The Float Guide How to float a company on the Belgian Securities Exchange - International Bar Association
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The Float Guide
How to float a company on the Belgian
Securities Exchange
Contact: Benoît Feron
Belgium
benoît.feron@nautadutilh.com
Marie-Laure De Leener
Belgium
marielaure.deleener@nautadutilh.comINTRODUCTION
This guide gives an overview of
what is involved in listing a Belgian
company on the NYSE Euronext Stock
Exchange – Brussels. It is a practical
manual covering all aspects of a float
from prerequisites through to life after the
float.
2 / 35CONTENTS
1. INTRODUCTION ON NYSE EURONEXT 4
MARKETS........................................................
2. PUBLIC OFFERING OF SECURITIES........ 5
3. LISTING REQUIREMENTS......................... 6
4. LISTING TIMELINE............………………… 7
5. NYSE ALTERNEXT (BRUSSELS) 25
LISTING PROCESS........................................
6. FREE MARKET (BRUSSELS) LISTING 29
PROCESS................................................…....
7. LIST OF ABBREVIATIONS:....................... 31
3 / 351. INTRODUCTION ON NYSE EURONEXT MARKETS
Going public is a real driver for a company’s development, enabling it to increase its equity
while also reinforcing its structure and reputation, as well as diversifying its sources of financing
and facilitating ownership’s transfers.
Companies listed on the European regulated markets of NYSE Euronext are subject to a
number of European rules applicable to all regulated markets within the European Union. This
harmonised environment, particularly in terms of financial reporting and accounting standards,
provides direct access to a very large investor base.
When going public on NYSE Euronext, companies have the choice of their point of entry:
Belgium, France, Portugal, the Netherlands or the UK.
Belgium offers three markets to companies considering a listing.
The Brussels regulated market of NYSE Euronext, Euronext Brussels, is segmented according
to market capitalisation:
Compartment A – companies with a market capitalisation of more than €1bn;
Compartment B – companies valued between €150m and €1bn;
Compartment C – companies with a market capitalisation of less than €150m.
NYSE Alternext (Brussels) is a market which offers simplified access and fewer requirements.
Listing requirements and post-listing obligations have been streamlined while respecting
investors’ needs for information. Intended primarily for midcap companies, it is open to both
professional and individual investors. The market is controlled by NYSE Euronext (through a
body of rules applicable to intermediaries and listed companies) but not regulated in the sense
of the European Union directives.
In addition to these two markets, the Free Market (‘Marché Libre/Vrije Markt) (Brussels) is
targeted at small and medium-sized companies looking to access the financial market to finance
their development and benefit from the reputation bestowed on listed companies without having
to meet the eligibility criteria of other NYSE Euronext markets. This market targets primarily
sophisticated or professional investors.
The major part of this contribution focuses on a listing on the regulated market Euronext
Brussels. Two smaller chapters at the end will set out the rules for the two additional markets
available in Belgium.
4 / 352. PUBLIC OFFERING OF SECURITIES
A public offering of securities means a communication to persons in any form and by any
means, presenting sufficient information on the terms of the offer and the securities to be
offered, so as to enable an investor to decide to purchase or subscribe to these securities, and
which is made by the person authorised to emit or sell the securities or on this person’s
account.
The Prospectus Act, implementing the Prospectus Directive, regulates:
the public offering of securities in Belgium;
the admission to trading of securities on a Belgian regulated market;
the prospectus and the communications with a promotional character regarding the
public offering of securities for a total amount of no less than €2.5m or the admission to
trading of securities taking place on the territory of one or more Member States of the
European Economic Area (with the exception of Belgium) when Belgium is the Member
State of origin.
An offering of securities shall not qualify as public if:
the offering is directed exclusively at professional investors;
the offering is directed at fewer than 100 [150]* people, other than professional
investors, per Member State of the European Economic Area;
the offering requires a minimum investment of €50,000 [100,000] per investor and per
separate offer;
the offering has a nominal value per unit of at least €50,000 [100,000]; or
the total amount of the offering is less than €100,000.
*These criteria will be soon amended in order to comply with the changes to the Prospectus
Directive adopted at the end of 2010 at European level (see numbers in [ ]).
There is no need for a foreign company offering securities in Belgium to be locally registered or
licensed or to have any formal local presence or agent to accept legal process. In the event of a
public offering, however, a foreign issuer must appoint a financial intermediary to act as its
paying agent for Belgian investors, and the FSMA shall require and ensure that the Belgian
public receives the same financial information provided abroad (particularly in the issuer's home
country).
5 / 353. LISTING REQUIREMENTS
In order to be admitted to trading on Euronext Brussels, issuers must meet the following main
requirements:
See NYSE Euronext Publication, European Markets – Public listing on NYSE Euronext (2010),
p 7.
The financial statements must have been reviewed by the issuer's statutory auditors or the
person in charge of the supervision thereof. If the most recent financial year ended more than
nine months prior to the application, interim statements must be submitted. If these interim
statements have not been reviewed by the statutory auditors, it should be mentioned.
The statutory annual accounts of an issuer having its headquarters in a state (party or not to the
European Economic Agreement) must be established in accordance with the International
Financial Reporting Standards (IFRS) if the national law allows them or the accounting
standards of its national law.
