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MULTI-JURISDICTIONAL GUIDE 2014/15

CAPITAL MARKETS

Debt capital markets in Belgium: regulatory overview David Ballegeer, Isabelle Le Grand, Anne-Sophie Vankemmelbeke and Thierry L'Homme Linklaters LLP

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LEGISLATIVE RESTRICTIONS ON SELLING DEBT SECURITIES

MARKET ACTIVITY AND DEALS 2.

1.

What are the main restrictions on offering and selling debt securities in your jurisdiction?

Outline the main market activity and deals in your jurisdiction in the past year.

Deals Main restrictions on offering and selling debt securities If debt securities are being offered to the public or an admission to trading on a regulated market is sought and Belgium is the home member state, a prospectus must be prepared and approved by the Financial Services and Markets Authority (FSMA) in accordance with the law of 16 June 2006 on public offerings of securities (Prospectus Law) and Regulation (EC) 809/2004 implementing Directive 2003/71/EC as regards prospectuses and dissemination of advertisements (Prospectuses Regulation) as amended (see Question 13 for a detailed overview of the exemptions). Marketing materials must also be approved by the FSMA if prepared in connection with: Admissions to trading of debt securities in Belgium. Admissions to trading of debt securities for which Belgium is the home member state. • The public offer of debt securities in Belgium. A number of provisions of the Belgian law of 6 April 2010 on market practices and consumer protection (Market Practices Law) may apply to the offering of securities to consumers. The Market Practices Law prohibits, for instance, unfair trade practices and unfair contractual terms in such context. The definition of "consumer" in the Market Practices Law is quite broad and includes "every natural person who purchases or uses, for nonprofessional purposes only, goods or services put on the market". Under limited circumstances (for example, in the case of an IPO or issue on the primary market), the mere execution of orders relating to securities is currently exempted from the provisions of the Market Practices Law. A legislative modification due to enter into force later in 2014 will remove this exemption and will, more generally, render all provisions of the Market Practices Law applicable to the offering of securities to consumers. • •

Restrictions for offers to the public or professional investors Offers of debt securities made to the "public" (as defined in the Prospectus Law) require the preparation and approval of a prospectus. Offers made to "qualified investors" (as defined in the Prospectus Law) are not considered an offer to the "public" and, provided no admission to trading on a regulated market is sought, no prospectus needs to be prepared (see Question 13 for a detailed overview of the exemptions).

Notable issues of debt securities in the Belgian market in 2013 include: The EUR15 billion AB InBev guaranteed EMTN Programme with several issues. • The EUR5 billion EMTN programme for Eandis cvba with a EUR500 million guaranteed fixed rate notes issue. • The EUR3 billion EMTN Programme for UCB NV with a EUR250 million retail bond issue. • The EUR500 million EMTN programme for Infrax cvba with a EUR250 million guaranteed fixed rate notes issue. • The EUR5 billion EMTN Programme for Elia NV with a EUR750 million fixed rate notes issue. • The EUR5 billion EMTN programme for Brussels Airport Holding with inaugural issue of EUR500 million notes, a US private placement of EUR155 million guaranteed fixed rate senior secured notes and an issue of EUR200 million fixed rate senior secured notes. • The EUR65 million bond financing for Financière Rémy Cointreau guaranteed by Rémy Cointreau SA. • The EUR150 million bond financing for Greenyard Foods NV. • The US$1 billion contingent capital notes issue for KBC Bank NV. • The EUR60 million bond financing for Immobel NV. • The EUR75 million bond financing for La Lorraine Bakery Group NV. • The issue of EUR500 million fixed rate mortgage pandbrieven by Belfius Bank under its EUR10 billion mortgage pandbrieven programme. • The EUR100 million bond financing for Sibelga SCRL/CVBA. Notable issues of debt securities with an equity component in 2013 included: •

• • •

•

© This article was first published in the Capital Markets Multi-Jurisdictional Guide 2014/15 and is reproduced with the permission of the publisher, Thomson Reuters. The law is stated as at 1 June 2014.

The EUR1 billion fixed rate exchangeable bonds by Groupe Bruxelles Lambert NV (GBL) into GDF Suez shares. The EUR428.4 million fixed rate convertible bonds issued by Sagerpar SA and convertible into GBL shares. The issue of EUR408 million fixed rate bonds by GBL exchangeable into ordinary shares of Suez Environment Company. The issue of US$250 million fixed rate bonds with detachable warrants exercisable into existing GDF Suez shares by Sofina NV.

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Recent trends With investors seeking higher returns, there is an increased appetite for higher yielding bond debt. In addition, the low interest rates attract different types of issuer: medium-sized enterprises and public entities are increasingly funding themselves through the capital markets. These favourable market conditions also trigger more interest in liability management exercises and exchange offers. The CRD IV framework has led to the issue of contingent capital notes by certain financial institutions. Since the introduction of a covered bond legal framework in 2012 in Belgium, several credit institutions have set up a covered bond programme.

MAIN DEBT CAPITAL MARKETS/EXCHANGES 5.

