ALERT MEMORANDUM Belgium’s Response to Mitigate the

Effects of COVID-19 If you have any questions concerning this memorandum, please reach out to March 27, 2020 your regular firm contact or the following authors On March 12, 2020, the Belgian Federal Government declared a national state of emergency caused by the Laurent Legein Coronavirus Disease 2019 (“COVID-19”) outbreak. +32 2 2872122 Since then, the Belgian federal and regional authorities [email protected] Laurent Ruzette have introduced a number of measures to mitigate the +32 2 2872149 effects of the COVID-19 pandemic on the national [email protected] Carlo Meert economy. +32 2 28721 96 Belgium is currently in a “partial lock-down”, meaning that: [email protected] Christophe Wauters  Stores and shops that do not provide essential services (e.g., +32 2 2872198 supermarkets and pharmacies) are shut down. Cultural, festive, [email protected] recreational, sporting and catering venues (other than hotels) are Marijke Spooren also closed; +32 2 2872075 [email protected]  Movement outside of an individual’s residence is prohibited, except Dorian Feron for certain necessary and urgent matters, such as (i) going to work if +32 2 2872078 absolutely necessary (subject to the rules on teleworking and social [email protected] distancing), (ii) essential travel (e.g., to the doctor or supermarket), François‑Guillaume de Lichtervelde +32 2 2872104 and (iii) physical exercise in open air; [email protected]  Travel in- or outside of Belgium that is not considered necessary is Ruben Foriers prohibited; +32 2 2872082 [email protected]  Social gatherings (in the broadest sense), whether inside or outside, Alexia Duquesne whether private or public, are prohibited; +32 2 2872072 [email protected]  Companies – irrespective of their size – are obliged to organize teleworking for their workers whose positions so allow. For those employees whose job does not allow for teleworking, social distancing rules (i.e., at least 1.5m of distance between employees at all times) should be strictly respected. Companies that are considered “non-essential” and cannot abide by these rules need to close. Companies that are considered “essential” are subject to more lenient rules.

clearygottlieb.com

© Cleary Gottlieb Steen & Hamilton LLP, 2020. All rights reserved. This memorandum was prepared as a service to clients and other friends of Cleary Gottlieb to report on recent developments that may be of interest to them. The information in it is therefore general, and should not be considered or relied on as legal advice. Throughout this memorandum, “Cleary Gottlieb” and the “firm” refer to Cleary Gottlieb Steen & Hamilton LLP and its affiliated entities in certain jurisdictions, and the term “offices” includes offices of those affiliated entities.

ALERT MEMORANDUM

For more details on these measures and the main points government, it is expected that refinancing loans would of attention for Belgian employers who are faced with also not be eligible for the guarantee scheme. partial or full closure of a site or dealing with decreased The viability criteria are expected to be construed by workload, please see our Alert Memorandum “Latest reference to, at a minimum, the criteria set out by the Practical Guidance for Belgian Employers in respect of European Commission in the General Block Exemption COVID-19”. Regulation (“GBER”) as regards “undertakings in This memorandum supplements the materials available difficulty”1. on our Resource Center and sets out the key measures Based on the agreement reached between the Federal issued by the Belgian authorities to date, both on the Government and the financial sector, it is expected that federal level as well as the regional level (Flanders, the guarantee scheme would provide for (i) a maximum Wallonia and Brussels-Capital Region), and outlines interest rate on eligible loans and facilities of 1.25% per certain of the key legal considerations for businesses, annum (excluding the guarantee fee), (ii) payment by including in relation to State aid. The measures the banks of a guarantee fee equal to 25 bps for credit described herein are expected to be enhanced in the extended to SMEs and 50 bps for credit extended to coming days, at which point an update of this Alert large companies, and (iii) an allocation of aggregate Memorandum will be warranted. losses incurred on all such new credits and facilities We are here to help interpreting and applying these new between the financial sector and the public authorities rules. If you have any question, whether large or small, as follows: please get in touch with your usual contact at Cleary  a first tranche of losses (equal to 3% of losses) Gottlieb or any of the lawyers listed above. would be borne entirely by the financial sector; I. BANK LOAN GUARANTEE SCHEMES  a second tranche of losses (equal to 2% of losses) would be borne equally (50-50) by the financial A. Federal sector and public authorities; and The Federal Government and the financial sector have  80% of any further losses would be borne by the agreed on an ambitious plan to support access to credit public authorities and for 20% by the financial and a continued financing of the Belgian economy sector. throughout the COVID-19 crisis. This measure is subject to approval by the EU On March 26, 2020, the Federal Parliament adopted Commission under the State aid regime (as explained in legislation enabling the Federal Government to adopt a more detail under section VII below). EUR 50 billion guarantee scheme for all new short-term Details of the guarantee scheme will be set forth in the loans and facilities (with a duration of up to 12 months) implementing royal decree, which is expected to be granted to viable non-financial undertakings up to adopted in the course of next week, following September 30, 2020 (included), which deadline and finalization of on-going discussions with the European maxim duration may be extended by royal decree in Commission. case of extended impact of the pandemic crisis on the economy. As a result, undrawn amounts of existing B. Flemish Region credit lines would not be covered by this guarantee scheme. In light of the objectives pursued by the The Flemish Government has decided to extend the EUR 300 million guarantee scheme currently offered by