Consolidated accounts of an issuer having headquarters in a state which is party to the
European Economic Agreement shall be prepared in accordance with the IFRS or the
accounting standards of its national law and this even in case of private placement or direct
admission. An issuer having headquarters in a state which is a third party to the European
Economic Agreement may use: (i) the IFRS; or (ii) the accounting standards considered
equivalent to these standards (US Generally Accepted Accounting Principles (GAAP), Canadian
standards, Japanese standards, Chinese standards, South-Korean standards and Indian
standards); or (iii) the accounting national standards of its home state, subject to the production
of a IFRS reconciliation table.
6 / 354. LISTING TIMELINE
IPO phase
Preliminary phase Pre-IPO phase Post-IPO phase
introduction
IPO readiness structuring the life after admission to
formalities
transaction trading
When? Up to 18 months Three to six months Two months
What?
Final prospectus
Nomination of syndicate and approval by FSMA
Admission to listing
members
Negotiations with
Publication of the
Due diligence process authorities
Selection of float results
and prospectus drafting
team (lead bank of the offering
(legal, business, Marketing
and other advisors)
financial)
Payment, settlement
Book-building
Preparation: and
Determination of price
- business plan delivery
range Signature of the
- legal, tax and
underwriting agreement
financial Ongoing information
Informal contacts with
restructuring obligations during the
authorities: FSMA and Pricing and allocation
listed life of the
Euronext Brussels
company
Listing
Lead manager Syndicate
Management Management Management
Shareholders Shareholders Auditors
Who? Management
Legal advisors Legal advisors Banks
Auditors Auditors
Other advisors Other advisors
4.1. IPO readiness
4.1.1. Float team
A company will need the assistance of a team of advisers on an initial public offering (IPO)
including one or several investment banks, lawyers and accountants. The type of advisers and
their roles and responsibilities varies depending on the nature of the company's business. For
example, in addition to the core team of advisers, market standards may require the production
and publication of specialist’ reports or comfort letters and therefore the company may need to
involve business consultants, patent and trademark agents or regulatory experts.
Investment services provider
The investment services provider is a financial intermediary, generally a bank that acts as an
intermediary between the company and other market operators to sell the company’s shares to
the public.
7 / 35Depending on the size of the offer, the company chooses one or more investment services
providers. If there are several investment banks involved, the investment bank that organises
and runs the offering is commonly referred to as the ‘global coordinator’. In smaller offerings,
especially where such offerings are not international in nature, the investment bank leading the
offering may simply be referred to as the ‘lead manager’.
The investment bank generally plays a leading role in the IPO process. The principal tasks of
the global coordinator are to:
advise the management of the issuing company throughout the process;
assess the company's suitability for listing. The investment bank – together with the
lawyers – often acts as the intermediary between the company and the regulator and
may have to demonstrate to such a regulator and/or a stock exchange that the
company is suitable for listing;
market the offering and book-building (if required). During the early stages of the
process, the investment bank can already carry out pre-marketing to test out investors’
appetite for the company’s shares and their position on the chosen valuation;
participate in drafting the prospectus and coordinating the due diligence process in
collaboration with the legal counsel;
determine the price and coordinate the underwriting of the securities;
liaise with regulatory authorities; and
oversee settlement, including underwriting and the exercise of any over-allotment option
and price stabilisation mechanisms, as required.
In addition to being responsible for the marketing of the offer, the investment bank will as
mentioned above act as an underwriter to the offer, commonly with one or more other
investment banks in a syndicate, undertaking that the company and any selling shareholders
will sell the total number of shares offered and will raise the amount of money that it or they
intend to raise. Such an undertaking can either be a best efforts undertaking based on the
appetite of the market (referred to as a ‘soft underwriting’) or a firm undertaking to underwrite
the securities offered regardless of market conditions and investors’ appetite (referred to as a
‘hard underwriting’). The underwriters’ obligations are contained in an ‘underwriting agreement’
entered into with the company. The underwriting agreement will set out their undertaking to
underwrite the offer, to sell the offered shares and the percentage commission charged for
doing so. The underwriting agreement will typically be conditional upon the satisfaction of
certain conditions precedent, including eg, the outcome of the offering and the payment of the
securities. In addition, the underwriting agreement will contain representations, warranties and
indemnities to be given to the underwriters by the company that relate to the company, its
business and the contents of the prospectus.
The investment bank may require the company and probably any selling shareholders to
abstain from any further sale of shares for a set period following the IPO. This so-called lock-up
arrangement can also be included in the underwriting agreement.
Finally, the underwriters may request either the company or the selling shareholders to grant a
‘greenshoe’ or ‘over-allotment option’. This is a call option, provided to the underwriter, requiring
the company to issue (or a selling shareholder to sell) a certain percentage of additional stock to
the underwriter for a 30-day period to cover over-allotments.
8 / 35Advisors
The listing process requires issuers to meet a number of legal and accounting requirements.
Most companies find it worthwhile to hire special advisors to assist them during this process:
legal advisors;
accountants;
statutory auditors;
tax advisors;
financial advisors; and
communications advisors.
The company’s lawyers help the company to prepare for the listing, by assisting and advising
on, inter alia, any corporate restructuring required for the offering, by producing a full legal due
diligence report regarding the company, by drafting and commenting on the prospectus or
offering circular, press releases and any other publicity materials relating to the offer and by
negotiating the transaction documents including the engagement letters, underwriting
agreement and all ancillary documentation. The company's lawyers will also advise the directors
on their legal and regulatory duties, obligations and potential liabilities on becoming directors of
a listed company.
