option (that is, an option allowing underwriters to sell additional shares, at the offering price, if the demand for the shares exceeds the original amount offered).

Timetables for other equity offerings very much depend on their type. For a rights issue, the total duration will typically be around four months when a shareholders' meeting is needed to decide on the capital increase and a quorum is not present at the first meeting, so that a second meeting must be convened. If the decision can be made by the board of directors within the framework of the authorised capital, the total duration will be shorter (that is, around two and a half months).

For an accelerated bookbuilding offering, the total duration will be much shorter (that is, generally a few weeks for the entire process).



19. Are there rules on price stabilisation and market manipulation in connection with an equity offering?

Transactions undertaken by investment service providers to stabilise securities are not considered market manipulation if they comply with the applicable rules, the most important of which are (Regulation (EC) 2273/2003 implementing Directive 2003/6/EC as regards exemptions for buy-back programmes and stabilisation of financial instruments, and ancillary Belgian rules):

  • The possibility of stabilisation activities must be disclosed in the prospectus.

  • Stabilisation cannot be made at a price higher than the issue price of the offering.

  • The stabilisation period must be limited in duration (generally to 30 days with the starting point depending on the nature of the offering).

  • The issuer, offeror or entity undertaking the stabilisation must provide the FSMA with details of all stabilisation transactions within seven trading days of execution.

  • Information concerning the existence of, and arrangements for, stabilisation must be made public within five banking days of the end of the stabilisation period through a press release.


Tax: equity issues

20. What are the main tax issues when issuing and listing equity securities?

No specific tax issues arise relating to the issuance of new securities in Belgium.

On the listing of existing securities, a number of tax issues can arise in an IPO requiring specialist tax advice. These issues include, among others:

  • Capital gains tax. The sale of shares in a Belgian company by individuals can, subject to certain conditions, trigger a capital gains tax. In addition, the Belgian government has announced that net capital gains realised on shares held for less than 12 months by Belgian corporates would become taxable at a separate rate of 25.75%.

  • Sale of existing shares. Belgian stock exchange tax can apply to the sale of existing shares.

Another tax issue that must be analysed when issuing new shares and when listing existing shares is whether the new/existing shares qualify as VVPR (Verlaagde Voorheffing/Précompte Réduit) shares, which benefit from a reduced domestic dividend withholding tax rate of 21% instead of 25% (the old 15% reduced rate was increased to 21% for dividends paid or attributed as from 1 January 2012).


Continuing obligations

21. What are the main areas of continuing obligations applicable to listed companies and the legislation that applies?

The following summarised rules apply to companies with Belgium as their home member state, unless otherwise indicated.

Periodic financial reporting

Issuers must ensure that the following regulated information is periodically distributed to the public and sent to the FSMA:

  • Annual financial report. The issuer must publish, within four months after the end of the financial year, an annual financial report which contains:

    • the audited (consolidated) annual accounts;

    • the annual board report;

    • a statement by the persons responsible for the (consolidated) annual accounts; and

    • the auditor's report on the (consolidated) annual accounts.

  • Annual communiqué. If the issuer chooses to publish an annual communiqué before the annual financial report has been published, the communiqué must contain:

    • certain specified financial information;

    • explanatory disclosures; and

    • information on the status of the audit process of the annual accounts.

  • Half-yearly financial report. The issuer who has issued shares or debt instruments must publish, as soon as possible, and at the latest two months after the end of the first half-year, a half-yearly financial report that contains:

    • condensed financial overviews;

    • an interim board report;

    • a statement by the persons responsible for the financial overviews; and

    • the auditor's report on the condensed financial overviews (this report is optional).

  • Interim statement. The issuer who has issued shares must publish for every half-year, in the period between ten weeks after the beginning and six weeks before the end of the relevant half-year, an interim statement which contains:

    • an explanation of material events and transactions; and

    • a general description of the financial position and results of the company.

This obligation does not apply to issuers that have published quarterly financial reports within two months after the end of the first and third quarter of the financial year.

Other disclosure obligations

The issuer must comply with the following disclosure obligations:

  • Inside information. The issuer must immediately disclose any inside information directly related to it. This disclosure can only be postponed under strict conditions and under the issuer's own responsibility.

  • Major shareholdings. Every person that acquires or disposes of securities with voting rights in an issuer of shares must notify the issuer and the FSMA if the proportion of voting rights attached to these securities reaches, exceeds or falls below certain thresholds. This notification must be done as soon as possible, and at the latest within four trading days. The issuer must disclose this information within three trading days after receipt.