1 In essence, undertakings are considered to be “in difficulty” or, for large companies, have a debt to equity ratio higher than if more than half of their capital has disappeared as a result of 7.5 and interest coverage ratio below 1. losses, are subject to insolvency proceedings or restructuring,

2

ALERT MEMORANDUM

Participatiemaatschappij Vlaanderen (“PMV”) with a guarantee scheme), calculated in accordance with Corona Crisis Guarantee (Waarborg coronacrisis). the following formula: 0.25% multiplied by the This guarantee can cover liabilities resulting from guaranteed amount of principal multiplied by the financing agreements entered into by SMEs and large duration of the guarantee (in years). The premium companies with regard to the activities of a business will be payable at signing of the (new) bridge loan based in Flanders or an investment in Flanders. For this agreement. purpose, an additional EUR 100 million will be made  Duration. The duration of the guarantee is limited available. to a maximum of 10 years. Under the existing guarantee scheme, enterprises Following the launch of the Federal guarantee scheme unable to receive credit for lack of guarantees could (as described under section I.A above), PMV announced benefit from a guarantee by PMV for up to 75% of the that the exact interaction between the federal guarantee credit commitments (capped at EUR 1.5 million), scheme and the Corona Crisis Guarantee scheme must provided they comply with certain viability criteria, still be determined by the Flemish authorities. which, as is the case for the federal guarantee scheme, are construed by reference to the criteria set out by the If adopted under these conditions, the scheme will need European Commission in the GBER as regards to be approved by the European Commission under “undertakings in difficulty”. State aid rules (as explained in more details under section VII below).  Beneficiaries. The benefit of the Corona Crisis Guarantee will be granted on a case-by-case basis, C. Walloon Region upon receipt of evidence that the beneficiary will make use of the guaranteed bridge loan to solve The Walloon Region also decided to intervene to ensure liquidity issues resulting from the current COVID- access to liquidity to undertakings facing a sudden 19 outbreak. liquidity shortage as a result of the COVID-19 outbreak. As part of the measures announced by the Walloon  Scope. The Corona Crisis Guarantee may be used Government on March 18, 2020, Sogepa and Wallonie in case a bridge loan is entered into to repay Santé, two investment vehicles owned by the Region, existing working capital liabilities (e.g., supplier will operate a new guarantee scheme with an estimated debts or arrears, rent arrears, wages of more than 3 budget of EUR 100 million. months old, etc.) which originated up to 12 months prior to the date of signing of the bridge loan The beneficiaries of this scheme will be undertakings agreement. that were viable before the COVID-19 crisis and may have encountered difficulties. The guarantee will In addition, liabilities under existing credit lines and sustain up to 75% of the loan principal in losses, subject existing investment credits that do not benefit from to a maximum amount of EUR 2.5 million per the existing PMV guarantee scheme are eligible for beneficiary. The Walloon Region will also extend the the Corona Crisis Guarantee subject to additional current GELICAR guarantee scheme, which its targeted conditions, such as the bank agreeing to a minimum to non-SME undertakings, from EUR 50 to 250 million, of three months payment deferral. with an intervention cap set at EUR 1.5 million per  Conditions. The Corona Crisis Guarantee can be beneficiary. granted for an aggregate amount per undertaking The exact scope of the guarantees and the eligible (including its affiliates) of up to EUR 750,000. undertakings have not yet been finally determined by  Premium. The cost of the Corona Crisis the Walloon Government. Certain guarantees may need Guarantee scheme will be a one-off premium of the prior approval of the European Commission under 0.25% (instead of 0.50% under the regular PMV

