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Legal frame

The regulated real estate company is governed by the Act of 12 May 2014 and the Royal Decree of  13 July 2014.

The aim of the legislator is that an regulated real estate company should ensure maximum transparency in its real estate investments and maximum cash-flow dividends, while the investor enjoys a whole array of benefits.

The regulated real estate companies are under control of the Financial Services and Markets Authority and are subject to specific regulations, of which the striking requirements are the following:

  • adopt the form of a limited liability company or a limited partnership with a share capital with a minimum capital of € 1.200.000
  • a company with fixed capital and a fixed number of shares
  • compulsory listing on the stock exchange with at least 30 % of the shares in public hands limited possibility for concluding mortgages
  • a debt ratio limited to 65 % of the total assets; if the consolidated debt ratio exceeds 50 %, a financial plan has to be drawn up
  • annual financial interest charges resulting from borrowings may under no circumstances exceed the threshold of 80 % of the operating distributable result before result on portfolio increased with the financial income of the regulated real estate company
  • strict rules relating to conflicts of interests
  • the portfolio must be recorded at market value without the possibility of depreciation
  • a three-monthly estimate of the property assets by independent property experts
  • risk spread: a maximum of 20 % of capital in one building, except certain exceptions
  • a regulated real estate company may not engage itself in “development activities”; this means that the regulated real estate company cannot act as a building promoter aiming to erect buildings in order to sale them and to cash a developer’s profit
  • exemption from corporation tax provided that at least 80 % of the operating distributable result are distributed
  • a withholding tax of 27% to be deducted upon payment of dividends (subject to certain exemptions)
  • the opportunity to establish subsidiary companies which take the form of an ‘institutional regulated real estate company’ which must operate under the exclusive or joint control of the public regulated real estate company in order to be able to implement specific projects with a third (institutional or professional) investor
  • at least three independent directors in the sense of Article 526b of the Belgian Companies Code sit on the board of directors
  • the fixed fees of directors and the actual managers may not depend on the operations and transactions carried out by the public regulated real estate company or its subsidiaries: this therefore prohibits them being granted a fee based on the turnover. This rule also applies to the variable fee. If the variable fee is determined according to the result, only the consolidated operating distributable result may be used as basis for this.

The aim of these rules is to limit risk for the shareholders.

Companies which merge with a regulated real estate company are subject to an exit tax of 16,995 % on the potential added-value and on tax-free reserves.

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