Over the past three years, Belgian listed companies have made considerable progress in complying with corporate governance rules. This is the conclusion of the Financial Services and Markets Authority (FSMA) following its third study on compliance with corporate governance rules by Belgian listed companies. 2009 CodeBelgian listed companies must respect the Belgian Corporate Governance Code, also known as the 2009 Code, in accordance with the "comply or explain" approach. This means that companies which do not comply fully with the 2009 Code must explain why they do not do so. Certain rules of the 2009 Code have been integrated into the Belgian Company Code. These rules do not allow for exceptions. One example is the obligation for listed companies to establish a remuneration committee and prepare a remuneration report. Supervision by the FSMAThe FSMA has analyzed the 2009, 2010 and 2011 financial reports
of Belgian listed companies in order to determine to what extent
they comply with the corporate governance rules set out in the 2009
Code. Corporate governance statementThe 2009 Code seeks to achieve a high level of transparency through disclosure. Transparency is achieved, amongst other means, through the corporate governance statement in the company's annual report. The FSMA study showed that all listed companies have included adequate corporate governance information in their corporate governance statements. The corporate governance statement must also be included in the annual report of the board of directors. 64% of the listed companies comply with this rule. Internal control and risk management systemThe corporate governance statement must contain a description of the most important characteristics of the company's internal control and risk management system. For listed companies, this is a statutory obligation (see Article 96 §2(1)(3) of the Company Code). The Corporate Governance Committee has published a number of guidelines in this respect. At least the following characteristics should be described: the control environment, the risk management process, the activities subject to control, and the information and communication procedures (see the corporate governance directives of 10 January 2011, available at www.corporategovernancecommittee.be). These guidelines have proven useful, as 97% of all Belgian listed companies now publish the required information. Evaluation of directorsThe corporate governance statement must also contain information regarding the evaluation of the board of directors, its committees and individual directors. This, of course, is a more sensitive issue. 10% of the listed companies reported that an evaluation had occurred, but without providing any further information. 16% of the listed companies explained their failure to comply with this provision. Remuneration reportAll listed companies are obliged by law to publish a
remuneration report. This report forms part of the corporate
governance statement. The minimum content of the remuneration
report is set out in Article 96 §3 of the Company Code, as
supplemented by the 2009 Code. The same trend can be noticed when it comes to mandatory components of the remuneration report:
ConclusionThe FSMA noted that Belgian listed companies have made considerable progress in complying with the corporate governance rules. According to the FSMA, this heighted compliance can be explained by the fact that a number of corporate governance principles are now statutory obligations. 86% of all listed companies comply with the obligation to publish a separate remuneration report (a 39% improvement compared to the first study). The FSMA concludes its study with a list of recommendations, intended to facilitate compliance by listed companies with corporate governance rules. |
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