3

ALERT MEMORANDUM

EU State aid rules (as explained in more details under COVID-19 lockdown. In the meantime, the College of section VII below). Courts and Tribunals issued recommendations to the attention of courts and tribunals. These D. Brussels-Capital Region recommendations, which will apply until April 19, 2020 The government of the Brussels-Capital Region has at least, have been implemented by judicial authorities announced liquidity support measures in favor of of the Belgian local courts and tribunals: enterprises in the form of guarantees (through the  all hearings are suspended, except for urgent Brussels Guarantee Fund) on bank loans for an matters (such as interim proceedings) or if parties aggregate amount of EUR 20 million. agree to make use of a written procedure (in which Details on these measures have not been made public case the judge(s) will decide solely on the basis of yet. the parties’ briefs and exhibits). New summons cannot be filed, except for urgent matters. II. BANK LOAN PAYMENT DEFERRALS  court registries will offer a limited service, The Belgian financial sector announced its willingness allowing access to their offices only if absolutely to grant viable non-financial companies (see section I.A necessary and with prior notice. To the extent above) the ability (if required by such companies) to possible, judicial acts must be filed electronically defer payments under existing loans until September 30, or by post, and communication be done by e-mail. 2020, without any associated costs or fees. The measure In ongoing proceedings, procedural calendars are aims at helping non-financial companies to mitigate the maintained. Deadlines for filing briefs are not extended impact caused by the COVID-19 crisis on their liquidity or suspended. position, allowing them to rely on a temporarily enhanced cash flow. Notaries have also restricted the scope of their activities. All notary appointments until April 5, 2020 The measure is not a mandatory moratorium on all are postponed to a later date, unless required for the existing loans and would not prohibit lenders to passing of a deed in urgent matters (including (i) if a accelerate defaulting loans for reasons unrelated to a person’s life is at risk, (ii) in order to meet a tax deadline payment default (e.g., due to breach of applicable (unless tax authorities have granted an extension), or financial covenants). Such payment deferral is further (iii) if the financial consequences are significant for the not binding on foreign banks and would therefore not parties). Corporate actions that have an impact on a benefit borrowers under large syndicated loans company’s equity are for the time being considered as including foreign lenders. The measure is expected to urgent matters (these actions include capital increases, take effect as of April 1, 2020. capital reductions and contributions). Similarly, payment deferrals will apply on loans granted IV. SHAREHOLDERS’ MEETINGS by Walloon local investments vehicles (SRIW, Sogepa, SOWALFIN) to companies until the end of March, with In light of the upcoming annual shareholders’ meetings a possible extension until the end of April, and on loans and the rules on social distancing, the cabinet of the granted by finance&invest.brussels until further notice. Minister of Justice is working on a royal decree III. JUDICIAL PROCEEDINGS AND regarding the practical organization of such shareholders’ meetings. Given that many companies NOTARIES are also looking to align their articles of association to In the coming days, the Federal Government will likely the new Belgian Code on Companies and Associations introduce specific measures to ensure the proper at the same time as their annual shareholders’ meeting, functioning of the judiciary during the ongoing a robust framework for such shareholders’ meetings is of great importance.