The accountants engaged by the company are normally one of the international accountancy
firms. The terms of their engagement and the scope and purpose of their work are often set out
in a detailed engagement letter. The accountants carry out the financial review of the company.
This review may cover a wide range of areas including historical trading information, projected
working capital, profit forecasts and internal management and accounting systems and control.
The accountants typically issue certain private comfort letters for the benefit of the company and
the investment bank. These comfort letters are often required by the company and/or the
investment bank to demonstrate that they have complied with certain of their regulatory
obligations (eg, the financial accounts available are stated in local GAAP rather than in
IAS/IFRS and need to be drawn up again to fulfil the prospectus requirements). In any event,
the accountants' review will assist all parties in ensuring that the financial information included in
the prospectus is correct and not misleading.
It is also common for a financial PR/IR company to be hired to generate press interest/positive
publicity and to monitor the content and wording of any public statements.
Liquidity provider
Liquidity providers act as market makers in the NYSE Euronext system. Liquidity providers must
be members of the NYSE Euronext marketplace in which they want to provide liquidity, and be
authorised to trade in the capacity of either dealer or broker/dealer. The role of the liquidity
provider is to:
protect against variations in volatility on the market;
guarantee transactions at all times at the best price; and
support the volume of transactions in the order book.
In this way the liquidity provider is a market specialist for its instruments offering a placing,
analysis and advisory service, and as a result is often the principal point of contact for the
9 / 35issuing company. The liquidity provider agreement for equities is combined in many cases with
a liquidity contract (the liquidity provider undertakes to quote two-way bid and offer prices with a
minimum volume size or capital amount, gauged either by the number or the value of
instruments, and within a minimum price range or spread).
Liquidity Providers mainly concentrate on small and mid-caps, since listed companies with large
market capitalisation generate greater liquidity. The criteria for liquidity provision on large-cap
stocks are more restrictive and liquidity provider agreements are not permitted for any of the
stocks in the Euronext 100 index (the index comprising the largest and most liquid stocks traded
on Euronext).
4.1.2. Preparation of the structure of the issuing company
During the preliminary phase, a number of important actions have to be taken by the company
planning to list on the Euronext Brussels market. The following actions are amongst the most
important ones:
the drafting of a shareholders’ agreement and a lock-up undertaking. Points of attention
should be the control by reference shareholders post IPO, the defensive measures
against hostile takeover bid and the implications under the Belgian takeover regulations
if the reference shareholders own in excess of 30 per cent of the company's voting
rights;
the amendment of the articles of association to include amongst others the following
facts: the company will be a publicly held company, there should be no restrictions on
the transfer of shares and the operation is happening within the limits of the authorised
capital;
the application of the corporate governance rules to listed companies (the need of a
corporate governance charter, an insider dealing code, the organisation of several
committees, etc);
the verification of the structure of the capital of the company: the situation of redeemed
shares, the fulfilment of the listing criteria, etc; and
the issue of new shares (with the accompanying formalities) and the verification of the
liquidity of the shares (free float, over-allotment option, greenshoe) and the ownership
of the shares (institutional/retail tranche, priority/preferential tranche, employee
tranche).
4.2. Structuring the transaction
4.2.1. IPO Due diligence
A due diligence is generally organised before the IPO of a company although there is no
statutory requirement to perform one. It is the first step towards making a decision about
entering the market. It takes the form of an audit report screening the company on all
information to be contained in the offering documentation. It involves an in-depth examination of
a company’s operations to establish whether it meets formal stock exchange requirements and
international best practices. Following this audit, the company may be deemed to review its
financial and administrative organisation, to put in place internal control and reporting
procedures, to reorganise its decision taking organs, etc. This due diligence exercise also
allows a company to choose how to present itself to the market, in order to maximise its
business value and ensure that procedures are carried out in a timely manner, thereby reducing
its IPO costs.
10 / 35At the same time of the due diligence organised by the listing candidate in order to conform its
by-laws and its structure to those of a listed company, the lead manager will organise its own
audit of the company (i) to verify the real nature of the data and projections contained in the
business plan of the company; (ii) to collect all information necessary to draft the prospectus
and prepare the financial analysis; (iii) to test the quality and the integrity of the management of
the company, the stability of its business model and its strategy, etc. Banks may be held liable
for failure to perform due diligence.
4.2.2. Offering documentation: the prospectus
A public offering of securities in Belgium and the admission to trading of securities on a Belgian
regulated market require beforehand the publication of a prospectus by the issuer. This
prospectus will be filed with the FSMA (to the attention of the Supervision of Financial
Information and Markets Department, Supervision of Financial Transactions unit) for approval.
A prospectus is traditionally drafted by the bidder, with the assistance of its bank, legal counsels
to the bank and the bidder, and its auditors. All of these parties usually take part in meetings
organised with the FSMA prior to submission of a draft prospectus and during the examination
process.
The FSMA must ensure that the prospectus complies with the applicable regulations and
contains all necessary information, depending on the characteristics and nature of the offering,
to enable the public to make a properly informed assessment of the proposed investment. The
minimum of information to be included in a prospectus, the format of the document and the
rules regarding the publication of a prospectus or the dissemination of advertisements are set
out in the Prospectus Regulation. The FSMA may not give any appreciation on the opportunity
or the quality of the securities or on the situation of the issuer.
The FSMA will approve the prospectus within ten days of the presentation of a complete file by
the issuer. Once approved, the prospectus will be valid for 12 months following publication,
provided, however, that it is duly updated (eg, mention of a new fact or correction of an error).
