Application of article 7:97 of the Belgian Code on Companies and Associations

Ieper, April 26th, 2023 – Melexis NV (Euronext Brussels: MELE) (Melexis or the Company) announces the application of article 7:97 of the Belgian Code on Companies and Associations (BCCA). The procedure was applied in the context of the approval of operational advance payments by its subsidiary, Melexis Technologies NV (Melexis Technologies), to an important supplier.

The recent mismatch between supply and demand related to automotive semiconductors has led market participants to establish new ways of contracting aimed at the long-term relationship between suppliers and their customers. Likewise, in recent years, Melexis and its subsidiaries have entered into a variety of long-term agreements (LTAs) with several suppliers, in line with the developments in the industry. The most important goal of the LTAs is to secure volumes and more predictable prices.

One of the most important wafer suppliers is the group related to X-Fab Silicon Foundries SE (Euronext Paris: XFAB) (X-Fab). With this supplier, Melexis Technologies entered into an LTA for the 2023-2025 period as regards the 350 nm and 180 nm technology and an LTA for 2024-2027 period as regards the 110 nm technology (the X-Fab LTAs).

Given that these X-Fab LTAs require significant capacity expansions at X-Fab, Melexis Technologies agreed today, in line with current market practices, to prepay a part of the committed wafers.

For Melexis Technologies, the determination and allocation of such prepayments for capacity reservation involves the approval of an operational advance payment to X-Fab for a total amount of around 189.2 mio, i.e. 15% of the reserved capacity (the Transaction). The prepayments are scheduled to occur at the end of April 2023, end of September 2023, end of October 2023 and end of February 2024.

Article 7:97, §1, second paragraph BCCA stipulates that a non-listed subsidiary (Melexis Technologies) of a listed company (Melexis) shall not make decisions about a transaction with a related party without prior approval of the board of directors of said listed company. Given that both Melexis and X-Fab are controlled by the same shareholder, Xtrion NV, they qualify as related parties. This means that the decision to approve the amount and the conditions of the operational advance payments to X-Fab by Melexis Technologies shall be submitted to Melexis’ board of directors for approval, applying the procedure required by article 7:97, §3 et seq. BCCA.

After advice from the committee of independent directors, on April 26, 2023, the board of directors approved the Transaction and the signing of the necessary agreements.

This decision is in line with the conclusion of the committee of independent directors, which reads:

“In conclusion, it is the opinion of the Committee that the upfront payments for capacity reservation are:

  • not such as to cause Melexis a disadvantage which, in light of the strategy of the Company, is manifestly illegitimate; and
  • in the interest of the Company and do not cause a disadvantage to the Company which would not be outweighed by benefits for the Company.”

The auditor has assessed the financial and accounting information mentioned in the related minutes of the board of directors and in the above-mentioned committee’s advice. The conclusion of the auditor reads:

“Based on our engagement, nothing has come to our attention that causes us to believe that the financial and accounting data as included the advice of the Committee of Independent Directors dated 24 April 2023 and the minutes of the board of directors dated 26 April 2023, which justifies the proposed Transaction, do not give, in all material respects, a true and fair view of, and are consistent with the information available to us in the context of our engagement.”

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