4

ALERT MEMORANDUM

This royal decree is likely to temporarily allow the payment of social security contributions due by shareholders’ meetings without physical attendance of employers for the first and second quarters of shareholders. Companies will likely be allowed to opt 2020. for any of the following mechanisms, even if not  Payment plan for VAT. Companies that provided for in the company’s articles of association: demonstrate payment difficulties can obtain a split  postponement of the date of the annual of the VAT payments while benefitting from an shareholders’ meeting, the approval of the annual exemption from the usual fines. accounts and the filing of the annual accounts;  Payment plan for taxes. Companies that  appointment of one single designated demonstrate payment difficulties can request a representative to whom shareholders may grant deferral of payments of various taxes, including proxies and organization of the shareholders’ corporate income tax and withholding tax. meeting with the attendance only of the designated  Flexibility in the execution of federal public representative; procurement agreement. Companies bound by an  voting prior to the shareholders’ meeting, either in ongoing federal procurement agreement will not writing or electronically; and face any sanctions or penalties in case the delay or failure to perform their obligations originates from  allowing real-time remote participation in the the outbreak. shareholders’ meeting. On March 20, 2020, the Federal Government The royal decree will likely also authorize the directors, announced further support measures to create additional the auditor and the notary (which needs to intervene at financial breathing space for enterprises, including most the companies amending their articles of association) to notably: take part in the shareholders’ meeting by phone or any other means of remote participation (i.e., a  Deferral of tax returns filing deadline. The shareholders’ meeting “behind closed doors”). deadline for the filing of tax returns for corporate income tax, legal entities tax and non-resident V. TAX AND OTHER ECONOMIC corporate income tax with an initial deadline MEASURES between March 16 and April 30, 2020 has been deferred until April 30, 2020. A. Federal  Deferral of VAT returns filing deadline. The At Federal level, the government announced on March deadline for the filing of VAT returns has been 6, 2020 a first series of measures to support companies deferred. affected by the consequences of the COVID-19 • Periodic returns and intra-EU returns. For outbreak. Some of these measures were geared towards periodic returns and intra-EU returns, the filing the benefits receivable by the employees due to deadlines have been deferred as follows: temporary unemployment, and facilitated the possibility for companies to put their employees on Return for… Deadline deferred temporary unemployment on grounds of force majeure until… (please see our Alert Memorandum “Latest Practical February 2020 April 6, 2020 Guidance for Belgian Employers in respect of COVID- March 2020 May 7, 2020 19”). Other important measures include: Q1 2020 May 7, 2020  Payment plan for employers’ social security

contributions. Amicable payment deadlines can be requested from the tax authorities in relation to