The prospectus must also mention the identity and capacity of those persons responsible for it
and a statement by the latter that, to the best of their knowledge, the information contained in
the prospectus is in accordance with the facts and that there are no omissions likely to affect the
content of the prospectus. These persons are always directors of the issuer. Advisors (eg,
banks) can also be held liable for misleading information in a prospectus, but such cases are
rare if not non-existing in Belgium.
Content of the prospectus
At the issuer's discretion, the prospectus may consist of a single document or may be
composed of several separate documents. In the latter case, the information required is divided
into:
a registration document containing information on the issuer;
a securities note relating to the securities offered to the public or admitted to trading;
and
a summary note.
The issuer can also incorporate certain information in the prospectus by reference.
The FSMA may (but is not obliged to) authorise the omission of certain information required by
the Prospectus Act or the Prospectus Regulation in the event that (i) the disclosure of such
information would be contrary to the public interest; (ii) the disclosure of such information would
11 / 35be seriously detrimental to the issuer, provided the omission is not likely to mislead the public
with regard to facts and circumstances essential to an informed assessment of the issuer or
guarantor, if any, and of the rights attached to the securities to which the prospectus relates; or
(iii) such information is of minor importance and relates to a specific offer or admission to trading
on a regulated market and is not such as to influence the assessment of the financial position
and prospects of the issuer or guarantor, if any.
In addition, the FSMA can grant permission to replace certain information with equivalent
adequate information when the requirements of the Prospectus Regulation are inappropriate to
the issuer's scope of activity or corporate form or to the securities to which the prospectus
relates.
The minimum information that, in accordance with the Prospectus Regulation Annexes I
(minimum disclosure requirements for the share registration document) and III (for the share
securities note), must be included in a prospectus for public offering of shares may be
summarised as below.
12 / 35Information required at least
identification of the persons (in general the directors of the issuer) which are
responsible for the information given in the prospectus and of the statutory
In all three auditors of the company that are responsible for the financial statements given
documents in the prospectus;
section wherein the risks factors that are specific to the company or its industry
are prominently presented.
description of the company: (i) identification of the company (legal and
commercial name, registration place and number, date of incorporation, legal
form, country of incorporation, registered office and, if applicable, principal
place of business); (ii) important events in the development of its business; (iii)
principal investments (already made, in progress and future on which firm
commitments exist); (iv) description of principal activities, products made or
services provided, principal markets in which it competes; (v) if applicable, short
description of the group, position within the group and significant subsidiaries;
and (vi) existing or planned properties, plants and equipments and any
environmental issues that may affect the utilisation of such assets;
description of the financial condition with selected key financial data: (i) financial
statements and related audit reports, consolidated financial statements, if
applicable, interim financial information, information on accounting rules and
auditing principles, dividend policy, statements of the auditors and other
financial information; (ii) in the case of significant changes, ‘pro forma financial
information’; (iii) operating results and description of factors that have affected
Registration this financial condition and the results of operations; (iv) liquidity, capital
document resource and financing; (v) research and development policies; (vi) description
of any trends that have affected or could affect in future the financial condition
of the company; and (vii) profit forecasts or estimates;
description of the administrative, management, supervisory bodies: (i) directors
and managers of the company, information on their experience and
qualification, relationship with the issuer and potential conflicts of interest; (ii)
remuneration of directors and managers; and (iii) board practices;
information about the number of employees of the company and their possible
share ownership;
information regarding the major shareholders and others that may control or
have an influence on the company;
information regarding transactions the company has entered into with persons
affiliated with the company;
any additional information which is not given elsewhere in the prospectus such
as information on the share capital, the act of incorporation and the articles of
association, material contracts, statements by experts, documents on display,
information on the holdings of the company.
information about the capitalisation and the indebtedness and the reasons for
the offer;
comprehensive description of the offered securities (nature, currency, attached
rights, applicable legislation, etc);
Securities terms and conditions of the offer (information on the offer conditions, statistics,
note expected timetable, pricing, etc.);
information on markets where the offered securities will be traded;
information on the expenses of the offer, the dilution resulting from the offer,
and any additional information relating to the source of the information, the
involved auditor, experts and third parties.
description of the essential characteristics and the risks associated with the
offer: (i) summarised terms and conditions of the offer; (ii) key information
concerning the company; (iii) key information concerning the selected financial
data and significant changes; (iv) information on employees, major
Summary note
shareholders and related-party transactions; (v) details on the relevant markets,
information on dilution, and expenses, and (vi) any additional information
relating to the share capital, the memorandum and articles of incorporation and
the documents available for inspection.
13 / 35Due to the uncertainty of market conditions, the offer price and number of securities to be
offered are often not mentioned in the prospectus. Mention must however be made of the
maximum offer price and the criteria and/or conditions in accordance with which the offer price
and number of offered securities will be determined.
Investors can withdraw their acceptance of the offer or subscription within a period of two
working days following the announcement of the final offer price. This announcement shall be
made public in the same way as the prospectus.
In the event a significant factor arises or a material mistake or inaccuracy occurs in the period
between approval of the prospectus and the close of the offer or the admission to trading, the
issuer must prepare a supplement to the prospectus. This supplement must be approved by the
FSMA within a maximum period of seven working days. The summary and any translations
should also be amended to take into account the new information included in the supplement.
