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Related Party Transactions: What's new?

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Rutten Sophie
Sophie Rutten



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Stéphanie Dalleur

PSL Counsel


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29 April 2020

On 9 April 2020, the draft Belgian legislative proposal implementing the Shareholders’ Rights Directive II (SRDII) was adopted in plenary session and should be published shortly.

The draft law amends the new BCC (the New BCC) in order to implement the SRDII (Title 2 of the draft law) and will introduce (i) changes to related party transactions; (ii) changes to the remuneration of directors; (iii) a shareholder identification right for issuers; and (iv) the disclosure of shareholder engagement policy by institutional investors.

Title 3 of the draft law also includes provisions that correct some errors and clarify unclear provisions of the New BCC (the overview of such changes is attached below).

Key changes in relation to related party transactions

The current rules on related party transactions are set out under articles 7:97 and 7:116 of the New BCC and are relevant for listed entities.

The draft law sets out a few amendments relating to:

  • the scope of application of the procedure, and
  • an additional publication requirement.

Scope of appication of the procedure

A new, much broader definition of ‘related party’ is implemented by referring to the definition in International Accounting Standard 24 (which, among others, considers any person with significant influence over the entity or any member of the key management personnel as a ‘related party’) instead of article 1:20 New BCC.

The following additional exemptions to the procedure are included:

  • transactions regarding remuneration of directors, persons in charge of day to day management or persons with managerial responsibilities;
  • certain transactions for the preservation of the financial stability entered into by credit institutions; and
  • acquisition or alienation of own shares, distribution of interim dividends and capital increases in the context of authorized capital without the restriction of the preferential subscription rights).

For transactions that are exempted because the board of directors takes the view that they are usual transactions at terms and with security that are market conform, the board of directors must establish an internal procedure to periodically assess whether the conditions (incl. market conformity) are met.

For the de minimis exemption, transactions relating to the same related party, which have taken place over a period of 12 months, should be added together for the calculation of the materiality threshold (ie 1% of the consolidated net assets of the entity).

Conflict of interest

If the related party is a director, he or she cannot participate to the deliberation or the vote.

Immediate disclosure requirement

The draft law introduces the obligation to publicly announce related party transactions at the latest at the time of conclusion of the transaction.

The law does not provide for a possibility to delay the announcement, as would be the case for inside information.

This announcement shall include the following information:

  • information on the nature of the relation with the related party;
  • name of the related party;
  • date and value of the transaction;
  • the conclusion of the independent committee as well as the auditor's assessment on possible inconsistencies (as already required under the current article 7:97), and
  • any other information that is necessary to assess whether the transactions is reasonable from the perspective of the company and the other shareholders.

The annual report of the entity shall include an overview of the related party transactions which have been entered into by the entity during the previous financial year (including a reference to where the publications of the transactions may be consulted).

Entry into force

Provisions in relation to related party transactions will come into force upon the publication of the law in the Belgian Official Gazette

If you would like to discuss any of the points covered in this publication in more detail, please let us know.