5

ALERT MEMORANDUM

• Annual client listing. The deadline for the support measures announced on March 6, 2020 annual client listing has been deferred until April (see above). 30, 2020. The Federal Government has also announced a number  Deferral of social security contributions of sector-specific measures, among others, with regard payments. The payment of social security to the travel, events, cultural and agricultural sectors. contributions may be deferred until December 15, B. Flemish Region 2020. Companies that are subject to a mandatory closure are automatically entitled to this deferral The Flemish Government has taken a number of while other companies have to submit a honorary measures such as (i) granting a nuisance premium, (ii) statement. extending the scope of application of the incentive  Deferral of VAT and withholding tax payments. premium for employees, (iii) announcing certain tax For the payment of VAT and withholding tax, an measures, and (iv) extending the deadlines for certain additional two-month payment deferral will be of the VLAIO grants. granted, without any charge of fines or interest  Nuisance premium. The Flemish Government being due. More in particular: will award a lump-sum subsidy (forfaitaire • VAT. For VAT, the payment deadline for the subsidie) to all enterprises with a seat of monthly declaration of February has been exploitation in Flanders that have been forced to deferred until May 20, 2020. For the monthly shut down. Enterprises subject to a complete declaration of March 2020 as well as the shutdown are eligible to receive a one-off subsidy quarterly declaration for Q1 2020 the payment of EUR 4,000. If the Federal Government extends deadline has been deferred until June 20, 2020. the current special measures further, and the shutdown continues after April 6, 2020, enterprises • Withholding tax. For withholding tax, the will be eligible to receive an additional closure payment deadline for the monthly declaration of premium (bijkomende sluitingspremie) of EUR February has been deferred until May 13, 2020. 160 per additional day of mandatory closure. For the monthly declaration of March 2020 as well as the quarterly declaration for Q1 2020 the The lump-sum subsidy and the additional closure payment deadline has been deferred until June premium will be increased if the enterprise has 15, 2020. multiple seats of exploitation2, where at least one registered FTE employee is employed, that are  Deferral of corporate income tax, non-resident closed due to the COVID-19 measures. and legal entity tax payments. For the payment of Enterprises have until 30 calendar days after the corporate income tax, non-residents’ tax and legal end of the mandatory closure period to file an entity tax, an additional two-month payment application for aid on the website of the Flanders deferral will automatically be granted, on top of the Innovation & Entrepreneurship Agency regular payment deadline and without any charge (“VLAIO”). of fines or interest being due. This measure applies to the settlement of these taxes for assessment year  Extended scope of application of the incentive 2019, which have been or will be established as premium for employees. The pre-existing Flemish from March 12, 2020. The payment of these debts incentive premium (aanmoedigingspremie) for established before March 12, 2020 is subject to the employees, intended to promote the reduction of working time (and thus avoiding redundancies),

2 The increase is calculated by multiplying the lump-sum aforementioned number of exploitation seats, but with a subsidy and additional closure premium by the maximum of five.

6

ALERT MEMORANDUM

was extended to employees employed at a seat of of a “Solidarity Fund”, (ii) liquidity measures, (iii) a exploitation in Flanders of enterprises which, as a post-crisis fund and (iv) tax. result of the COVID-19 crisis, experience a  Solidarity Fund. The most important economic decrease of at least 20% in turnover, production or measure taken at this stage consists of the creation orders. In order to be eligible for the premium, the of an exceptional Solidarity Fund of EUR 350 relevant employees must be employed in the million, to be split between (i) lump-sum private sector under a joint committee (paritair compensations ranging from EUR 2,500 to 5,000 comité) and maintain at least a half-time working to SMEs located in the Walloon Region active in schedule. The company-employer must file a sectors affected by the COVID-19 crisis (total of specific plan with the Department of Work and EUR 233 million), (ii) financial support of EUR Social Economy, setting out (i) the decrease in 115 million to the healthcare and social sector and turnover, production or orders, (ii) which labor (iii) financial support of EUR 2 million to local redistribution measures are being undertaken and authorities. the link with the COVID-19 virus, (iii) the number of jobs that are the subject of the measures, (iv) the  Liquidity measures. The Walloon Region has time period of the measures, and (v) the VAT adopted a number of measures to assist declarations for all relevant months. undertakings by ensuring liquidity. The Walloon Region’s investment vehicles Sogepa/Wallonie  Tax measures. In order to avoid liquidity issues Santé will set aside a budget of EUR 100 million for companies, the Flemish Government has taken dedicated to granting (i) unsecured loans up to two measures related to tax: EUR 200,000 with a one-year repayment period • Postponed mailing of property tax assessment and a 2% fixed interest rate, (ii) loans on an equal notices. Legal entities will only receive the basis with the banks (Sogepa/Wallonie Santé will property tax (onroerende voorheffing) double the amount of the loan principal granted by assessment notices for the assessment year 2020 the bank), and (iii) loan guarantees under certain as from September 2020 (instead of May). conditions discussed in more details under section • Extension of payment period for annual traffic I.C above. taxes. Legal entities will be granted an  Post-crisis fund. The Walloon Government additional four-month payment deferral on the announced the creation of a EUR 100 million fund annual traffic taxes. for the “redéploiement économique post-  Extension of VLAIO grant deadlines. coronavirus”. The exact scope, possible Beneficiaries who, as a result of the COVID-19 beneficiaries and financial mechanisms of this crisis, are struggling to meet the deadlines fund remain unclear at this stage. provided for in certain types of grants awarded by  Tax measures. A number of decisions are aimed at VLAIO can contact their case handler at VLAIO to relieving tax pressure on companies: (i) suspension discuss the potential extension of these deadlines. and/or postponement of the payment deadline, The Flemish Government has also announced a number allowing taxpayers to pay outstanding taxes only of sector-specific measures, among others, with regard after the crisis has ended, (ii) freezing of the to the tourist, cultural, youth and media sectors. deadlines for filing a fiscal administrative claim to the Walloon Tax Administration, in order to C. Walloon Region safeguard companies’ rights despite temporary containment measures, (iii) suspension of the On March 18, 2020, the Walloon Government executions of tax decisions taken by the Walloon announced measures in relation to (i) the establishment Tax Administration which would negatively