Main debt markets/exchanges The main debt securities markets/exchanges are as follows: •

STRUCTURING A DEBT SECURITIES ISSUE 3.

Are different structures used for debt securities issues to the public (retail issues) and issues to professional investors (wholesale issues)?

An offer of debt securities to qualified investors (a private placement/wholesale issue) is typically placed by the managers on the basis of a mandate letter. The subscription agreement is signed after the bookbuilding process. Where no admission to trading on a regulated market is sought, a prospectus will not be required. The issuer will typically prepare an offering circular with certain information on the issuer and the securities offered, without being required to include the minimum information and use the format prescribed by the Prospectus Regulation and without FSMA approval.

A prospectus must be prepared and it must be approved by the FSMA. The prospectus must comply with the requirements set out in the Prospectus Law and the Prospectus Regulation. 4.

Are trust structures used for issues of debt securities in your jurisdiction? If not, what are the main ways of structuring issues of debt securities in the debt capital markets/exchanges?

There is no "trust" concept under Belgian law. In Belgium, debt securities are issued either on a standalone basis or under a programme.

Euronext Brussels. The Belgian regulated market operated by Euronext Brussels (www.euronext.com). In 2013, the debt securities of the following issuers have been listed on Euronext Brussels (among others): -

Elia;

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Greenyard Foods;

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UCB;

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Eandis;

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Sibelga;

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Financière Rémy Cointreau;

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Infrax.

Listing on a regulated market requires financial statements under the International Financial Reporting Standards (IFRS). •

If admission to trading on a regulated market is sought, a prospectus will need to be prepared in accordance with the Prospectus Law and the Prospectus Regulation. However, disclosure will be more limited for wholesale issues than for retail issues. An offer to the public (a retail issue) is made under a placement agreement entered into before the offering period starts. The managers agree to place the bonds, typically on a best efforts basis. After the offer period, a supplemental agreement is signed that specifies the final amount of the issue.

What are the main debt securities markets/exchanges in your jurisdiction (including any exchange-regulated market or multi-lateral trading facility (MTF))?

Alternext Brussels. The main multi-lateral trading facility (MTF) in Belgium (www.euronext.com). Often, this is chosen if the issuer does not have financial statements that are prepared in accordance with IFRS. In 2013, the debt securities of the following issuers were listed on Alternext Brussels (among others): -

DEME;

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La Lorraine Bakery Group NV;

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TMVW.

Many Belgian issuers seek admission to trading and listing on the regulated market of the Luxembourg Stock Exchange (Bourse de Luxembourg) or seek listing on the Luxembourg MTF (Euro MTF). In light of the limited number of listings on Alternext Brussels and the focus in this chapter on the Belgian markets, Alternext Brussels and the Luxembourg stock exchanges are not further discussed.

Approximate total issuance on each market In 2013, approximately 80 new debt securities were listed on Euronext Brussels and six new debt securities were listed on Alternext Brussels. 6.

What legislation applies to the debt securities markets/exchanges in your jurisdiction? Who are the main regulators of the debt capital markets?

If the issuer intends to issue one specific type of debt securities, the issuer will typically prepare bond documentation on a standalone basis. The prospectus or offering circular can only be used for the issue of one specific type of security.

Regulatory bodies

If the issuer intends to issue different types of debt security during a certain period of time, the issuer may consider establishing a programme.

The FSMA is the competent regulator for offers of securities to the public and to listings of securities on a regulated market or (where Belgium is the home member state). Debt securities issued by Belgian issuers are typically issued in euros and cleared through the securities settlement system of the National Bank of Belgium (NBB).

Legislative framework Public offers and admission to trading. The Prospectus Law sets out the main rules for preparation, approval and publication of the

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The Prospectus Law further specifies a number of specific requirements for marketing materials. The marketing materials for retail offers must also be approved by the FSMA. In practice, if the securities offered are in denominations of EUR100,000 or more, the marketing materials are usually filed with the FSMA for information purposes only. On-going obligations. Once the debt securities are issued, a number of on-going obligations apply to issuers of debt securities with a view to enhancing transparency and preventing market abuse. These rules are set out in: Law of 2 August 2002 on the supervision of the financial sector and on financial services. • Royal Decree of 17 May 2007 on primary market practices. • 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 21 August 2008 on the rules applicable to certain multilateral trading facilities. • Royal Decree of 5 March 2006 on market abuse. • Regulation 1606/2002 on the application of international accounting standards (IFRS accounting standards) (Accounting Regulation). • Belgian Companies Code: as soon as a company, having its principal place of business (voornaamste vestiging/établissement principal) in Belgium, has listed debt securities on a regulated market or has offered debt securities to the public, the issuer will qualify as a "listed company" and/or as a "company which has or will be made a public call for savings" in accordance with the Belgian Companies Code. A number of additional rules set out in the Belgian Companies Code will apply. The issuer will, for instance, need to put in place an audit committee (either organised within the board of directors or in a separate committee) and ensure that an independent director sits on its board of directors. The issuer will also have to put in place specific procedures in order for the holders of the debt securities to be able to exercise their rights and provide information about the rights attached to the debt securities. Overall, the on-going obligations for issuers of debt securities are less stringent than the obligations applicable to issuers listing or offering equity securities. •

Exchange offers. In the case of an exchange offer in relation to debt securities, the law of 1 April 2007 on public takeover bids and Royal Decree of 27 April 2007 on public takeover bids will, in principle, apply (instead of the Prospectus Law).