    The relevant thresholds are 5% of the total voting rights and every multiple of 5%. However, the articles of association of Belgian issuers can set additional thresholds of 1%, 2%, 3%, 4% or 7.5%.

Significant transactions and related party transactions

Issuers of shares that are Belgian companies must comply with a special procedure that requires the involvement of the auditor and a committee of three independent directors when certain decisions or transactions relate to relationships between the issuer and its affiliated companies (subsidiaries excluded). This procedure does not apply to:

  • Common decisions and transactions that occurred at market conditions.

  • Decisions and transactions that represent less than 1% of the issuer's consolidated net assets.

Significant shareholder voting restrictions

The articles of association of Belgian companies can (but rarely do) limit the number of votes each shareholder disposes of, on condition that the limitation applies to every shareholder. It is also possible to include voting arrangements in a shareholders' agreement, but this will only be valid if the agreement is limited in duration and in the company's interest.

22. Do the continuing obligations apply to listed foreign companies and to issuers of depositary receipts?

The following rules apply:

  • For issuers outside the EEA, the FSMA can exempt issuers that have their registered office in a country that is not a member of the EEA if the legislation of that country imposes equivalent obligations.

  • For issuers for which Belgium is not the home member state, issuers within the EEA for which Belgium is not the home member state but whose securities are exclusively admitted to trading on Euronext Brussels must publish in Belgium the regulated information set out in the applicable legislation of the home member state.

23. What are the penalties for breaching the continuing obligations?

Failure to comply with continuing obligations can, depending on the circumstances and the obligations being breached, result in a variety of sanctions, including:

  • Tort liability.

  • The publication of warnings.

  • The suspension or prohibition of trading of the relevant financial instrument.

  • Administrative fines or criminal sanctions.


Market abuse and insider dealing

24. What are the restrictions on market abuse and insider dealing?

There is no answer content for this Question, as it is a new addition to the template that did not exist at the time of writing.



25. When can a company be de-listed?

Euronext can de-list securities listed on Euronext Brussels either at the request of the issuer, in so far as this is permitted by applicable law, or on its own initiative, on any appropriate grounds. Euronext can subject any de-listing of securities to such requirements as it deems appropriate.

The Euronext Rule Book sets out appropriate grounds for de-listing, including:

  • The issuer's manifest failure to comply with its obligations under the Euronext Rule Book or the listing agreement.

  • Less than 5% of the securities remaining available for trading.

  • Facts or developments occurring concerning a security, which:

    • prevent the continued listing of that security;

    • cause Euronext to believe that a fair, orderly and efficient market for a security cannot be maintained.

  • Adequate clearing and/or settlement services for a type of security being no longer available.

  • The de-listing of the shares or other securities into which they are convertible or for which they are exchangeable.

Instances of de-listing at the initiative of Euronext Brussels (that is, compulsory de-listings) are quite uncommon.

De-listing at the initiative of the issuer for which Euronext Brussels constitutes the primary market will in principle only be accepted as a result of another, prior step taken under the relevant rules such as a squeeze-out offer, a merger by absorption by another company or liquidation. On the other hand, when Euronext Brussels does not constitute the primary market and the securities continue to be listed on at least one other EEA regulated market, the de-listing from Euronext Brussels will in principle take place without any prior step, simply following the procedure set out in the Euronext Rule Book.

In total, fewer than five de-listings occurred in 2011.



26. Are there any proposals for reform of equity capital markets/exchanges? Are these proposals likely to come into force and, if so, when?

The amended Prospectus Directive, which must be transposed into national law by 1 July 2012, will result in (among other things):

  • Reduced disclosure requirements for rights issues.

  • The format and content of the summary prospectus being improved.

  • The creation of exemptions from the requirement to publish a prospectus if the issue is placed through intermediaries (retail cascades).

  • Slightly broader exemptions for offerings (see Question 11, Exemptions for offerings).

  • The alignment of the definition of "qualified investor" with that of professional clients as defined in Directive 2004/39/EC on markets in financial instruments (MiFID).

  • An increase in wholesale debt denominations to EUR100,000.

  • Clarifications to the circumstances in which a withdrawal or walk away right can be exercised.

NYSE Euronext is considering listing all debt securities in nominal value and not in quantity, to comply with listing practices on international debt markets.

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