the Multiple Voting Shares Directive and its potential impact on the Belgian rules on public takeover bids – Corporate Finance Lab

On 4 December 2024, as part of the so-called Listing Act package, the EU adopted Directive (EU) 2024/2810 on multiple voting share structures, commonly known as the MVS Directive. This directive requires EU Member States to allow companies seeking admission to trading on multilateral trading facilities (MTFs) to introduce or maintain multiple voting share structures, provided that certain safeguards are respected (see “Europese richtlijn betreffende meervoudig stemrecht voor genoteerde vennootschappen gepubliceerd – Corporate Finance Lab”).

A group of legal experts working under auspices of the Belgian Centre for Company Law has used the MVS Directive as a starting point for proposing a comprehensive and more far-reaching reform of multiple voting rights in Belgian listed companies (see “MVS proposal Belgian Centre for Company Law”) . The main elements of this proposal have already been set out in an earlier blogpost (see “Multiple voting shares in listed companies in Belgium”).

Beyond simply implementing the MVS Directive, the working group also proposes certain revisions to the Belgian Takeover Act^[1] (overnamewet / loi relative aux offres publiques d’acquisition) to ensure that the rules on public takeover bids reflect the new reality of multiple voting rights. This adaptation is imperative because the current takeover regime, centred on share ownership thresholds, does not adequately address the disconnect between economic ownership and voting power that MVS structures introduce.

1. From securities to voting power: redesigning the mandatory bid threshold

Under the Belgian Takeover Act, a mandatory takeover bid is triggered when a person, acting alone or in concert with others, acquires 30% of the securities with voting rights in a Belgian listed company. This system assumes a one-to-one relationship between shares and votes. But when multiple voting rights are introduced, this link breaks down, as holding 30% of the securities might result in far more than 30% of the voting rights.

One may recall that when the BCCA introduced the possibility for Belgian listed companies to issue loyalty shares, which grant their holder under certain conditions an additional vote per share, the Belgian legislator did not change the mandatory takeover bid threshold, although some scholars argued that this was needed to comply with Article 5 (3) of the EU Takeover Directive, which requires the threshold to reflect “a certain percentage of the voting rights in the company which confers control” (see “Verplicht bod en meervoudig stemrecht – Corporate Finance Lab”). With the transposition of the MVS Directive, this discussion resurfaces.

To align with Article 5 (3) of the EU Takeover Directive, the working group proposes a crucial and inevitable change: the mandatory bid threshold should be expressed as 30% of the voting rights, not of the securities^[2]. This proposed change ensures that control (which is presumed when a party holds 30% of the voting rights), and not merely ownership of securities, triggers the obligation to launch a public takeover bid for the remaining securities with voting rights or granting access to voting rights. It also prevents acquirers from circumventing the takeover rules through dual class voting structures that allow them to obtain control over a listed company without crossing the traditional threshold of 30% of the securities with voting rights.

By contrast, the working group did not manage to reach consensus on whether this new threshold should also apply to loyalty voting rights (i.e., on whether loyalty voting rights should count toward the 30% threshold for mandatory takeover bids in Belgium). The working group outlines two alternatives options:

The first option is to include loyalty voting rights in the threshold calculation just like ‘real’ multiple voting rights, as they represent actual voting power and influence over the company. In this approach, a mandatory bid could be triggered for shareholders who  cross the 30% threshold ‘passively’. Indeed, in a company that has implemented a system of loyalty voting rights, the 30% threshold can be crossed upward by a shareholder (i) when the shareholder has held his shares in registered form for an uninterrupted period of two years or (ii) when other shareholders transfer their loyalty shares and thus lose their extra voting rights, thereby reducing the total number of voting rights. To mitigate any potential negative impact on shareholders, a few safeguards are proposed:

1. To increase legal certainty for shareholders, Article 5 of the Takeover Act would clarify that the total number of voting rights must be calculated on the basis of the most recent public announcement by the company of the so-called ‘denominator’ (i.e., the total number of voting rights) on the basis of Article 15 of the Transparency Directive.
2. An explicit possibility for shareholders would be introduced to renounce their loyalty votes voluntarily through a waiver, in order to avoid triggering a mandatory bid.
3. The existing temporary exceedance exemption of Article 52, § 1, 7° of the Takeover Decree, permitting a brief upward crossing of the 30% threshold (with a maximum of 2%) without triggering a mandatory bid, would become available once this exemption has been adjusted to the new threshold for voting rights.