LISTING DEBT SECURITIES 7.

What are the main listing requirements for bonds and notes issued under programmes?

Main requirements

A letter confirming its undertaking to apply the Belgian legislation in relation to the withdrawal of bearer shares. • A copy of the minutes of the board of the issuer approving the listing and a statement from the issuer confirming the application for listing. The documentation should be submitted, for first-time issuers, at least seven business days before the target listing date and, for previously admitted issuers, no later than 11am Central European Time on the business day prior to the target listing date. Euronext Brussels may waive any of the listing conditions, in which case it will publish the waiver and apply it in a general manner. •

Working capital requirements. Euronext Brussels does not impose any specific working capital requirements to issuers of bonds.

Minimum size requirements Each issuer requesting an admission to trading of bonds must issue bonds for a minimum aggregate nominal amount of either: EUR5 million in the case of a public offer of bonds. • EUR2 million for all other types of admission of bonds. These minimum amounts do not apply in the case of tap issues where the amount is not fixed. •

Trading record and accounts Under the Euronext Rulebook, no specific trading record or accounting requirements apply for listing bonds. Under the Prospectus Regulation, the issuer must include audited annual financial statements, consolidated where applicable, for the preceding two financial years in the prospectus. These must be drawn up in accordance with the Accounting Regulation (IFRS) or, if not applicable, in accordance with a member state's national accounting standards for issuers from the European Economic Area (EEA). Issuers outside the EEA must include financial information in accordance with the Accounting Regulation or their own country's national standards equivalent to these standards. If the standards are not equivalent, the financial statements must be presented in the form of restated financial statements. If the issuer has published quarterly or half-yearly financial information since the date of its last audited financial statements, these must also be included in the prospectus. If the prospectus is dated more than nine months after the end of the last audited financial year, it must contain interim financial information, covering at least the first six months of the financial year. After the issue of the securities, the issuer will be required to publish certain financial information on an on-going basis under Royal Decree of 14 November 2007 (see Questions 8 and 9).

Minimum denomination There are no minimum denomination requirements. However, typically bonds are issued in denominations of EUR1,000 (in the case of retail offers) and EUR100,000 (or US$200,000) (in the case of wholesale offers). 8.

Listing conditions. The issuer must file the following documents with Euronext Brussels: • • • •

An application form. A technical term sheet. A copy of the prospectus (or the final terms as the case may be). Its articles of association.

Are there different/additional listing requirements for other types of securities?

For the listing of depositary receipts for shares, issuers must comply with the same listing rules as set out for shares. Issuers seeking to list warrants must be either: • •

A credit institution or an investment firm. An entity subject to comparable supervisions and control.

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prospectus. These rules are supplemented by the rules set out in the Prospectus Regulation, the Royal Decree of 26 September 2006 on the register of eligible investors and on the modification of the concept of eligible investors and the Royal Decree of 17 May 2007 on primary market practices.

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Another entity whose obligations in relation to the warrants are irrevocably and unconditionally guaranteed by or benefit from an arrangement equivalent to such guarantee by either of the entities in the first two bullets. Euronext Brussels may require that a liquidity provision agreement be entered into between a liquidity provider and Euronext Brussels, or any other agreement as Euronext Brussels deems appropriate. Euronext Brussels may subject the admission to listing of warrants to a minimum quantity per issue or a minimum order size.

•

CONTINUING OBLIGATIONS: DEBT SECURITIES 9.

•

The above information must not be disclosed by issuers of debt securities that are admitted to trading on a regulated market having a nominal amount of at least EUR100,000 or securities issued by sovereign issuers, the central banks of the member states or the European Central Bank (ECB).

•

The publication of the half-yearly report is not required for continuous issues by credit institutions or issues that are irrevocably and unconditionally guaranteed by sovereign entities, each time subject to certain conditions.

•

The issuer that lists debt securities on Euronext Brussels must disclose to Euronext Brussels the following information:

What are the main areas of continuing obligations applicable to companies with listed debt securities and the legislation that applies?

Periodic financial reporting The following rules apply to companies if Belgium is their home member state. Issuers must ensure that the following regulated information is periodically distributed to the public and sent to the FSMA: •

The annual financial report must be published by no later than four months after the end of the relevant financial year and must include: -

the audited financial statements (when accounts are prepared on a consolidated basis, both the consolidated and standalone or condensed standalone accounts);

-

the annual board report (which must be prepared by issuers having their real seat in Belgium, in accordance with the rules set out in the Belgian Companies Code (which require, among other things, the setting out of the most important aspects of the internal control and risk management systems regarding financial reporting) and, for other issuers, in accordance with the national equivalent of the rules set out in EU Directive 83/349/EEC on consolidated accounts);

-

•

a declaration from a responsible person from the issuer that the accounts provide a true and fair view of the current assets, the financial condition, the results and the consolidated group companies of the issuer, and that the board report provides a true and fair view of the developments, the results, the position and the consolidated group entities of the issuer, together with a description of the most important risks and uncertainties; and the signed auditor's report.

