The Corporate Governance Review: Belgium

Overview of governance regime

Belgian corporate governance practices for listed companies have been partially codified in the new Code of Companies and Associations (CCA). For existing companies, associations and foundations, the CCA has been applicable since 1 January 2020. The articles of association of existing legal entities must be brought into line with the CCA no later than 1 January 2024.

Other financial and ad hoc disclosure requirements for listed companies are laid down in the Royal Decree of 14 November 2007 on the obligations of issuers whose financial instruments are admitted to trading on a regulated market. Listed companies must also disclose the transparency notices they receive from their shareholders pursuant to the Act of 2 May 2007 and the Royal Decree of 14 February 2008.

The other main source of guidance with respect to corporate governance for Belgian listed companies is the Corporate Governance Code 2020 (the 2020 Code),2 published on 5 May 2019. The 2020 Code is an initiative of the non-government Corporate Governance Committee, composed of representatives from bodies such as the FSMA, the Federation of Belgian Enterprises, Euronext Brussels, the Belgian Institute of Chartered Accountants and the Central Economic Council. The FSMA monitors compliance by listed companies with the comply or explain principle applicable under the 2020 Code. The 2020 Code applies to companies incorporated in Belgium whose shares are admitted to trading on a regulated market (i.e., listed companies) as defined by the CCA.

By Royal Decree of 12 May 2019, the 2020 Code was named the mandatorily applicable corporate governance code for certain listed Belgian companies, more specifically those whose shares are listed on a regulated market in Belgium or in another Member State of the European Economic Area (EEA). The CCA obliges these types of companies to adhere to the provisions of the 2020 Code or to explain in their corporate governance statement, which forms part of the annual report, why they have not done so, assuming, of course, that the provisions in question are not of mandatory application. This means that listed companies are not required by law to comply with the 2020 Code but they are required to explain why they have not done so. In addition, compliance is highly recommended since it gives credibility and authority to listed companies. Non-compliance can adversely affect public opinion about a company.

The Belgian corporate governance rules have thus evolved in the past few years from soft law (the Lippens Code and the 2009 Code) to hard law (the CCA) and that process is continuing. The 2020 Code is a thorough overhaul of the 2009 Code, incorporating numerous regulatory changes, at both the European and Belgian levels. European legislation is indeed often the driving force behind Belgian legislative proposals.

This chapter focuses solely on the corporate governance rules applicable to listed companies.

Corporate leadership

i Board structure and practices

Listed companies usually take the form of a limited company (NV/SA).3 Companies with other corporate forms can be listed if their shares are freely transferable.

The basic governance structure of an NV/SA is a one-tier model, whereby the board of directors holds all powers except those specifically reserved by law or the articles of association to the general meeting of shareholders. The CCA allows the board of directors to delegate daily management of the company to another person, who may also be a director. This person is generally known as the chief executive officer (CEO), managing director or general manager. The board of directors keeps the authority to make decisions with respect to the delegated powers.

The CCA allows companies to adopt a two-tier governance model, consisting of a supervisory board and a management board. The supervisory board is responsible for general corporate policy, overall strategy and supervision of the management board. It holds the same powers as the board of directors under the one-tier model, provided the powers are reserved to it pursuant to the CCA. The management board exercises all management powers, provided these have not been reserved to the supervisory board in accordance with the CCA. The supervisory board is responsible for appointing and removing the members of the management board.

The aim of the two-tier model is to entrust exclusive powers to the aforementioned bodies through the articles of association and by law. In this regard, membership of both boards is prohibited. Very few listed companies have adopted a two-tier governance structure.

The CCA has also introduced the possibility of a having sole director. In this case, all powers are held by a single director, which can be either a natural person or a legal entity. For listed companies, however, only an NV/SA with a board is eligible to serve as a sole director.4

The 2020 Code states that the board of directors should be composed of both non-executive directors, who do not participate in the company's daily activities, and executive directors, who belong to executive management and thus participate in the company's daily activities. A majority of the board should be made up of non-executive directors, at least three of whom are independent based on the criteria set out in Clause 3.5 of the 2020 Code. Article 7:87 of the CCA defines 'independent' as not having a relationship with the company and not being an 'important' shareholder.

The board's composition should ensure that decisions are made in the company's interest and should reflect gender diversity and diversity in general, as well as complementary skills, experience and knowledge. No individual or group of directors should dominate the board's decision-making process, and no individual should wield excessive decision-making powers.

In January 2011, the Corporate Governance Committee, which drafted the 2020 Code, issued an additional recommendation stating that, within seven years, at least 30 per cent of board members should be women.

