Market abuse: what you need to know about the new regulations

In order to comply with the EU directive, Belgium is implementing new regulations on market abuse. The preliminary draft law establishes and refines investigatory powers. How can you navigate the law?

Since June 2016, a new legal framework has applied to market abuse that takes place within the European Union. The Market Abuse Regulation (MAR) (596/2014) ensures that Member States' own regulations adapt to financial developments in order to prevent abuse on the financial markets (including derivatives) and commodities markets.

Three types of abuse have been identified:

  •  Market manipulation;
  •  Insider dealing;
  •  Unlawful disclosure of restricted information.

The EU legislator believes that market abuse harms the integrity of financial markets and undermines public confidence in both securities and derivatives. It should be noted that the regulation's scope of application extends to traded financial instruments.

"Market integrity is essential for the financial markets to be integrated, effective and transparent." European Parliament, 16 April 2014

Belgium ensures compliance

On 31 March, the Belgian Council of Ministers approved a preliminary draft law (FR or NL)  which will apply the EU regulation on market abuse to Belgium. Although the regulations are directly applicable to Belgium, some of their provisions have required implementation in national law.

The preliminary draft law, once approved, will establish and improve investigatory powers. Which measures does it contain? As examples, we can cite disqualification from the profession, the request to hand over electronic communications data, police searches and confiscations, and new measures on market informers.

Sanctions are heavy. The EU now requires the imposition of fines totalling between 1 and 15 million euros, or 15% of the total annual turnover of the company in question.

A test for the repurchase of shares

The regulation transposed into law also affects trading to repurchase own shares. From now on, transactions to repurchase shares must comply with the provisions of the regulations in order to benefit from a presumption of legitimacy. And transactions must now be carried out on regulated markets or MTFs (multilateral trading facilities). The use of derivatives does not benefit from this presumption of legitimacy.



Green light for new law for companies and associations

From 1 May 2019, new legislative rules will apply for Belgian companies and associations.

On 28 February, the Belgian House of Representatives adopted a bill for a new Code on Companies & Associations. The aim? To modernise the current legal framework, align more closely with reality and help make Belgian companies more competitive in relation to their European colleagues.

High impact

The aim? To modernise the current legal framework, align more closely with reality and help make Belgian companies more competitive in relation to their European colleagues. The new legislation will enter into force from 1 May 2019 for new companies and associations and 1 January 2020 for all existing companies and associations (unless these opt in before that date). Mass conversion is likely to occur between 2020 and 2023. All existing companies and associations must use this period to review their articles of association and legal status.


The new rules would normally have entered into force on 1 January, but the bill's adoption was delayed by the government shenanigans in recent months (Prime Minister Michel submitted his government's resignation on 18 December 2018 after a Green-Red vote of no confidence, ed.). Although the new legislation has been approved by the House, it hasn't yet been published in the Belgian Official Gazette currently. Also, the implementing decrees will take a little longer. Nevertheless, the new rules will apply as of 1 May this year.



Reforestation and biodiversity in practice

Some causes are more important than the pursuit of EBITDA. Without trees there can be no biodiversity, and flora, fauna, soil, water and air are all affected. That is why WeForest is mobilising companies to plant forests.

Reforestation is neither a luxury nor a question for hippies. It is indispensable for the climate and biodiversity, the quality of our soil and water, as well as for food; it is thus vital for the future of all species.

The solutions, which remain under-recognised, are simply waiting to emerge. They are not technical, do not adhere to the logic of extraction and do not call on limited natural resources. They are tremendously effective, draw their inspiration from natural ecosystems and entail integrating trees into fields. See also the article The full potential of reforestation.

We have pinpointed two relevant non-governmental initiatives: Ecosia, a search engine launched by a start-up in Berlin, has attracted 7 billion users and plants one tree for every 45 searches made – the equivalent of some 27 million trees planted to this day; secondly, the non-profit organisation WeForest is utilising its expertise in this area, its basis in science and its business network to engage in sustainable reforestation. We went to meet Marie-Noëlle Keijzer, the founder of WeForest, to hear her story.

From carbon offsetting to corporate 'water footprints'

In the early days, WeForest was not convinced by carbon offsetting, which it regarded as too reductive. Yet it was a means to connect with its target audience: companies anxious to measure, reduce and then offset the carbon emissions that they are not able to avoid. Today, the objective of 'net positive emissions' has been set, which also aims to offset past emissions.

