Non-Belgian parties and their counsel involved in cross-border M&A transactions often wish to use their home country model documents that typically provide for a choice of home country law and courts. Where the targets include Belgian companies, the effectiveness of this tactic is limited by the provisions of Belgian law that are mandatory and that will apply notwithstanding the choice of home country law. Such provisions are many and varied and will depend on the sector and activities of the companies involved and the following examples are amongst those that most frequently occur but the list is by no means exclusive.

• A preliminary consideration relates to the Belgian rules on the control of foreign investments As things stand, in Flanders, there are ex-post controls of foreign investments by non-EU/EEA investors with regard to the acquisition of certain assets in which the Flemish government has a stake. Further rules for the whole of Belgium, which will provide for a system of prior notification to an Inter-Federal Screening Committee, are due to be introduced with effect from 2023 with regard to investments in critical supplies, infrastructure, technologies and information as well as with regard to the media.
• Belgian employment and social law includes many rules that protect employees and which are mandatory. These rules, which include working hours, minimum wages, notice and termination rights, social security provisions, health and safety, employee consultation/information (including with regard to the purchase of the company), trade union representation, non-compete clauses are mandatory and will apply to employees of the Belgian target companies irrespective of any attempt to waive, avoid or contract out.
• Real estate is another area where there are many mandatory These include rules with regard to the acquisition and transfer of title to land and buildings, leases and rental agreements, planning rules, environmental matters, security interests in real estate, storage of dangerous products, easements etc.
• Insolvency is yet another area where many of the rules are mandatory. This is relevant for companies incorporated in Belgium but also for companies which own property in Belgium or which deal with Belgian customers or clients in The mandatory rules include rules on the legal consequences of insolvency or reorganization, so-called suspect periods prior to bankruptcy, the ranking of securities and creditor’s claims and the management of the reorganization or liquidation process.
• Last but not least, Belgian company law contains certain provisions and principles which are mandatory and which will need to be considered when considering changes to the articles of Belgian companies or when drafting Shareholders Agreements.

The inevitable conclusion is that, when a foreign company or group makes an acquisition which includes companies based in Belgium the effect of the Belgian mandatory provisions will need to be carefully considered, including with regard to the warranties set out in the acquisition agreement.

For more information, please contact Charles PRICE (charles.price@cew-law.be) or Sébastien POPIJN (sebastien.popijn@cew-law.be)