The half-yearly financial report should be made public no later than three months following the end of the relevant reporting period and must include: -

a condensed financial overview;

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the interim board report;

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a declaration of the issuer's officials confirming that the condensed overview provides a true and fair view of the assets, the financial condition, the results and the consolidated group companies of the issuer, and that the board report provides a true and fair view of the most important events during the reporting period and the effect on the financial information, together with an overview of the most important risks and uncertainties for the remainder of the relevant financial year.

If the issuer chooses to publish an annual communication before the annual financial report has been published, the communication must contain certain specified financial information, explanatory disclosures and information on the status of the audit process of the annual accounts and/or a declaration of the auditor.

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-

all information that may impact the fair, orderly and efficient functioning of the market or may modify the price of the securities ultimately when such information is made public; and

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corporate or securities events having an effect on the market or the position of the bondholders, at least two trading days in advance of the earlier of either the public announcement of the timetable for any such event, or the event having an effect on the market or the position of the holders of the securities.

Other disclosure obligations The issuer must also comply with certain rules preventing market abuse. The issuer must immediately disclose any inside information directly related to it that, if made public, could have a significant impact on the market price of the bonds. This disclosure can only be postponed under strict conditions and under the issuer's own responsibility. 10. Do the continuing obligations apply to foreign companies with listed debt securities? Non-EEA issuers can be exempted by the FSMA if the legislation of that country imposes equivalent obligations. The FSMA will notify any such exemption to the European Securities and Markets Authority (ESMA). 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. These issuers must simultaneously send the regulated information to the FSMA. 11.

What are the penalties for breaching the continuing obligations?

Failure to comply with the 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.

•

Criminal sanctions.

comfort letter is typically issued at the time of the approval of the prospectus and a bring down is typically provided at the time of the closing of the transaction.

12. Outline the role of advisers used and main documents produced when issuing and listing debt securities.

For Belgian transactions that include a Rule 144A offering to qualified institutional buyers in the US, 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.

Investment banks The investment banks assume several roles in an offering. These include: Advising the issuer on the structuring and the timing of the offering. • Advising the issuer on the implementation of the offering, for example: compliance with the prospectus and listing rules; drafting of the prospectus; update on market conditions; and pricing. • Advising the issuer on the marketing of the offer, for example: road shows; preparing and filing of the marketing materials. • Acting as underwriters for the offered securities. • Managing the offering process (one or several of the banks involved will usually act as lead managers or coordinators). • Acting as stabilisation manager. In addition, one or more banks will assume several agency roles. •

The paying agent will be responsible for paying the principal and interest to the bondholders. It also centralises the requests for redemption of the bonds before or on the maturity date. The calculation agent performs the calculations of interest and repayment amounts. A clearing agreement must be entered into between the issuer, a domiciliary agent (which must be a participant of the securities settlement system of the NBB (NBB System)) and the NBB when debt securities are cleared through the NBB System. A listing agent is typically also appointed to assist the issuer with the listing process, although no longer required for bonds under Euronext notice 6-01.

Legal advisers Usually, issuer's counsel will assist the issuer in relation to: The structuring of the transaction. The drafting of the issuer disclosure for purposes of the prospectus. • The communication with the FSMA in relation to the submission and the approval of the offering documents. • Relevant corporate authorisations. The dealers usually have their own counsel that will typically assist with: • •

• • •

The drafting and review of the main offering documents, including the prospectus. The drafting and the negotiation of the agency agreement and subscription or placement agreement. The drafting of the marketing materials.

Issuer's auditor The issuer's auditor will issue a comfort letter that will be addressed to the underwriters and in which the auditors will provide negative assurances up to a cut-off date and extraction comfort as to the financial information included in the prospectus (to the extent copied or derived from the financial statements). The

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 (or EUR3 million for unlisted issuers) for comfort letters under the Law of 22 July 1953 establishing the Belgian Institute of Auditors.

Main documents The main documents produced in an offering are the following: • • • • • • • • • • • •

A mandate letter in which the investment banks are instructed by the issuer. An engagement letter in which the auditor is instructed. A prospectus or offering circular. Marketing materials. A subscription or placement agreement. An agency agreement. A clearing agreement. Relevant corporate authorisations approving the transaction. An application for approval of the prospectus by the FSMA. An application for admission to trading on Euronext Brussels. Comfort letters issued by the issuer's auditor. Legal opinions from the legal advisers.