It is obvious that environmental concerns now extend beyond carbon alone. Many are beginning to examine their water footprint. A new vision is taking hold, which entails development aid via the promotion of reforestation. "Moving countries out of poverty and doing more than simply planting trees and leaving: this is how companies now wish to act in a socially responsible way", explains Marie-Noëlle Keijzer, CEO of WeForest.

Intervening on vegetation, carbon, water, air and employment

With the 270 corporate clients that have joined it since 2011, WeForest planted almost 17 million new trees and restored 13,000 hectares of land by the end of 2017, and aims to double these figures by 2020. It offers high-impact marketing materials to customer companies with messages such as 'one sale = one tree planted'. 

In 2014, Brabantia decided to 'do something different'. It wanted to sell products, of course, but also give thought to global issues. Working alongside WeForest, the company entered into a joint financing project supporting reforestation. "Since Brabantia began to state on its website, on YouTube and on its packaging that one tree would be planted for every rotary dryer sold, it has seen a 25% increase in sales every year", explains the head of WeForest, citing well-substantiated case studies with certified benchmarks: "We go beyond the theoretical", she continues. "There is total transparency, with every customer receiving a GPS map of the hectares they have funded. We then ensure the forest is protected, approve our customers' projects and help develop the socio-economic activity of the entire region by initiating alternative revenue sources which create employment."

A tree is more valuable in the ground than on it

WeForest is not engaged in helping Zambia in order to maintain its reliance on international aid, but to educate the hundreds of farmers who chopped down all of their trees in order to sell them for firewood. By bringing them together, the association demonstrates that they do not have to clear trees to sell forestry chips, and that by selectively collecting biomass, they can provide heat without cutting a tree down. WeForest trains women to work as nursery growers, giving them a job, an income and an identity. It also supplies beehives to farmers who have begun to produce honey as a new source of income. Bees have other positive effects too, since they pollinate flowers, plants and fruit crops, for example. "It's really simple", affirms Marie-Noëlle Keijzer. "If we kill bees and birds by using pesticides and insecticides, we are preventing nature from doing its work."

Trees provide a habitat for animals and natural fertiliser for plants

In regions of Brazil where tree coverage is 3%, leopards have completely died out. Agriculture has supplanted forests wherever the ground is level. WeForest cannot operate across the entirety of the country, which is much too large. But they have created green corridors, and life has begun again. Trees and plants have been restored, attracting birds and animals that use them to move around, eat and reproduce.

Trees are also a natural source of fertiliser: corn grows more quickly when it is close to trees. They provide shade and retain water in the soil.

There are trees and trees

Not all reforestation projects are equal. Some trees boost the food supply or increase soil nitrogen levels (such as the lucerne), whereas others are detrimental to diversity. For example, no animals will live in palm tree plantations where the soil is also full of chemicals. "We won't solve the problem if we do nothing to change the causes of deforestation: intensive agriculture for the purposes of producing meat, for example", says Marie-Noëlle Keijzer, firmly convinced. Solutions exist, but everyone needs to accept their share of responsibility.

Sources: BNP Paribas Fortis, WeForest


Artificial intelligence: strength in (European) union!

With more financial resources, better coordination of national policies, improved data sharing and a common framework of legal and ethical rules, Europe now wants to ensure it can make up for its slow progress on artificial intelligence.

On 10 April, 24 EU countries (excluding Cyprus, Romania, Croatia and Greece) and Norway agreed to adopt a "European approach" to artificial intelligence – a technology highly likely to revolutionise various facets of our societies. The objective is clear: to give Europe the tools it needs to rival the technological giants of Asia and America. And with good reason, because European investment in AI lags behind the US and also China, which has announced a new plan to invest EUR 18 billion of public money by the year 2020.

Massive investment

Aware that fighting alone would leave them at a disadvantage, the signatories have clearly understood that they must leave aside their disagreements, pool their financial resources, coordinate national policies and devise a common framework. Although no sum of money has yet been put forward, the European Commission has also said it will ask member states and the private sector to invest a total of EUR 20 billion in research by 2020, alongside up to EUR 1.5 billion it intends to contribute itself. For its part, France has already announced that it will inject EUR 1.5 billion of public money into research on AI during the next four years. In addition to amending national legislation and increasing the funding available for AI, EU ministers have also pledged to create a number of pan-European research centres.