Article 7:86 of the CCA stipulates that at least one-third (rounded to the nearest whole number) of the directors of companies whose securities are listed on a regulated market should be of a different gender than the other members. If the required number of directors of the less-represented gender is not met, the next appointed director should be of that gender. If not, the appointment shall be deemed null and void. The same holds true if an appointment would cause the number of directors of the less-represented gender to drop below the statutory minimum. For companies whose securities are admitted to trading on a regulated market for the first time, this requirement should be met as from the first day of the sixth financial year following the admission to trading.5.

The CCA obliges companies6 whose shares are listed on a regulated market to set up a remuneration committee composed of non-executive directors, a majority of whom should be independent.7 The remuneration committee should submit proposals to the board of directors on the company's remuneration policy and on the individual remuneration of directors and executive managers and, where appropriate, on proposals to be submitted by the board of directors to the general meeting of shareholders (i.e., proposals on the remuneration of directors). The remuneration committee also prepares the remuneration report that forms part of the annual report and provides explanations on this report at the annual general meeting of shareholders.

The 2008 financial crisis led to an animated debate on the (at times excessive) remuneration of directors and executive managers of Belgian companies. In an attempt to rein in the remuneration of directors and executive managers, several new provisions were adopted in 2010 and codified in the Belgian Company Code and subsequently the CCA.

As a general rule, the general meeting of shareholders has exclusive power to determine the remuneration of directors. The board of directors, in turn, determines the remuneration of executive management, unless the company's articles of association provide otherwise. In listed companies, the articles of association sometimes provide that the general meeting of shareholders determines the overall remuneration for the board of directors as a whole, while the board itself decides how to distribute this total amount between its members.

The CCA stipulates that the remuneration of individual directors and executive managers shall be determined further to a proposal by the remuneration committee. The remuneration committee should also submit proposals for the company's remuneration policy, which must be explained in the remuneration report that forms part of the board's annual report. The general meeting of shareholders need not approve the remuneration policy per se pursuant to the CCA but does have the power to vote on the remuneration report in which the remuneration policy is described.8 There are no consequences, however, if the general meeting rejects the remuneration report. The remuneration report should also be provided to the works council or, if there is none, the employee representatives on the health and safety committee or, if there is no such committee, the trade union representatives.

The board must submit the remuneration policy to the general meeting of shareholders for approval. As long as no remuneration policy has been approved, directors and other high-level managers can continue to be paid in accordance with past remuneration practices. Approval of the remuneration policy is also required in the event of a material change, and in any event every four years. The approved remuneration policy should be published on the company's website. Special rules and conditions apply to variable remuneration, granting of shares and severance packages. These provisions of the CCA are supplemented by the principles and best practices of the 2020 Code with regard to the level and structure of executive remuneration.

ii Directors

The 2020 Code indicates that both executive and non-executive directors, regardless of whether the latter are independent, should exercise independence of judgement in their decision-making. Directors should make sure they receive detailed and accurate information and should study this information carefully to acquire and maintain a clear understanding of the key issues relevant to the company's business. They should seek clarification whenever they deem it necessary to do so.

Board members should place the company's interests above their own. They have a duty to look after the interests of all shareholders equally and should act in accordance with to the principles of reasonableness and fairness. Board members should inform the board of any conflict of interest that could, in their opinion, affect their judgement. In the event of a potential conflict of interest, the board should, under the leadership of its chair, decide which procedure it will follow to protect the interests of the company and all its shareholders. In the next annual report, the board should explain why it chose this procedure. However, if there is a substantial conflict of interest, the board should carefully consider communicating as soon as possible on the selected procedure, the most important considerations and the conclusions. This disclosure should be effected through two different documents: the Corporate Governance Charter, posted on the company's website, and the Corporate Governance Statement, a specific section of the annual report. The CCA indicates a specific procedure to be followed when directors have a pecuniary conflict of interest opposing the interest of the company. A director with a conflict of interest of a financial nature cannot participate in the deliberations or vote on the decision in question. Information on the pecuniary conflict of interest should be included in the board of directors' annual report and the statutory auditor's report.

The board should also take all necessary and useful measures to ensure effective and efficient execution of the Belgian rules on market abuse. It should draw up a set of rules (a dealing code) regulating transactions (and the disclosure thereof) in shares of the company or in derivatives or other financial instruments linked to shares carried out for their own account by directors or other persons with managerial authority.

Although the term of office of a director of an NV/SA cannot exceed six years by law, the 2020 Code advises setting the maximum term of directors at four years. This can be done by including a provision to this effect in the articles of association or by a decision of the general meeting of shareholders on the appointment of the director.