DEBT PROSPECTUS/MAIN OFFERING DOCUMENT 13. When is a prospectus (or other main offering document) required? What are the main publication/delivery requirements? A prospectus is required for an offer of securities to the public and for the listing of securities on the regulated market (with Belgium being the home member state). The FSMA must decide within ten business days following receipt of a complete application whether or not it approves the prospectus. The deadline is extended to 20 business 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. By way of derogation, for plain vanilla bonds and for issuers with a positive track record, an accelerated procedure can be applied. In such a case, the FSMA can approve the prospectus within a period of five business days upon receipt of a complete application. However, in practice the timetable for prospectus approval is usually agreed informally with the FSMA when the contemplated transaction is introduced. Once approved, the prospectus must be made public at least three business days before the end of the offer period and, in any case, at the latest on the first day of the offer period. If an admission to trading on Euronext Brussels takes place without a public offer, the prospectus must be made public at the latest one business day before the date of the admission to trading on a regulated market.

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ADVISERS AND DOCUMENTS: DEBT SECURITIES ISSUE

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The prospectus can be made public through any of the following main means: Publishing the prospectus in newspapers that are distributed throughout the country. • Making a printed copy freely available at the issuer's registered office, and at the offices of the financial intermediaries placing or trading the securities, including the paying agents. • Posting the prospectus on the website of the issuer. • Posting the prospectus on the website of the financial intermediaries placing or trading the relevant securities, including the agents. • Posting the prospectus on the website of the market where admission to trading is sought. An electronic version of the prospectus must be sent to the FSMA. The FSMA will publish the prospectus on its website and will forward it to ESMA. •

If not disclosed in the prospectus, the issue price and the final amount of debt securities that will be offered must be filed with the FSMA. The prospectus can be composed of several documents (with or without documents incorporated by reference): A registration document and a securities note. • A base prospectus and final terms. • A standalone prospectus. In such a case, the documents and information together forming the prospectus can be published separately, provided that the publication is made available in accordance with the rules set out above.

The offer has a total consideration of less than EUR100,000 in the EEA over a period of 12 months. A free allocation of investment instruments does not constitute an offering and, therefore, does not require a prospectus.

•

In addition, qualified financial intermediaries holding debt securities in custody for their clients, located in Belgium and not acting on behalf of the issuer of debt securities, may, without running the risk of having this qualified as a public offering in Belgium (which would require the publication of a prospectus), inform their clients about a public exchange offer, conducted mainly outside Belgium, with respect to the securities they hold in custody (allowing their Belgian resident clients to participate in the exchange offer and tender their securities). A prospectus need also not be prepared in case of a subsequent resale of securities or final placement of debt securities through financial intermediaries as long as a valid prospectus is available and the issuer or the person responsible for drawing up such prospectus have consented to the use of the existing prospectus by means of a written agreement. Finally, a prospectus need not be drawn up in accordance with the Prospectus Law in the case of: •

•

14. Are there any exemptions from the requirements for publication/delivery of a prospectus (or other main offering document)?

General exemptions

•

Exempt admissions to a regulated market Notwithstanding the above exemptions, if securities are to be listed on a regulated market, a prospectus must nevertheless be prepared and approved unless one of the exemptions below apply: •

•

In general, the Prospectus Law is not applicable to: •

•

•

•

Debt securities issued by a member state or by one of a member state's regional or local authorities, by public international bodies of which one or more member states are members, by the European Central Bank or by the central banks of the member states. Debt securities that are unconditionally and irrevocably guaranteed by a member state or by a member state's regional or local authorities. Debt securities issued by associations with legal status or nonprofit-making bodies, recognised by a member state, with a view to their obtaining the means necessary to achieve their non-profit-making objectives. Debt securities issued in a continuous or repeated manner by credit institutions subject to certain conditions.

Exempt offers Furthermore, a prospectus is not required if: • •

•

•

The offer is addressed solely to qualified investors. The offer is addressed to investors other than qualified investors belonging to a limited circle of fewer than 150 natural or legal persons per member state of the EEA. The offer is addressed to investors acquiring securities for a total consideration of at least EUR100,000 per investor, for each separate offer. The offer relates to debt securities with a minimum denomination of at least EUR100,000.

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A (public) exchange offer, if a document containing information equivalent to a prospectus is made available and filed with the FSMA for review. 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.

•

Debt securities offered in connection with an exchange offer, if a document containing information equivalent to a prospectus is made available and filed with the FSMA for review. Debt 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, subject to certain conditions. Debt securities already admitted to trading on another regulated market, subject to certain conditions.