The second option is to exclude loyalty voting rights from the threshold calculation, as is the case today. Only ordinary or multiple voting rights would be taken into account. This solution has the benefit of simplicity and administrative clarity, by making monitoring and enforcement more straightforward. On the downside, the fact that loyalty voting rights and multiple voting rights are treated differently for purposes of the calculation of the mandatory bid threshold could raise questions under the constitutional principles of equal treatment and non-discrimination, besides the already mentioned potential violation of Article 5 (3) of the EU Takeover Directive.

2. Implications for the grandfathering regime

If the mandatory bid threshold is redefined in terms of voting rights, as the working group proposes, the transitional provision in Article 74 of the Belgian Takeover Act will also need be amended to clarify that shareholders who made use of the grandfathering exemption from the mandatory bid obligation will be able to continue to benefit therefrom as long as they retain more than 30% of the voting rights, and not merely 30% of securities with voting rights. This would create flexibility for existing reference or controlling shareholders to lower their ownership below 30% while maintaining their voting rights above 30% by making use of dual class voting structures without having to fear that they could be obliged to launch a mandatory takeover bid.

3. Adjusting the framework for companies listed on a Multilateral Trading Facility (MTF)

Currently, Article 5 (6) of the Belgian Takeover Act prohibits multiple voting rights for companies whose securities are listed on a MTF, except in the form of loyalty voting rights. Oddly enough, and unlike for companies whose securities are listed on a regulated market, this prohibition is not laid down in the BCCA itself^[3].

Given the MVS Directive’s new requirement, this prohibition will in any case have to be repealed (i.e., even if the Belgian legislator would not follow the proposal of the working group of the Belgian Centre for Company Law).

To prevent excessive concentration of voting power, the working group proposes to introduce a maximum ratio of 1:20 for multiple voting rights in companies listed on a MTF, as well as in companies listed on a regulated market (see “Multiple voting shares in listed companies in Belgium”).

4. Other implications

Besides these amendments necessary to adapt the takeover regulation to multiple voting rights, proposed by the working group, it should be noted that other rules in the Takeover Act and the Takeover Decree^[4] already take into account the possibility of dual class share structures^[5]. These rules may become more important if dual class voting structures are allowed and their practical application may lead to discussions.

By way of example,

• the object of a (voluntary or mandatory) takeover bid must include all securities with voting rights or giving access to voting rights issued by the target company which are not yet in the possession of the bidder or of persons connected with the bidder (Article 3, 1° of the Takeover Decree);
• if the bid relates to securities of different classes, the prices offered for each class may not contain differences other than those resulting from the respective characteristics of each class (Article 3, 5° of the Takeover Decree);
• if, during the bid period, the bidder or persons acting in concert with him acquire securities of the target company at a higher price than the bid price, or have committed themselves to do so, the bid price will be adjusted to that higher price (Article 15, §2 (juncto Article 57) of the Takeover Decree).

Minority shareholders are protected by the fact that a bidder will not be able to limit his bid to multiple voting rights shares (although holders of non-voting shares are not protected). On the other hand, since price discrimination between ordinary shares and multiple voting rights shares will be possible, minority shareholders may not share in the ‘control premium’ that is paid by the bidder.

Conclusion

The transposition of the MVS Directive by the EU Member States, which is due by 3 December 2026, must be paired with careful adjustments to the existing legal framework on public takeover bids. Difficult questions will need to be tackled during this legislative exercise, such as whether or not loyalty voting rights will count toward the mandatory bid threshold. The broader challenge will be to balance flexibility for issuers with predictability and fairness for investors.

Carl Clottens & Göktug Celik

Carl Clottens is a lawyer at NautaDutilh in Brussels and guest lecturer in corporate law at the University of Leuven and the University of Antwerp and a member of the Belgian Centre for Company Law and of the working group that authored the proposal for implementation of the MVS Directive in Belgium.

Göktug Celik is a lawyer at NautaDutilh in Brussels and voluntary academic researcher at Ifese.

[1] Act of 1 April 2007 on public takeover bids, as amended.

[2] C. Clottens, Proportionaliteit van stemrecht en risico in kapitaalvennootschappen, Antwerpen, Biblo, 2012, p. 338, no. 397.

[3] See C. Clottens, “Meervoudig stemrecht in genoteerde vennootschappen?”, in M. Wyckaert, V. Colaert en S. Cools (eds.), Feestschrift voor Koen Geens, Roeselare, Roularta, 2023 (296) 299.

[4] Royal Decree of 27 April 2007 on public takeover bids, as amended.

[5] See also C. Clottens, Proportionaliteit van stemrecht en risico in kapitaalvennootschappen, Antwerpen, Biblo, 2012, p. 339-341, no. 398-399.