Language
The prospectus must be drafted in French or in Dutch or in a usual language of the international
financial markets accepted by the FSMA, such as English. If the offer is taking place totally or
partially on Belgian territory, the summary will have to be prepared in Dutch and French,
provided however that if the advertisements and other documents relating to the offer are
prepared only in one official language in Belgium, the summary may be prepared in such
language.
Method of publication of the prospectus
The prospectus must be made available to the public at least three working days before the end
of the public offering and no later than the opening of the offering. In the event of an admission
to trading on a regulated market without a public offering, the prospectus must be made
available to the public at least one working day before the date of admission to trading. If it is
the first admission to trading for the securities, the prospectus must be made available at least
six working days before the end of the offering.
Publication shall be accomplished in accordance with the Prospectus Directive. A prospectus
shall be considered to have been made public when it is made available in any of the following
ways:
publication in one or more daily newspapers with nationwide or extensive circulation;
in a printed document made available free of charge to the public at the offices of the
market on which the securities are being admitted to trading, the issuer's registered
office and the offices of the financial intermediaries placing or selling the securities; or
on the website of the issuer, the FSMA and/or Euronext and, if any, the financial
intermediary.
European passport
If the issuer’s home Member State is Belgium, the prospectus will qualify for the European
passport if it contains a summary translated into the language(s) required by the host Member
State(s). At the issuer’s request, the FSMA will address the notification referred to in the
Prospectus Directive to the competent authorities of the host Member State(s). A prospectus
approved by the competent authority of another Member State will also be valid within the
framework of a public offering on the Belgian territory or an admission to trading on a Belgian
regulated market, provided the other Member State is the issuer’s home country and the FSMA
has received the notification referred to in the Prospectus Directive from the competent
authorities, along with a translation into Dutch and French.
14 / 354.3. IPO phase
4.3.1. Review process for Euronext Brussels listing
Simultaneously with the filing of a draft prospectus with the FSMA, an application must be
submitted to Euronext Brussels including, inter alia, the issuer’s articles of association, the draft
prospectus, a written commitment from a financial intermediary to act as paying agent, the
issuer's annual accounts for the last three financial years prepared in accordance with IAS, a
description of the business sectors in which the issuer operates and expects to operate, a
financial forecast for at least the coming three years, an overview of the issuer's technical and
human resources, copies of any liquidity agreements, etc.
Traditionally the filing of a prospectus with the FSMA, and of an application with Euronext
Brussels, are preceded by informal contacts between the FSMA and Euronext Brussels, on the
one hand, and the issuer and its team, on the other. Additional meetings with the supervisory
authorities may take place during the examination process to present specific points of attention
that may draw some difficulties (latest restructuring and translation of it in the company's
accounts, specific litigation files, etc).
Euronext Brussels and the applicant jointly agree on a timetable for the listing process.
Euronext Brussels then rules on the application for listing as soon as possible and, in any event,
always within the regulatory time limits (ie, within 90 days from receipt of all required
documentation and information for a first admission and 30 days in all other cases). Euronext
publishes the date on which the admission of the relevant securities to listing on Eurolist shall
become effective, as well as the particulars for the trading of such securities. The offering may
not start as long as the prospectus (if any) has not been approved and distributed.
Listing costs
Euronext admission fees range from €10,000 to €3m, based on the issuer's market
capitalisation at the time of the IPO. Centralisation fees amount to 0.3 per cent of the capital
raised. Annual fees range from €3,000 to €20,000, depending on the number of securities
admitted to trading.
Primary market practices
With a view to promoting the integrity of the markets, a number of measures have been
introduced in 2007 with a view to safeguarding the fair treatment of retail investors, including: (i)
the conditions for the offering must be identical for retail and institutional investors, in particular
with respect to pricing; and (ii) in any offering not limited to a particular group of investors, at
least ten per cent of the financial instruments must be allocated to retail investors, unless an
exemption has been granted by the FSMA. Secondly, the over-allotment and greenshoe options
may not exceed 15 per cent of the amount actually subscribed for in the offering, unless an
exemption has been granted by the FSMA. On the other hand, save for certain exceptions, any
party that has acquired financial instruments in the year preceding the first listing of these
instruments is (except as part of a public offering), at a price below the offer price, subject to a
one-year lock-up effective as from the listing of the financial instruments.
4.3.2. Offer price
The offer price will be determined within the offer price range. The offer price range will be
determined by the company and the selling shareholder in an agreement with the global co-
ordinator(s) taking into account market conditions and factors such as:
conditions on the financial markets;
a qualitative assessment of demand for the offered shares;
15 / 35the company’s financial information;
the history of, and the prospects for, the company and the industry in which it competes;
an assessment of the company’s management, its past and present operations and the
prospects for, and timing of, its future revenues;
the present state of the company’s development;
the above factors in relation to other companies engaged in activities similar to the
company’s; and
all other factors deemed appropriate.
The offer price will as well be determined on the basis of a book-building process conducted
during the offering period, in which only institutional investors will participate. In this book-
building period, various relevant qualitative and quantitative elements will be taken into account,
including such orders and the prices at which the orders were made, as well as the market
conditions at that time.
The offer price will be determined as soon as possible after the end of the offering period, and
will be published in the Belgian press no later than on the first business day following its
determination and no later than one business day thereafter.
The offer price will be expressed in euro and will be exclusive of any taxes and expenses, which
must be borne by the investors. The offer price will be the same for all investors.