The tremendous potential of AI

The concept of artificial intelligence originated in the 1950s, when the British mathematician Alan Turing wondered whether a machine was capable of "thinking". However, it was during the first decade of this century that the technology began to take off. AI entails implementing a certain number of techniques that aim to give machines the ability to imitate, and even surpass, a form of actual intelligence. Since the first supercomputers capable of beating humans at chess using deep learning algorithms, technology has continued to advance in ways that demonstrate that robots can overtake humans. And although the tidal wave predicted has perhaps not quite materialised yet, the potential of AI does seem extraordinary and likely to disrupt numerous sectors, from health and aviation to logistics, the armed forces and banks.

Ethical rules as a comparative advantage

Artificial intelligence is also the source of a wide range of fears. Top of the list is job losses on a vast scale. But at the same time, others are predicting the opposite. The McKinsey Global Institute, for example, contends that automation and AI will help create 200,000 jobs in Belgium by 2030. The other major concern is the risk of robots that are not only ultra-intelligent, but also possess cognitive abilities that enable them to evade the control of their creators. This dilemma, which touches on legal, philosophical and ethical questions, is also driving the EU to adopt a position. Its stated objective is to move towards a framework of legal and ethical rules that guarantees to keep humans at the heart of developments, deployments and decision-making in relation to AI, as well as prevent the creation and use of harmful AI applications. And such ethical standards will be viewed as a potential competitive advantage for European Union companies.



Simpler rules for VAT on e-commerce are one step closer

Europe is about to modernise the rules relating to VAT levied on goods and services sold online. The aim is to lighten the load on SMEs and turn the EU into a genuine "electronic single market". The first stage will begin on 1 January 2019.

Obligations associated with VAT applied inside the EU can sometimes be a real headache for companies trading within the Union's borders. While self-declaration payment rules for B2B trade are relatively simple to apply (providing the purchasing company has a valid VAT number), selling to individuals within the EU involves a more complex set of formalities. This is because companies that exceed the annual threshold of EUR 35,000 (in Belgium) must register for VAT in the country or countries of destination. According to European Commission estimates, this administrative obligation equates to an average annual cost of EUR 8,000 (per member state) for a company to ensure it complies with local VAT rules, making it costly for SMEs. This observation led the European Commission to put forward an action plan in April 2016, which was ratified by the European Council last December. What will the new rules change?

A new threshold for "digital services" from 1 January 2019

Brussels has a clear objective: it wants to simplify VAT collection from e-commerce companies in order to turn the European Economic Area into a genuine "digital single market". The primary beneficiaries will be companies that offer "digital services" to individual consumers anywhere in Europe (relating to video on demand, music or app downloading and the distribution of video games or e-books, etc.) Up to a new annual threshold of EUR 100,000, these companies can remain subject to VAT in Belgium, thereby avoiding all obligations in the other Member States.

The "one-stop shop" will gradually be extended

In addition, such digital services companies can already make use of the Mini One-Stop Shop (MOSS), a system which simplifies all cross-border VAT operations by allowing companies to make one single VAT declaration: this is submitted electronically in the company's country of origin, for all services in all other Member States. This portal therefore removes a large chunk of the administrative burden on firms. The good news is that this mini portal will be accessible to providers of all other types of services in Europe from 2019.

Distance selling of goods also to be covered from 2021

Companies whose business involves the distance selling of goods will need to wait until 1 January 2021 for the new EUR 100,000 threshold to come into force. But the other change is that the MOSS will also be opened up to these online retailers. There can be no doubt that access to this single portal is a real step forward that will, according to the European Commission, lead to savings of EUR 2.3 billion and increase Member States' VAT receipts by EUR 7 billion. It should also be emphasised that from 2019, micro-businesses with cross-border online sales of no more than EUR 10,000 can continue to apply the VAT rules of their home country.

The other priority: the fight against fraud

This package of new measures also aims to mount a more effective attack against a form of fraud that reportedly led to losses of more than EUR 152 billion across the EU in 2015. As a result, a new measure to take effect in 2021 will remove the VAT exemption on goods with a value of under EUR 22 imported from outside the European Union. This is because it was often abused by companies that exploited it to bring in goods of a higher value while evading payment of VAT in their country of arrival. 

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