On 22 October 2013, EU Directive 2013/50 amending EU Transparency Directive 2004/109 was adopted. It aimed at simplifying and further harmonising the existing rules, and eliminating some loopholes in the current legal framework.
Belgium had to implement the (amended) Transparency Directive by 20 November 2015 at the latest. Some elements were already implemented by Royal Decree of 26 March 2016, such as the abolition of the obligation to publish quarterly financial reports and interim management statements.
The Belgian Government introduced a draft act in Parliament recently to further implement the (amended) Transparency Directive. The competent Committee of the House of Representatives has already adopted the draft act. It is expected that the House of Representatives will adopt the act soon.
Concept of concerted action narrowed
An agreement with regard to the possession, acquisition or transfer of voting securities – such as a mere stand still or lock-up agreement – will no longer constitute concerted action. As a result, the concept of concerted action under the Belgian Transparency Act of 2 May 2007 will be the same as under the Belgian Act on Public Takeover Bids of 1 April 2007.
Those who effected a joint transparency notification in the past on grounds of a concerted action with regard to only the possession, acquisition or transfer of voting securities will be assumed to no longer act in concert for the purposes of the Belgian transparency legislation. The explanatory memorandum to the draft act indicates that no mandatory new transparency notifications have to be effected for that reason alone.
Changing the nature of an agreement for concerted action will no longer have to be notified either.
Definition of financial instruments broadened
The calculation of the notification thresholds will not only have to take into account financial instruments that grant the holder the right to acquire securities carrying voting rights pursuant to a formal agreement and only on the holder's own initiative ("equity-settled derivatives"). Financial instruments with similar economic effect will also have to be taken into account, even if they do not result in a physical settlement ("cash-settled derivatives"). For example, options which, when exercised, give the holder the right to opt for the payment of a sum of money ("cash-settled options") rather than the physical delivery of the underlying share will fall within the scope of the definition of a financial instrument.
Notifications have to be effected "promptly"
Under the current Belgian transparency legislation, the notification to the issuer has to be effected "as soon as possible" (but not later than within four trading days). This deadline will become more stringent, as the notification will have to be effected "promptly" (but not later than within four trading days).
Administrative fines increased
If the Belgian Transparency Act or its implementing decrees are not complied with, the FSMA may impose administrative pecuniary sanctions. If the offender is a legal entity, the FSMA will also be able to impose those fines upon the member of the administrative body and the actual leaders.
The administrative fines will increase – in the case of a natural person up to EUR 2 million, and in the case of a legal entity up to EUR 10 million or up to 5% of the consolidated yearly turnover (where applicable, of the ultimate parent undertaking of the offender), whichever is the higher. If profits are gained (or losses are avoided) because of the breach, the maximum amount may be increased up to twice the amount of the profits gained (or losses avoided).
Next step: amending the Belgian Transparency Decree
Finally, the Belgian Government will also have to amend the Belgian Transparency Decree of 14 February 2008 to further implement the (amended) Transparency Directive.
One of the amendments will relate to the calculation of the notification thresholds. Currently, only the aggregate of (i) the holdings of shares and voting rights and (ii) the holdings of financial instruments has to be taken into account for determining whether a notification threshold has been crossed. However, the (amended) Transparency Directive also imposes a separate transparency notification if one of these holdings crosses a notification threshold individually.