As of 1 January 2012, shareholders of listed companies will obtain more rights as a
consequence of the transposition of the EU Shareholders’ Rights Directive into
Belgian federal law. However, unlike the Directive, the new Belgian Act also
allows non-listed companies, mainly on an optional basis, to apply the
Shareholders’ Rights Act.

On 20 December 2010, the Shareholders’ Rights Act was ratified. On 18 April 2011, the
Act was published in the Official State Gazette. The Act faithfully implements
Directive 2007/36/EC of the European Parliament and the Council of 11 July 2007
into Belgian law. Its goal is to eliminate obstacles to access to the general
shareholders’ meeting, as well as those hindering its operations, especially in
a cross-border context. The Act also explicitly confirms the principle of equal
treatment for all shareholders who are in a same position. Unlike the
Directive, certain non-listed companies can also opt to apply the Act to
themselves. So the Belgian Act has greatly enhanced the Directive’s practical
relevance.

Innovations

The innovations of the Shareholders’ Rights Act particularly pertain to the
convocation of, and the attendance at, the general shareholders’ meeting. In
addition to the extension of the notice period from twenty-four to (at least)
thirty days and the introduction of a convocation notice through “such media
from which one can reasonably expect an efficient dissemination of the
information to the public throughout the European Economic Area in a manner
ensuring fast access to it on a non-discriminatory basis” in addition to the
publication in the Official State Gazette and national newspapers, the Shareholders’
Rights Act introduces a new Article 533bis
to the Belgian Company Code that contains the minimum contents of convocation
notices. Listed companies must also make all convocations, draft resolutions,
proxy forms, postal vote forms, question forms and any other relevant
information available on their websites, at least thirty days before the
general meeting.

Furthermore, the Act introduces the right to add items to the Agenda and to submit draft
resolutions for existing Agenda items to shareholders individually or jointly
owning at least 3% of the share capital (Article 533ter §2 C.C.). However, the Act does not specify whether or not
these rights may be used to alter the nature of a general meeting (e.g. by
adding draft amendments to the company’s Articles of Association to the Agenda,
requiring an extra-ordinary general shareholders’ meeting held in the presence
of a notary public).

For listed companies, the registration date, which is currently optional, becomes
compulsory. Shareholders registered by no later than midnight fourteen days
before the general meeting is held, are entitled to vote at the general
meeting, even if they no longer hold shares on the day of the general meeting.

Finally, the Shareholders’ Rights Act also includes some minor clarifications and
modifications, for instance to the right of shareholders to adjourn a general
meeting or to ask questions at a general meeting. Previously, the directors and
the statutory auditors could refuse to answer questions if this would cause
severe damage to the company, its shareholders or employees. Now, such a
refusal is only allowed if answering the question could damage the company’s
business interests or breach confidentiality undertakings of the company, its
directors or statutory auditors. The shareholders will also be entitled to
address questions by post or by electronic means in advance of a general
meeting.

Non-listed companies

For non-listed companies, the new rules regarding remote voting and electronic
voting are relevant. Both listed and non-listed Belgian public
limited-liability companies are granted the option to set up, within the
framework of the company’s Articles of Association, a system that enables
voting by post or by electronic means before the general meeting. This must be
done using a form which enables the company to verify the shareholder’s
identity and capacity (e.g. using an electronic signature or password). The use
of electronic voting may only be limited to ensure the security of electronic
communications. 

Moreover, the Shareholders’ Rights Act allows shareholders to participate in general
meetings by electronic means (e.g. using video or telephone conferencing or
internet chat rooms). The proceedings of the general meeting must be
transmitted in “real time”, to enable the shareholders accessing the meeting
remotely to follow the discussions and cast their votes simultaneously with the
shareholders who are present in person. This option is not only open to
non-listed public limited-liability companies, but also to private
limited-liability companies and co-operative limited-liability companies. It
is, however, not open to the members of the committee of the general meeting,
the directors and the statutory auditors who all still need to attend in
person. It goes without saying that shareholders participating in the meeting
by electronic means must be counted when calculating whether or not a quorum
has been reached.

Practical relevance

Particularly with respect to remote voting before a general meeting and electronic voting,
we expect that this new legislation will have a profound impact on the daily
operations of most Belgian companies. First, these rules are not exclusively
limited to the small number of listed companies, and, second, practice confirms
that companies with large numbers of shareholders have long desired the
introduction of electronic voting. The success of directors’ meetings by
telephone or video conferences can thus be extended to general meetings, which
can only be beneficial to the level of shareholder participation.

Amendments to the Articles of Association

In practice, the companies concerned need to modify their Articles of Association to allow
remote voting before a general meeting as well as electronic voting during a
general meeting. Most listed companies have already carried out these
amendments, even though the deadline to do so is not until 31 December 2011.
However, non-listed companies seem to be waiting to see which way the wind
blows. Should they also wish to make full use of the new participation and
voting options provided by the Shareholders’ Rights Act (in order to optimise
their corporate bodies and to tailor them to the needs of the current “digital
generation”), we encourage them to include these new provisions on remote voting
before a general meeting and electronic voting during a general meeting in the
next set of amendments to their Articles of Association. Accordingly,
non-listed companies can also amend their Articles of Association to bring them
in line with the current and future business context. Foreign shareholders and
shareholders who travel frequently as part of their work would thus have a
chance to become more involved in their companies in a more efficient and
contemporary manner.

The authors are Associates in the ALTIUS Corporate and M&A team.
ALTIUS won the “Corporate Firm of the Year” Award 2011 at the Belgian Legal
Awards.

Adriaan Dauwe, Kurt
Grillet and Laurent Cloquet

ALTIUS