15. What are the main content/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, if any, of any guarantor). • Rights attached to the securities. The information must be presented in an easy-to-analyse and comprehensible form in a specific order. •

The minimum information to be included in the prospectus is set out in the Prospectus Regulation. The specific features of the securities offered (for example, derivatives, convertibles, guaranteed, denomination) and the type of issuer (for example, public entity, small and medium-sized enterprise) will determine how much and which type of information is required. Generally, the disclosure requirements for debt securities are more limited than for equity securities. For example, the historical financial information should cover only two years, there is no

The requirements for debt securities with a minimum denomination of EUR100,000 for which admission to trading on a regulated market is sought are in turn more limited than those for debt securities with a denomination of less than EUR100,000. For those issues, disclosure about the investments, the principal markets, board practices, share capital of the issuer, selected financial information and a summary in the form as set out in Annex XXII of the Prospectus Regulation are not required. Limited disclosure also applies to small and medium-sized enterprises, companies with a reduced market capitalisation and under certain conditions, credit institutions. When issuing securities to the public, or when an admission to trading on a regulated market is sought and Belgium is the home member state, a summary in Dutch and/or French must be included. The summary must contain "key information", which is defined to include the essential characteristics and risks associated with the issuer, the guarantor (if any), the securities, any rights attaching to the securities, the general terms of the offer, the specifics about the admission to trading, the reasons for the offer and the use of the proceeds. A summary must be drawn up in a common format to facilitate comparability of the summaries relating to similar securities. In a public offer context, the prospectus is also subject to certain language requirements if the issuer has an operating seat (exploitatiezetel/siège d’exploitation) in Belgium. The prospectus must be supplemented if a significant new factor, material mistake or inaccuracy relating to the information included in the prospectus arises or is noted that is capable of affecting the assessment of the securities between the time when the prospectus is approved and the later of either the final closing of the offer to the public or the trading on the regulated market. The supplement must be approved by the FSMA within seven business days and the supplement must be published through the same means that were used for the publication of the prospectus (see Question 12). Investors who had already agreed to purchase or subscribe to the securities before the supplement was published have the right, exercisable within two business days after the publication of the supplement, to withdraw their acceptance. Issuers or offerors may extend the period for withdrawal. Withdrawal rights only apply if the new development, mistake or inaccuracy requiring the publication of a supplement has arisen prior to the final closing of the offer and the delivery of the debt securities. Investors should be expressly notified of their withdrawal rights at the time of publication of the supplement, either through the press or individually, unless the new development, (rectification of the) material mistake or inaccuracy that triggered the supplement does not negatively impact the assessment of the securities by the public in Belgium. When debt securities are offered outside the scope of the Prospectus Law and Prospectus Regulation, an offering circular will be prepared and will contain certain information about the issuer and the securities. However, it is not required to include the minimum information or to use the format prescribed by the Prospectus Regulation. If a listing is sought on a non-regulated market, listing particulars should be prepared containing the information required by the rules of the relevant market where listing is sought.

16. Who is responsible for the prospectus (or other main offering document) and/or who is liable for its contents? The prospectus is generally prepared by the issuer's legal advisers, with input from the issuer, the auditors and the investment banks (see Question 9). The prospectus must designate the persons responsible for the content of the prospectus. The responsibility can only be borne by: The issuer or its administrative, management or supervisory bodies. • The offeror. • The person requesting the admission to trading. • The guarantor. The persons responsible must declare that, to the best of 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 by any misleading or inaccurate information in the prospectus or its supplements, or lack of information that should have been included in the prospectus or its supplements. Except if proven otherwise, damages will, under the Prospectus Law, be presumed to result from the misleading or inaccurate information or lack of information if 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 securities. No one can be liable solely on the basis of the summary or the translation of the prospectus, unless the summary or translation of the summary, when read together with the rest of the prospectus, is misleading, inaccurate or inconsistent or does not include the key information to assist when considering whether to invest in such securities.

• •

TIMETABLE: DEBT SECURITIES ISSUE 17. What is a typical timetable for issuing and listing debt securities? The timetable for issuing and listing debt securities can vary from a few days to several months depending on: Whether the issuer is a first-time issuer or a regular issuer. Whether a registration document or base prospectus already exists. • The characteristics of the offer (for example, number of jurisdictions involved, retail issue or private placement). • The type of securities offered (for example, complexity of the terms and conditions). The following are the main steps typically followed in the case of a public offer of debt securities, where "T" is the date of listing: • •

•

•

• • •

T minus 1 or 2 months. Advisers are appointed and start drafting the prospectus and agreements, first (and second) filing with the FSMA. T minus 3 weeks. Co-managers or dealers are asked to join the syndicate, marketing materials are filed with the FSMA, second (or third) filing with the FSMA. T minus 2 weeks. Road shows. T minus 10 days. Final filing with FSMA, signing of the documentation, pricing, due diligence, start offering period. T. Signing of supplemental agreement, settlement, listing.

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requirement to draw up pro forma financial information, and there is no requirement to include an operating and financial review.

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The following steps are typically followed in the case of a private placement (where admission to trading on a regulated market is sought), where "T" is the date of listing: •

T minus one or two months. Advisers are appointed and start drafting the prospectus and agreements, first (and second) filing with the FSMA.

•

T minus two weeks. Co-managers or dealers are asked to join the syndicate; second (or third) filing with the FSMA, road shows.

•

T minus one week. Approval from the FSMA, due diligence, launch, pricing, bookbuilding.

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T minus two business days. Signing of documentation.

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T. Settlement and listing.

