Open letter: "Appeal to the Belgian Government and the Presidents of the Belgian Political Parties"

The signatories of this appeal are individuals or companies who intentionally invest in Belgian enterprises.We do this from a perspective often described as “conscious capitalism.”“Conscious Capitalism is a philosophy stating that businesses should serve all principal stakeholders, including the environment. It does not minimize profit-seeking but encourages the assimilation of all common interests into the company’s business plan.”In short, it’s about “corporate social responsibility.”

We are making this appeal based on our experience as investors in Nyrstar, of which we collectively represent more than 9.5% of the shares.Our group consists of people from various backgrounds: entrepreneurs, self-employed workers, executives, retirees, industrial leaders, as well as teachers, individuals from the cultural sector, and young people who support our cause.A diverse group, indeed, but united by the shared vision of socially responsible capitalism.

We would like to draw your attention to our disheartening experiences as investors in the Belgian listed company Nyrstar, because we are convinced that Nyrstar is not an isolated case and that profound changes are needed to prevent this from happening again.

What is the story of Nyrstar?

Trafigura is the world’s largest commodity trader, including in zinc.Over several years—taking advantage of Nyrstar’s difficult position in 2014—Trafigura acquired 24.42% of the publicly traded company’s shares. It thus became the largest shareholder.The rest of the ownership was highly fragmented, so this 24% stake enabled control of the company. As a result, Trafigura not only became the controlling shareholder, but also a supplier, a buyer of products, and even a "banker" to Nyrstar. At the time of Trafigura’s entry, Nyrstar’s market capitalization was around 1 billion euros.If you want to know more about Trafigura and its "criminal record," take a look at what Wikipedia has to say.

To ensure this all appeared above board, the board of directors signed agreements regarding business transactions between the two parties, which were then briefly described at general meetings as being "at arm’s length" and "on normal commercial terms."However, years later, under court pressure, it became clear that commercial discounts in favor of Trafigura amounted to as much as 76%.The chairman of the board was supposed to be an independent director. That became Martyn Konig, who was supposedly independent, yet was clearly connected to Trafigura—against the advice of the then board of directors (which still included a few Belgians).In this way, Trafigura gained de facto control of the board.Gradually, the board placed people close to Trafigura in key positions within the company.

Thus, Trafigura slowly managed to drain and weaken Nyrstar behind the scenes, like a cuckoo, without triggering alarms from the proper authorities (auditor, FSMA).Meanwhile, institutional and retail (Belgian) investors continued to believe in Nyrstar’s opportunities, fed by optimistic analyst reports and misleading corporate communications.

By the end of September 2019, Nyrstar had to repay a €336 million bond loan.Although other options were likely available, the board had already decided in April 2019 that Trafigura would take over the debt and that all company assets would be transferred to a vehicle (NN2), 98% owned by Trafigura for a symbolic 1 EURO, while the existing shareholders were diluted to a meager 2%.An agreement was reached with institutional bondholders, allowing them to partially limit their losses.Retail shareholders, however, were entirely abandoned and effectively expropriated.They learned of this via the press on April 15, 2019, after months of being left in the dark.Since then, a legal battle has raged with no end in sight, increasingly highlighting how small shareholders are left to fend for themselves.

Why is the Nyrstar story important for the Belgian economy?

What is truly striking is the realization that the board of a (public, international) company can dispose of all corporate assets without properly informing shareholders or giving them the right to decide.Normally, the board takes into account the interests of all or at least a majority of shareholders. But there is no guarantee of this. In a listed company with many shareholders, a 24% minority—through a well-planned strategy—can take over the board and disregard the remaining 76% of shareholders. In other words: expropriate them.Moreover, there are no legal guarantees that minority shareholders can access the information they need about such actions. So they are not only expropriated by a controlling minority but also kept in the dark by it.

In Nyrstar’s case, the company tries to justify sidelining other shareholders by claiming an emergency situation.However, our detailed analysis shows that in the years leading up to this “emergency,” Trafigura actively contributed to Nyrstar’s further weakening, thereby creating the very crisis it later invoked.There are serious indications that this supposed emergency didn’t even exist, as also observed by the company’s auditor.

The Nyrstar affair demonstrates that Belgian listed companies remain vulnerable to (foreign) attacks by predatory capitalists or raiders, who can strip companies of their assets and future potential. In this post-Covid period, that is a message deserving of serious attention.

