Company Mergers in Belgium: Complete Procedure and Advantages

Different Forms of Restructuring

The Code of Companies and Associations (CCA) provides for several forms of restructuring in Belgium:

1. Merger by Absorption

The absorbed company transfers its entire assets to the absorbing company and is dissolved without liquidation. Shareholders of the absorbed company receive shares of the absorbing company.

2. Merger by Incorporation of a New Company

Two or more companies transfer their assets to a new company they incorporate together. The merging companies are dissolved without liquidation.

3. Demerger

A company transfers its assets to two or more existing or new companies. The demerged company is dissolved.

4. Partial Demerger

A company transfers part of its assets to one or more companies without being dissolved. Useful for isolating a business line.

Comparative Table

The Merger Procedure in 8 Steps

Step 1: Merger Proposal (T-6 weeks)

The management bodies of the concerned companies draft a common merger proposal containing:

• Company identification (form, name, seat, CBE number)
• Share exchange ratio and any cash settlement
• Terms for issuing absorbing company shares
• Date from which operations are deemed completed for accounting purposes
• Rights granted to holders of special rights
• Special advantages granted to auditors, directors, and experts

Step 2: Filing and Publication (T-6 weeks)

The merger proposal is filed with the enterprise court registry and published by extract in the Belgian Official Gazette at least 6 weeks before the decision-making general meeting.

Step 3: Management Body Report

Each management body drafts a detailed report explaining and justifying the merger proposal from a legal and economic perspective, particularly the exchange ratio.

Step 4: Auditor's Report

An auditor or appointed certified public accountant prepares a report on the merger proposal, including an assessment of the exchange ratio.

Step 5: Document Availability

The following documents are made available to shareholders at the registered office at least 6 weeks before the meeting:

• The merger proposal
• Management body and auditor reports
• Annual accounts for the last 3 financial years
• Interim accounts (if the last financial year ended more than 6 months ago)

Step 6: Extraordinary General Meeting

Each company votes on the merger at an extraordinary general meeting before a notary, with required majorities:

• Attendance quorum: 50% of capital (1st call)
• Majority: 75% of votes

Step 7: Notarial Deed and Publication

The notary drafts the authentic merger deed which is filed with the registry and published in the Belgian Official Gazette.

Step 8: Effects of the Merger

• Universal transfer of assets (assets and liabilities)
• Dissolution without liquidation of absorbed company(ies)
• Share allocation to shareholders of the absorbed company
• Continuity of contracts and employment relationships

Tax Aspects

Tax Neutrality (Favorable Regime)

The merger may benefit from tax neutrality if it meets valid economic motives (not solely tax-related):

• No taxation of latent capital gains
• Carry-forward of tax losses (subject to conditions)
• Continuity of depreciation and provisions
• No registration duties on real estate contributions (0.50% in Flanders exempt)

Neutrality Conditions

• The merger must be justified by real economic motives
• Tax authorities may refuse the regime if the merger's primary objective is tax avoidance
• Conditions must be met for a minimum period

VAT

• Merger operations are in principle outside the scope of VAT (transfer of universality)
• The absorbing company takes over VAT rights and obligations
• The absorbed company's VAT number is deregistered

Advantages of a Merger

• Economies of scale: pooling of fixed costs
• Simplification: one entity to manage instead of several
• Synergies: combination of expertise and resources
• Market position: strengthened competitive position
• Taxation: optimization of tax structure (if economic motives)
• Administrative: reduced reporting and publication obligations

Points of Vigilance

• Thorough due diligence before any merger
• Verification of contracts with change of control clauses
• Impact on administrative authorizations and licenses
• Managing human change (corporate culture, duplicate positions)
• Compliance with the strict legal timeline (6-week deadlines)

Conclusion

Considering a merger or restructuring? LegalBelgique supports you at every step: opportunity analysis, merger proposal drafting, coordination with the notary and auditor, and complete procedure follow-up.