Retail investors will purchase shares at the offer price and will be legally bound to purchase the
number of shares indicated in their share application form at the offer price. The offer price
could be lower than the lower-end of the offer price range. The maximum price for retail
investors will not exceed the upper-end of the offer price range.
16 / 35Book-building process
Positioning
(‘equity story’)
Preparation by
underwriting
banks of the Management Road-show R Pricing
management presentation for E
presentation underwriters Group meetings V Allocation C
sales forces I L LISTED
Preparation of ‘in-house’ One-on-ones E When all orders O COMPANY
equity sales with selected W have been S
forces from Pre-marketing institutional gathered and the E
underwriting investors B books are being
banks Determination O closed
of price range Retail marketing O
Institutional K
investors
identification
and ranking
14 days 14 days 1day 1day 5 days
4.3.3. Marketing the float
Nowadays, where listings have become a tricky exercise, investors have become more difficult
to convince. The success of an IPO will depend on the credibility of the valuation of the
company and its ability to persuade investors of the seriousness of its projects. The
underwriters need to integrate this difficulty when marketing the IPO through press releases,
road-shows, etc.
The main marketing initiatives undertaken by the underwriters will be pre-marketing to a select
number of their key investor clients, followed by investor presentations and road-shows in which
the company's senior management will be integrally involved. In addition, one of the investment
bank’s analysts will meet the company and write an independent research report, based solely
on the information that the company will publish in the process. The analyst's research is per se
not part of the marketing, given the analyst's independent status.
4.3.4. Offering period and application procedure
The offering period is the period during which investors, whether retail or institutional, may
submit a share application form. The offering period may close earlier, in which case the early
closing will be announced in the Belgian financial press, and the dates for pricing, allocation,
listing and closing of the offering may be adjusted accordingly. The offering period will in any
event be open for at least six business days following publication of the prospectus.
The allocation among applications from retail investors will be made on the basis of objective
allocation criteria (such as the use of a relative or absolute amount of shares with respect to
each subscription which may, but will not necessarily, be grouped in certain tranches and in
which preferential treatment may be given to subscriptions submitted through the retail
underwriters and their affiliates, rather than through other financial intermediaries).
The underwriters will reserve the right to reject, cancel or modify orders from institutional
investors in whole or in part. If the underwriters determine, or have reason to believe, that a
single investor has submitted several orders through one or more underwriters, they may
reduce or disregard any or all such orders. In addition, the underwriters may reduce or
disregard any unusually large subscription if they believe that it could disrupt the market.
17 / 35Only in the case of new developments, material errors or incorrect statements which could have
an influence on the consideration of the shares and which must be reflected in a supplement to
the prospectus, investors who have submitted an application for the shares prior to the
publication of a supplement to the prospectus have the right to withdraw their application for at
least two business days after the publication of such supplement.
Once the application for the listing and admission to trading on Euronext Brussels of all new
shares and existing shares (including all shares resulting from the exercise of the over-allotment
option) is made, trading may commence on the listing date, being the first trading day following
the allocation date, but before the closing date when the offered shares are delivered to the
investors, subject to acceleration or extension of the offering period.
The closing date will be published in the Belgian financial press together with the
announcement of the offer price and the results of the offering.
4. 4. Life after admission to trading: on-going obligations of listed companies
Continuing requirements for listed companies (on Euronext or, with certain variations, on
Alternext Brussels but not on the Free Market) are set forth in the Belgian Company Code and
the several pieces of legislation resulting from the implementation of the Transparency
Directive. An exemption system is available to third-country (non-EU) issuers which are subject
to equivalent disclosure rules in their home country.
Companies admitted to trading on a Belgian regulated market must therefore post on their
website at least the following information: occasional information (in the form of a press
release), any changes to the company's shareholder structure, annual information in brochure
form, annual and half-yearly financial reports, quarterly reports (if published), the company's
articles of association, information needed by the holders of financial instruments in order to
exercise their rights, information concerning rights attached to the holding of financial
instruments, the financial service offered, the financial year, etc.
4.4.1. Obligations relating to periodic information
Several documents on the listed company’s activities and financial position have to be drafted
over the year:
the annual financial report;
the half-yearly financial report;
interim management statements twice a year which can however be replaced by
quarterly financial reports; and
the annual announcement which has become optional.
The deadlines for publication, the required publicity measures and the content of these
documents can be found in the table below.
Since 1 January 2005, Belgian issuers listed on the Euronext regulated market have been
required to draw up their annual, half-yearly and quarterly financial reports in accordance with
IAS/IFRS. Issuers subject to the legislation of an EU Member State or issuers governed by the
legislation of a non-EU country can prepare their financial statements in accordance with the
accounting standards applicable in their home country. However, the FSMA may request such
issuers to submit, within 15-day period, a declaration from their auditor or the financial
supervisory authority of their home country indicating that the financial data in the issuer's
annual, half-yearly and quarterly reports have been prepared in accordance with the applicable
accounting standards.
18 / 35According to Euronext's Rule Book, the issuer's annual consolidated financial reports must be
audited by its accountants in accordance with the standards of the International Federation of
Accountants or national GAAP. The half-yearly financial reports for the first six months of the
financial year must be subjected to a limited review by the issuer’s auditors. The report on this
limited review shall be published along with the half-yearly report.
Listed companies must also publish, as any company submitted to the Company Code, its
annual accounts and consolidated accounts. A copy of the documents must be made
available to each shareholder, holders of bonds or warrants at the latest 15 calendar days
before the annual shareholders meeting. The National Bank of Belgium (Central Balance Sheet
Office) is entrusted with the task of centralising the above mentioned documents and making
them available to the public.