This is especially relevant because Belgian households have little confidence in investing part of their wealth in equities. Belgian savings are substantial. Yet the desire to invest in companies is weak.And it is clear that a stronger investment culture will be vital in the years ahead as we recover from the Covid crisis.

We therefore need a structural solution.

A structural solution is necessary. It should include a number of elements, which we outline briefly below:

1. Asset sales: The sale of key assets from a (public) company, which significantly impacts its value, should not be decided solely by the board.Shareholders must have a say and at least be properly informed—even in emergencies—especially where there are serious signs of possible abuse.This is sensitive for many companies, not just large listed firms.The Companies Code should be amended.Shareholders cannot do this alone. In large companies, they should be supported by the supervisory authority, ensuring that in major transactions the information is accurate and all stakeholders’ interests are respected.This means that the FSMA must be given additional powers. Currently, its role is mostly informative, advisory, and cautionary.Shareholders must be able to call on these new powers quickly and affordably. Otherwise, it will remain meaningless.

2. Information: Shareholders often receive limited and delayed information. In the Nyrstar case, shareholders were rejected by the summary proceedings judge after winning at first instance.A simple clarification request via an expert group took months—during which time the predator could continue to act with impunity.Communication and interaction with the company-appointed auditor are difficult and unnatural, resulting in vast information asymmetry between the reference shareholder and the minority shareholders. How can we convince people to invest in our companies if they are not entitled to proper information and are left abandoned even amid clear signs of abuse by a dominant shareholder?

3. Oversight: Taking legal action against predatory capitalists is not easy.They have more experience, more resources, and exploit every legal loophole. They are “repeat players.” We are not.Often small shareholders cannot keep up. It sends a troubling message if every investor will eventually need a lawyer to protect their investment and bear the full cost—while any gains go mainly to the company itself.That’s why the FSMA must be given more binding powers, enabling it to go beyond just issuing guidelines or engaging in endless legal arguments with expensive lawyers.The legal framework must of course be balanced—but enforcement should be more effective and accessible, as it is in neighboring countries.

4. Independent directors: It’s an old story.The definition of “independent director” should be clearer, with relevant and enforceable criteria—especially when there are doubts from the start, as with Nyrstar.Letting the general meeting vote on who is or isn’t independent is a flawed solution.Power games inevitably emerge and the (small) shareholder loses out. It must be possible to overturn the appointment of an "independent" director who turns out not to be independent—even if that becomes clear only gradually.

Our appeal

We are "minority shareholders."The “controlling” shareholder holds 24%. The “minority” represents 76%.This is not uncommon in a public company—and we accept that.But this minority must be better protected.Every Belgian who wants to contribute to our nation’s prosperity should be reasonably rewarded.An investor knows the risks and accepts that an investment can go wrong.But an investor deserves effective protection from practices that have nothing to do with “conscious capitalism.”For our prosperity, socially responsible capitalism is too important to leave to predatory capitalists.Yet that is exactly what we are doing now.

That is the core of our message. In this post-Covid period, substantial funding will be needed to restore our prosperity.Private investor capital will be crucial. Today, that money sits safely in low-yield savings accounts, while investors—at least in part—wait for better protections before they dare contribute to building our future prosperity by investing in the risk capital of Belgian businesses.

We do not ask for subsidies.We ask you to change the law, to protect us more effectively, and to motivate us to take part in the rebuilding.

We also ask you to show leadership by taking concrete and result-driven action against clear signs of (legal) abuse by predatory capitalists who care only about their own profit—at the expense of others, and ultimately at the expense of the prosperity built by our ancestors.

We are counting on you.

Sincerely,

Kris Vansanten & Evelyne van Wassenhove

Partners, RSQ Investors

Also on behalf of a group of investors affiliated with our action, who are also minority shareholders of Nyrstar, including:

Jean-Louis Matton, Etienne Schouppe, Bram Depla, Geoffroy Desaintghislain, Greet De Grave, Guy Van Rossum, Zulma Sonck, Karim El Messaoudi, Robert Baessens, Roland Sclep, Roeland Vavedin, Jan Anton Rijsdijk, Miguel Van Damme, Patrick Van Geertsom, Willem Marijn Tol

[These individuals explicitly agreed to have their names included in this letter. A number of other investors also support this letter but prefer to remain anonymous.]

---

Automated translation (Chat GPT)