7

ALERT MEMORANDUM

impact companies will be temporarily frozen (tax measures for the financial sectors, economic decision which would have a positive impact on sectors, profit and non-profit sectors, businesses companies will however be implemented) and (iv) and households to mitigate the effects of the mitigation of fiscal recoveries launched by the pandemic, (iv) ensure the continuity of the Walloon Government, including through bailiffs, economy, financial stability of the country and the and facilitation of payments plans. protection of consumers, (v) adjust labour law, and social security law, with a view to protecting the D. Brussels-Capital Region workers and the population, the due organisation The Government of the Brussels-Capital Region has of enterprises and public authorities, while announced a number of sector-specific measures, safeguarding the country’s economic interests and among others, with regard to the horeca, cultural, taxi the continuity of critical sectors, (vi) suspend or and touristic sectors. extend time limits provided for by or pursuant to the law, (vii) ensure the proper functioning of the VI. FEDERAL SPECIAL POWERS courts and the continuity of justice, including by adjusting the organisation of the courts, The measures outlined above are undoubtedly only the jurisdiction and procedure (including with respect beginning of more extensive measures to come. On to time limits), (viii) adjust the competence, March 26, 2020, the Chamber of Representatives functioning and administration of justice of the adopted a legislative proposal authorising the King to Council of State and the administrative courts and take measures to combat the spread, and mitigate the (ix) comply with the decisions taken by the EU in impact of, COVID-19 (“Special Powers Law”), which the framework of joint management of the crisis. received broad support from almost all political parties The royal decrees adopted pursuant to the Special (i.e., also from several parties who are not part of the Powers Law may impose administrative, civil and current minority Federal Government). The Special criminal sanctions and may have retroactive effect Powers Law undoubtedly will become the main basis (although not beyond March 1, 2020). for the Federal Government to launch further initiatives relating to public health, public order, social affairs and  Limitations. There are only a few limitations that protection of citizens and the economy. curtail the King’s powers under the Special Powers Law. The royal decrees may not (i) undermine the  Special powers. The use of “special powers” is, purchasing power of families and the existing although exceptional, not unknown in Belgium. In social protection and (ii) adjust, abolish, modify or essence, through a special powers law, the replace the social security contributions, taxes and legislator will temporarily grant the government duties (they may, however, allow a deferral of legislative powers, including the power to issue payment). new laws and change existing ones within certain areas. The government will make use of such  Duration. The special powers will be granted for powers through the adoption of “numbered” royal a period of three months. Of course, Parliament decrees (i.e., to distinguish them from “regular” could always decide to, if necessary, renew these royal decrees), which are subject to ratification by powers. the legislator. VII. CLEARANCE REQUIREMENTS  Scope of powers. The Special Powers Law grants UNDER STATE AID RULES the King sweeping powers to (i) limit the further spread of COVID-19, (ii) safeguard or increase the In times of crisis, it is important not to lose sight of EU necessary logistical and storage capacity, (iii) State aid rules, which set limits to the ability of Member provide direct or indirect support or protective States to intervene in their economy. On March 19,