19 / 35When published? Publication means Content
Annual financial no later than four months communication to the audited financial statements (statutory and consolidated);
report after the close of the media through a press management report (information with respect to the company’s strategy and
financial year release mentioning the business, discussion and analysis of financial conditions and the results of
website on which the operations, corporate governance disclosures, list of material contracts the company
report will be available has entered into during the past year, the auditor's report, etc);
(and kept for at least five statement made by the persons responsible within the company (whose names and
years); and functions shall be clearly indicated) certifying that to their knowledge (i) the financial
FSMA and Euronext statements prepared in accordance with the applicable set of accounting standards
informed at the latest on give a true and fair view of the assets, liabilities, financial position and profit or loss of
the day when the the issuer and the undertakings included in the consolidation (ii) the management
information is made report includes a fair review of the development and performance of the business and
available to the public the position of the issuer and the undertakings included in the consolidation, together
and the securities with a description of the principal risks and uncertainties that they face;
holders. report of the auditor; and
corporate governance statement.
Half-yearly within two months (four condensed set of financial statements;
reporting months if the company is interim management report; and
requirements listed on Alternext) after the indications on the status of the external audit.
end of the first six-month
period of the financial year
Interim twice a year; explanation of the material events and transactions that have taken place during the
management within the period considered period and their impact on the financial position of the company; and
statements starting ten weeks after Communication to general description of the financial position and performance of the company during
the beginning of the FSMA; the considered period.
concerned six-month Euronext; and
period and ending six the media through a
weeks before the end of press release
OR the considered six- mentioning the website
month period. of the company on
Quarterly at the latest, two months which the report will be condensed set of financial statements;
financial reports after the end of the first and available (and kept for at interim management report; and
third quarters least five years). indications on the status of the external audit.
Annual during the period between figures exclusively on the performance;
announcement the drawing up of the comments on the evolution of the business, the performance and the position of the
financial statements and the company as well as any specific indication having had an impact on those elements
OPTIONAL publication of the annual during the period under review;
financial report anticipated development of the company for the current financial year; and
indication on whether the financial statements have, or have not, been audited by the
auditor and, as the case may be, indicate the state of progress of the audit work.
20 / 354.4.2. Corporate governance obligations
Principles of corporate governance for all companies admitted to trading on a Belgian regulated
market are set forth in the Company Code and the Corporate Governance Code which has been
adopted in 2004 and reviewed in 2009. The Code has been imposed as the reference code for
listed companies in April 2010. Until then the principles of the Code were considered as soft law.
The Company Code reflects the ‘one-tier’ board model. All Belgian public limited liability
companies (SA/NV) must appoint a board of directors responsible for managing the company.
The board is entrusted with general managerial authority and may take legal action on the
company's behalf. Members of the board of directors are accountable to the company's
shareholders for the performance of their duties and may be removed from office by the latter at
any time. The board is led by a chairperson and is composed of both executive and non-
executive directors, including independent non-executive directors. The board may delegate the
day-to-day management of the company to one of its members (CEO) or to a management
committee. They are responsible for running the company, implementing internal controls,
preparing the company's financial statements and all information necessary for the board to
perform its duties properly, presenting to the board a balanced and comprehensible assessment
of the company's financial situation, etc. Persons entrusted with daily managerial authority are
accountable to the board for the performance of their duties and may be removed from office by
the latter at any time.
The Corporate Governance Code requires a clear division of authority within a company between
the board of directors and those responsible for running the company's business. The chairman
of the board and the chief executive officer must not be the same person. The division of authority
between the chairman of the board and the CEO must be clearly established, set out in writing
and approved by the board.
Any company admitted to trading on a regulated market must, in accordance with the Corporate
Governance Code, draw up two documents:
a corporate governance charter describing its corporate governance policy; and
a corporate governance statement.
When? Publication Content
Corporate regularly posted on the description of the company's governance structure and
governance updated website of the policies on matters such as its structure, the terms of
charter company reference of the board of directors and its committees as
well as related-party transactions, remuneration and insider
trading, and market manipulation
Corporate once a year included in a among other things:
governance separate a reference to the corporate governance code to which
statement section of the the company is subject / which the company may have
company’s voluntarily decided to apply;
annual report to the extent that a company departs from a corporate
governance code, an explanation by the company as
to which parts of the code it departs from, and the
reasons for doing so;
a description of the main features of the company’s
internal control and risk management systems in
relation to the financial reporting process;
the operation of the shareholder meeting and its key
powers, and a description of shareholders’ rights and
how they can be exercised;
the structure of the shareholding of the company
according to the notifications of substantial
shareholdings received; and
the composition and operation of the administrative,
management and supervisory bodies and their
committees.
21 / 35According to the Corporate Governance Code, all companies admitted to trading on Euronext
Brussels must set up specialised committees to analyse specific issues and advise the board, in
particular an audit committee, composed exclusively of non-executive directors, a nomination
committee and a remuneration committee. The obligation to set up some of these committees
was finally transposed in legislation:
First, since 2009 and the implementation of the Audit Directive, listed companies on
Euronext Brussels and regulated financial institutions meeting the established criteria
must establish a mandatory audit committee. The rules with respect to the duties and
responsibilities of the audit committee have been incorporated into the Company Code;
Secondly, under the Act of 6 April 2010 on Corporate Governance and Remuneration in
listed companies, companies whose shares are admitted to trading on Euronext Brussels
are, subject to certain limited exceptions, compelled to set up a remuneration
committee within the board of directors.
