merger proposal

Merger proposal

The procedures to be followed in the case of a merger by acquisition and in the case of a merger by incorporation of a new company are dealt with extensively in sections 12:24 up to and including 12:35 and sections 12:36 up to and including 12:49, respectively, of the WVV. This extensiveness is the result of an endeavour to protect the shareholders involved on the one hand and the companies’ creditors on the other. In principle, the following procedure applies to both forms of the merger.

The administrative bodies of the companies to be merged draw up a merger proposal by authentic Act or private Act in which the information set out in article 12:24, paragraph 2 or 12:37, paragraph 2 WVV is included. These data include:

  • who is going to merge;
  • the manner in which the shares will be issued; 
  • which rights the shareholders will have in the new company; 
  • the dividend policy;
  •  the exchange ratio;
  • the accounting retroactivity.

In this way, they want to present a common project to the shareholders on the one hand, and to the creditors on the other hand. The creditors, however, will never be able to block the merger but the possibility is open to them to ask for additional protection. All the various governing bodies commit themselves to present this merger proposal to their respective general meeting. This will usually be done after negotiations have taken place. It should be noted that these proposals are not binding whatsoever. After all, it is the general meeting that decides on the merger, not the administrative body.

The proposal must be deposited at the registry of the Corporate court no later than six weeks before the merger decision. Each company involved in the merger will have to do this before the competent registry. The proposal will in turn be published by the registry in the Annexes to the Belgian Official Journal, either by way of an extract or by means of an announcement of the subject of the proposal and a hyperlink to the company website.

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