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Pursuant to the Royal Decree of December 5 2000, the Belgian Law on Commercial Practices and the Protection of Consumers (LCP) of July 14 1991 became, as from May 1 2001, applicable to almost all financial instruments and securities. The general purpose of the Royal Decree was:

  • to ensure better protection of consumers with respect to transactions not yet regulated by the existing financial regulations; and
  • to implement Council Directive No 93/13/EEC of April 5 1993 into Belgian law.

It is important to note that the LCP now applies to public offers in Belgium of ordinary Eurobonds that are not marketed in Belgium and which were previously largely unregulated. This could result in more favourable conditions for Belgian consumer-investors than other investors, and necessitates, at the very least, appropriate selling restrictions. The application of the LCP to public offers for which a prospectus was approved, or that were exempted from a prospectus, by the Belgian Commission for Banking and Finance was not witheld, as the existing regulation was deemed sufficient to protect consumer interest in accordance with the EU directive. This position can, however, be seriously questioned.

The LCP has an impact on the type and contents of permitted publicity, as well as on the legality of certain provisions in contracts with consumers. The latter is an important point for all private placements involving non-professional Belgian investors.

Non-compliance with the LCP may lead to civil and criminal sanctions, including a court ordered shut-down of the operation. Consequently, the impact of the LCP on transactions in the relevant financial instruments and securities, including shares, bonds, warrants, financial futures, equity swaps and options, will have to be addressed.

Michael Olislaegers

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