TAX: DEBT SECURITIES ISSUE 18. What are the main tax issues when issuing and listing debt securities? A number of tax issues arise in connection with the issue and listing of debt securities. Each issuer and potential investor should seek professional and tailored advice on the tax consequences of issuing or investing in debt securities. The main issues can be summarised as indicated below: •

Qualification of the instrument. Interest coupons on debt instruments issued to third parties are in principle fully tax deductible in the hands of the Belgian issuer, whereas dividend distributions are not tax deductible. One should therefore analyse the qualification of the instrument for Belgian tax purposes.

•

Interest withholding tax (WHT). Belgian domestic tax law provides for a 25% interest WHT to be levied on interest payments. There are various interest WHT exemptions (under Belgian domestic tax law and/or double tax treaties entered into by Belgium) that can be relied upon. One should verify whether the debt security can be structured so that a particular WHT exemption can be relied upon.

•

Stock exchange tax. A tax on stock exchange tax transactions could be levied on the purchase and sale in Belgium of existing debt securities on the secondary market through a professional intermediary in Belgium. Primary market transactions are not subject to the tax on stock exchange tax transactions. Certain investors enjoy, subject to certain conditions, an exemption from the tax on stock exchange tax transactions on secondary market transactions. The tax on stock exchange tax transactions should therefore be assessed in connection with the issue and listing of debt securities.

Financial Transactions Tax. In the future it may also be necessary to take into account the Financial Transactions Tax (FTT), if introduced. On 14 February 2013, the European Commission proposed a draft directive on a common Financial Transaction Tax (Draft FTT Directive) in the context of an enhanced co-operation procedure involving 11 EU member states (note that this procedure is unprecedented in tax matters). Under the Draft FTT Directive, the FTT will, subject to certain conditions, be payable on financial transactions relating to (among other things) debt instruments. The proposed minimum rate is 0.1%. According to the Draft FTT Directive, primary market transactions would not be subject to FTT. A statement made 6 May 2014 by the participating member states

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(other than Slovenia) indicates that a progressive implementation of the FTT is being considered, and that the FTT may initially apply only to transactions involving shares and certain derivatives, with implementation occurring by 1 January 2016. However, full details are not available. In addition, the UK has legally challenged certain aspects of the Draft FTT Directive. The Court of Justice of the EU (CJEU) has dismissed, on 30 April 2014, the UK's legal challenge to the EU Council decision authorising 11 member states to use the enhanced co-operation procedure in order to implement a common financial transaction tax in those member states. However, the case does not amount to a defeat on the substantive points of concern but rather is a decision that the timing of the challenge was premature. The CJEU has left the way open for legal challenge to the FTT itself if and when the measure is finally adopted. The Draft FTT Directive currently provides that once the FTT enters into force, the participating member states shall not maintain or introduce taxes on financial transactions other than the FTT. For Belgium, the stock exchange tax should therefore be abolished if and when the FTT enters into force.

CLEARING AND SETTLEMENT OF DEBT SECURITIES 19. How are debt securities cleared and settled and what currency are debt securities typically issued in? Are there special considerations for holding, clearing and settling debt securities issued in foreign currencies? Debt securities issued by Belgian issuers are typically issued in euros and settled through the securities settlement system operated by the National Bank of Belgium (NBB System). The NBB System is designed for the settlement of debt securities of Belgian governmental and corporate issuers. It operates in a manner similar to other clearing and settlement systems. The rationale of the NBB System is to enable tax-free trading of Belgian debt securities for non-resident and corporate investors. The NBB regime exempts from WHT all interest on debt securities received by non-resident investors (without any connection with Belgium other than the holding of securities), companies subject to Belgian corporate income tax (and foreign companies with a taxable establishment in Belgium), and other qualifying investors (Eligible Investors) as holders of an "X" account. However, interest paid to Belgian private investors (retail investors), Belgian non-profit organisations (other than certain investment funds and semi-public governmental institutions which are eligible investors) and certain other investors, as holders of an "N" account (that is, a non-exempted account), are subject to WHT. The NBB System is accessible to investors and foreign financial intermediaries through its participants. The participants include most Belgian banks, some Luxembourg banks, investment firms, Euroclear, Clearstream Luxembourg and a few other institutions. Participations are often held through Euroclear and Clearstream Luxembourg.

REFORM 20. Are there any proposals for reform of debt capital markets/exchanges? Are these proposals likely to come into force and, if so, when? No definite proposals for reform of Euronext Brussels have been made publicly available.

Country Q&A

ONLINE RESOURCES Belgisch Staatsblad/Moniteur Belge W www.ejustice.just.fgov.be/cgi/welcome.pl Description. Belgian legislation published in the Belgian State Gazette.

Justel W www.ejustice.just.fgov.be/wet/wet/htm Description. Consolidated Belgian legislation (the legislation is regularly updated).

Euronext W www.euronext.com Description. The official website of Euronext Brussels.

FSMA W www.fsma.be Description. The official website of the FSMA.