8

ALERT MEMORANDUM

2020, the European Commission adopted a before the end of the year; (iii) guarantee duration communication (the “Temporary Framework”) setting limited to 6 years; and (iv) guarantee amount out a temporary framework for the implementation of limited to 90% of the underlying loan (or 35% in less stringent State aid rules in order to allow Member case of a first-loss guarantee). States to support their economy in the context of the  Subsidized loans. Aside from loan guarantees, COVID-19 outbreak. The Temporary Framework is Member States may grant public loans with based on Article 107 (3) (b) TFEU, which allows the subsidized interest rates. The main conditions are Commission to clear aid aiming at remedying “serious similar to those for loan guarantees and include: (i) disturbance in the economy of a Member State”. The minimum interest rate of one-year IBOR plus a Commission had used the same legal basis (and adopted credit margin ranging from 25 to 200 basis points a similar framework) to allow exceptional aid measures depending on the company’s size and the loan following the 2008 financial crisis. maturity; (ii) amount of the loan capped to twice The Temporary Framework allows Member States to the company’s 2019 wage bill (or 25% of its 2019 implement aid schemes (subject to prior notification turnover, or the total amount of its liquidity needs and clearance by the Commission) in four different for the next 12 months for large enterprises, and 18 forms, which can be cumulated with each other under months for SMEs) with the possibility to exceed this regime: (i) direct grants, repayable advances and that cap for loans expiring before the end of the tax advantages; (ii) loan guarantees; (iii) subsidized year; and (iii) loan duration of up to 6 years. loans; and (iv) short-term export credit insurance.  Short term export credit insurance. By way of  Direct grants, repayable advances or tax derogation to standard State aid rules on export advantages. The Temporary Framework enables credit insurance, the Temporary Framework allows Member States to set up schemes granting to each for State support to export credit insurance relating individual company up to EUR 800,000 in direct to marketable risks, provided the Member State grants, repayable advances or tax advantages for its can demonstrate (based on market evidence) that urgent liquidity needs. The aid amount will be private insurance is no longer available for such calculated in gross terms, i.e., before any tax risks. deductions or surcharge. Specific thresholds and The Temporary Framework complements other public rules apply for the fishery and aquaculture (EUR support tools under other legal bases that are already at 120,000 per undertaking) and primary production the Member States’ disposal. These include among of agricultural products (EUR 100,000 per others: (i) measures that do not qualify as aid in light of undertaking). their general character (such as wage subsidies,  Loan guarantees. Member States can provide suspension of payments of corporate and value added subsidized State guarantees on bank loans or set up taxes or social welfare contributions to the benefit of all guarantee schemes supporting bank loans taken out undertakings); (ii) measures that qualify as rescue or by viable companies. The main conditions are: (i) restructuring aid to companies in financial difficulties minimum guarantee premiums ranging from 25 to under Article 107 (3) (c) TFEU, in particular schemes 200 base points depending on the company’s size aimed a meeting acute liquidity needs; and (iii) and the loan maturity; (ii) amount of the loan measures that are aimed at compensating damage capped to twice the company’s 2019 wage bill (or directly caused by the COVID-19 outbreak pursuant to 25% of its 2019 turnover, or the total amount of its Article 107 (2) (b) TFEU (in particular in the health, liquidity needs for the next 12 months for large tourism, transport, retail and culture sectors). enterprises, and 18 months for SMEs), with the To date, the European Commission cleared aid schemes possibility to exceed that cap for loans expiring adopted by Denmark, France, Germany, Italy, Latvia,

9

ALERT MEMORANDUM

Spain, Portugal and the UK under the Temporary Framework, and Denmark adopted two compensation measures under Article 107 (2) (b) TFEU. Further measures are expected to be announced by Member States in the coming weeks. So far, no Member State appears to have adopted individual aid measures (i.e., targeting one specific undertaking) based on one of the legal bases available. The intervention schemes adopted at the different constitutional levels in Belgium may need to receive green light by the European Commission before being actionable by undertakings in practice. Once all the regimes are in place, companies seeking financial support for their activities in Belgium will need to assess their eligibility for one or several of these regimes. …

CLEARY GOTTLIEB

10