4.4.3. Obligations relating to inside information
In order to be considered privileged, information must not be public and must (i) be sufficiently
precise, (ii) relate to one or more issuers of securities or to one or more classes of securities, and
(iii) be such that its publication would likely have a material effect on the price of the securities or
their derivatives.
An insider is a anyone in possession of ‘privileged information’ who knows or should be aware of
the privileged nature of such information in his or her capacity as (i) a member of management or
of a controlling body of the issuer or of a company closely related to the issuer, (ii) a holder of the
securities in question or (iii) due to access to such information through his or her work, profession
or function. Insiders may also be anyone who comes into possession of privileged information
through criminal activities, any natural person who takes part in the decision to enter into a
transaction or to pass an order on behalf of a legal entity, or any other person knowingly in
possession of information that s/he knows or should know is privileged and which originates,
directly or indirectly, from any of the persons mentioned above.
Anyone in possession of privileged information must refrain:
from using such information in order to acquire or sell, directly or indirectly, for his or her
own account or for a third party, any of the securities concerned;
on the basis of this information, from recommending that a third party, directly or
indirectly, should acquire or sell any securities to which the information pertains;
from disclosing it to any third party, except in the ordinary course of business or in the
exercise of his or her profession or function.
The applicable criminal sanctions include a prison term ranging from three months to one year
and fines from €50 to €10,000, capped at three times the capital gain derived from the insider
trading. The FSMA can also impose administrative fines up to €2.5m. The criminal sanctions are
applicable to financial instruments admitted to trading on Euronext Brussels, the Free Market and
Alternext. The administrative fines, however, only apply to the Euronext Brussels and Alternext
markets.
This inside information must be published immediately and in principle after the closing of the
markets by means of a communication to the media through a press release posted also on the
website of the issuer and a communication to the FSMA and to Euronext. If the issuer decides to
delay the publication, because such disclosure may prejudice its legitimate interests but provided
that such delay would not be likely to mislead the market, the issuer must inform the FSMA
promptly of the delay (without having to communicate the content of the information) and assure
the confidentiality of the concerned information, which implies (i) limiting the disclosure of that
22 / 35information only to the persons who need it to perform their duties (while informing these persons
of the provisions concerning insider trading) and (ii) ensuring an immediate disclosure in the
event of a leak.
There are on the other hand safe harbours to protect transactions such as buy-back programmes
and stabilisation of financial instruments (subject to the fulfilment of several conditions).
Preventive measures have been enacted since 2006 and relate to the identity of any person
with access to inside information, the notification of transactions in financial instruments by
persons entrusted with managerial authority within an issuer, and intermediaries' obligation to
report any suspicious transactions. These obligations are applicable to financial instruments
admitted to trading on Euronext and Alternext.
Issuers whose financial instruments are admitted to trading on a Belgian regulated market or
which are in the process of being admitted to such a market must provide a list of all persons
working for them (whether under an employment contract or otherwise) who have access, on a
regular or incidental basis, to inside information directly or indirectly concerning the issuer. This
list must mention the identity of any person with access to such inside information, the reason for
including that person on the list, and the date on which that person received access to the inside
information and on which the list was created and updated. Persons on these lists must be made
aware of their statutory and regulatory obligations and the sanctions that can be imposed for
abuse or improper disclosure of inside information. The list of insiders must be kept for five years
after being drawn-up or updated and the FSMA has an inspection right.
Persons entrusted with managerial authority (ie, members of the issuer's administrative,
management or supervisory bodies or senior executives who are not members of the foregoing
bodies but who have regular access to inside information relating directly or indirectly to the
issuer and the power to take managerial decisions affecting the future development of the issuer's
business and business prospects) and, if relevant, any persons closely associated with them (ie,
the spouse or any partner of that person considered under national law to be a spousal
equivalent, dependent children, other relatives who have shared the same household as that
person for at least one year on the date of the transaction or any legal entity, trust or partnership
for which any of the foregoing persons exercise managerial responsibility or which is directly or
indirectly controlled by such a person or which has been set up for the benefit of such a person or
whose economic interests are substantially equivalent to those of such a person) must notify the
FSMA of transactions performed for their own account involving shares of the issuer or any
derivatives or other financial instruments related to these shares.
Notification must be made within five working days following the settlement of the transaction,
although a deferral is possible as long as the total value of the transactions completed during the
current calendar year does not exceed €5,000. Once this threshold is attained, all previously
completed (but undeclared) transactions must be reported within five working days from the date
of the last transaction. If the total value of the transactions is below €5,000 for the current
calendar year, the transactions in question must be reported before 31 January of the following
year. Notifications communicated to the FSMA by means of a model form available on its website
are posted on the authority's website.
4.4.4. Obligations relating to the publicity of substantial shareholdings
The Act of 2 May 2007 (the ‘Act’) on the disclosure of major holdings in listed companies
implementing the Transparency Directive applies to all issuers whose securities are admitted to
trading on a regulated market within the European Union, regardless of whether their registered
office is located in Belgium. The specific rules that apply, however, depend on whether Belgium is
the home or the host Member State and whether the company is listed on Euronext, Alternext or
the Free Market.
The legislation on the disclosure of large shareholdings in listed companies and the regulation of
public takeover bids requires that any person acquiring or disposing voting securities issued by a
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