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Practical Law Contributor profiles David Ballegeer, Partner

Isabelle Le Grand, Associate

Linklaters LLP

Linklaters LLP

T F E W

+32 2 501 9593 +32 2 501 9116 [email protected] www.linklaters.com

T F E W

+32 2 501 9250 +32 2 501 9116 [email protected] www.linklaters.com

Professional qualifications. Attorney, Member of the Brussels Bar; Solicitor of the Senior Courts of England and Wales

Professional qualifications. Attorney, Member of the Paris Bar, registered on the list of EU lawyers of the Brussels Bar

Area of practice. Equity and debt capital market transactions; banking.

Area of practice. Banking and debt capital market transactions.

Recent transactions •

Advising Belfius Bank as issuer and registrar with regard to the establishment of the EUR10 billion mortgage pandbrieven programme and issuance of N-bonds (Namensschuldverschreibungen) by Belfius Bank.

Recent transactions •

Advising AB InBev on its EUR15 billion guaranteed EMTN Programme with several issues.

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Advising on the EUR3 billion EMTN Programme for UCB NV with a EUR250 million retail bond issue.

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Advising KBC Bank on its US$1 billion contingent capital notes issue.

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Advising Financière Rémy Cointreau on its EUR65 million bond financing guaranteed by Rémy Cointreau SA.

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Advising KBC Group on its EUR1.4 billion additional tier 1 notes issue.

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Advising BNP Paribas on the EUR100 million bond financing for Sibelga SCRL/CVBA.

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Advising the joint lead managers with regard to the EUR75 million retail bond issuance for La Lorraine Bakery Group.

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Advising on an exchangeable bond for a BEL20 company with one of the largest capitalisations of Euronext Brussels.

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Advising AG Insurance as Issuer in relation to the issue of EUR1,125 million notes by AG Insurance to its shareholders (Ageas and BNP Paribas Fortis).

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Advising Belfius Bank and HSBC France as co-arrangers and dealers in connection with the update of the EUR5 billion EMTN guaranteed programme of Eandis CVBA and with regard to the inaugural issue of EUR500 million fixed rate notes thereunder.

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Advising Agfa-Gevaert NV on the public exchange offer on its outstanding EUR189 million fixed rate bonds.

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Advising the dealer managers in connection with the public exchange offer by NV Bekaert SA on its outstanding EUR150,000 fixed rate bonds.

Languages. Dutch, English, French Publications. Various publications on financial law (for example Basel II: The new capital regime for banks, Bank and Financial Law Review (Bank- en financieel recht), 2011).

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Languages. English, French Publications. The French trust for security purposes: the outcome

of a three year legislative adventure (Banque & Droit, No 128, November-December 2009).

Thierry L'Homme, Counsel

Linklaters LLP

T +32 2 501 9186 F +32 2 501 9577 E [email protected] W www.linklaters.com

Linklaters LLP

T +32 2 501 9167 F +32 2 501 9116 E [email protected] W www.linklaters.com

Professional qualifications. Attorney, Member of the Brussels Bar

Professional qualifications. Attorney Area of practice. Banking and debt capital market transactions Recent transactions •

Advising KBC Bank and KBC IFIMA on the update of their EUR15 billion retail and EUR25 billion wholesale EMTN programmes.

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Advising Belfius Bank and HSBC France as co-arrangers and dealers in connection with the update of the EUR5 billion EMTN guaranteed programme of Eandis CVBA and with regard to the inaugural issue of EUR500 million fixed rate notes thereunder.

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Advising BNP Paribas and Belfius Bank with the establishment of the Infrax EUR500 million wholesale guaranteed EMTN programme and issue of EUR250 million fixed rate notes thereunder. Advising BNP Paribas as arranger on the update of the EUR3 billion EMTN programme for Elia as well as in connection with the EUR750 million fixed rate bond issuance by Elia.

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Advising Agfa-Gevaert NV on the public exchange offer on its outstanding EUR189 million fixed rate bonds.

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Advising the dealer managers in connection with the public exchange offer by NV Bekaert SA on its outstanding EUR150,000 fixed rate bonds.

Languages. Dutch, English, French

"Compensatieclausules" in Clausules, Antwerp, Intersentia 2013, 1143. Publications.

Gemeenrechtelijke

Areas of practice. Equity, equity-linked and debt capital markets transactions including IPOs, public M&A, company law and corporate governance. A trusted advisor to a large number of listed companies, including many BEL 20 companies. Leads the executive incentives practice of Linklaters in Belgium. Recent transactions •

Advising on the largest IPO that took place on Euronext Brussels in 2013.

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Advising on a EUR1 billion exchangeable bond for a BEL20 company.

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Advising on a complex convertible bond for a BEL20 company.

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Advising one of the largest Belgian listed companies on a substantial international bought deal.

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Advising one of the leading energy providers in the world on the disposal and reorganisation of several strategic assets following its merger as well as on its subsequent combination with another large energy company.

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Advising a number of listed companies on their annual shareholders' meetings as well as their international stock option plans and executive incentive schemes.

Languages. French, English, Dutch Publications. Has written on numerous subjects on company law, corporate governance and incentive schemes; a regular speaker at conferences on these topics.

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Anne-Sophie Vankemmelbeke, Associate