Companies whose securities are listed on a regulated market9 must publish a financial report annually and biannually.10 This type of listed company is also obliged to make ad hoc disclosures if the information in question can be considered inside information. If the issuer decides to make a disclosure between the end of the financial year and publication of the annual financial report, this communication should meet certain criteria. The biannual financial report should contain the interim financial statements and an interim report, information on external control and a declaration by the issuer regarding the faithful nature of the statements and report.

Listed companies are subject to other disclosure requirements with respect to any changes in the conditions, rights and guarantees linked to their securities, special reports of the board of directors and draft amendments to the articles of association.

In addition to the disclosures set out above, the 2020 Code indicates that the company should draw up a corporate governance charter describing the main aspects of its corporate governance policy, such as its governance structure, the terms of reference of the board and its committees as well as other important topics. It should contain the minimum information set out in the 2020 Code. The charter should be updated as often as necessary to reflect the company's corporate governance at all times. It should be made available on the company's website and should specify the date of its most recent update.

The board of directors should include a corporate governance statement in its annual report, describing all relevant corporate governance events that have taken place in the past year. This statement should be included in a specific section of the annual report and should contain the minimum information set out in the 2020 Code. If the company has not complied in full with one or more provisions of the Code, it should explain its reasons for not doing so in its corporate governance statement (the comply or explain principle). The CCA has made a corporate governance statement mandatory.

The CCA indicates that the corporate governance statement should include a remuneration report, prepared by the board of directors further to a proposal of the remuneration committee. In addition, the remuneration report discusses the annual change in remuneration, the development of performance criteria and the average remuneration of employees other than directors and managers for at least five financial years, presented in a manner that permits comparison, and mentions the ratio between the highest remuneration of a member of management and the lowest remuneration of an employee.

Corporate social responsibility / ESG

The Belgian corporate governance rules do not specifically cover corporate responsibility, with the exception of Article 7:86 of the CCA, which provides that at least one-third (rounded to the nearest whole number) of the board members of companies whose securities are listed on a regulated market should be of a different gender from the rest. Moreover, the 2020 Code mentions that the composition of the board should ensure sufficient expertise in the company's areas of activity as well as sufficient diversity of skills, background, age and gender.

The 2020 Code is characterised by a stronger emphasis on the creation of sustainable value. This entails an explicit focus on the long term, on responsible behaviour at all levels of the company and the permanent consideration of the legitimate interests of stakeholders. More explicit expectations are also formulated in terms of diversity, talent development and succession planning, and in relation to the company's annual reporting on non-financial matters.

Unlike financial institutions, which are subject to specific rules on compliance and risk management, there are currently only a limited number of rules on compliance and risk management applicable to listed companies. The main provision of the 2020 Code is that an independent internal audit function should be established, with resources and skills adapted to the company's nature, size and complexity, and that if the company does not have such a position, the need for one should be reviewed at least once a year.


i Shareholder rights and powers

The basic rule is that each share of the same value carries one vote. If shares do not have the same value or if there is no value mentioned, they carry voting rights in proportion to the capital they represent, with the share with the lowest value carrying one vote. Fractions of votes are not taken into account.11

The CCA introduced new rules on multiple voting rights. For listed companies, this possibility is limited and only loyalty shares may be issued with double voting rights (a maximum of two votes per share). The CCA provides for an opt-in for companies that wish to issue loyalty shares.

The issuance of shares with double voting rights requires a change to the company's articles of association, which must be approved by a two-thirds majority of shareholders at the general meeting (unless the articles of association provide for a higher majority for this decision). Notably, this threshold is lower than the three-quarters majority required for any other type of amendment to the articles of association.

The rules apply only to shares that have been registered in the name of the same shareholder for an uninterrupted period of at least two years. This two-year period runs from the day on which the shares are registered, even if registration took place before the provision introducing double voting rights was adopted and before the company was listed. Shares converted into dematerialised form or to which title is transferred lose their double voting rights.

A number of decisions are reserved by law to the general meeting and cannot be delegated12 to the board of directors, such as approval of the financial statements and discharge of the directors and statutory auditor, the appointment and remuneration of directors and the statutory auditor, the initiation of claims by the company against its directors, winding-up of the company, or a merger or division.

Dispute resolution procedures are available to shareholders pursuant to which they can be obliged to sell their shares, or purchase the shares of other shareholders, in the event of a serious conflict between them (CCA, Articles 2:60 to 2:69). The involuntary winding-up of the company can be requested as a last resort (CCA, Article 7:230).

One or more shareholders who, individually or collectively, hold 10 per cent of the share capital can also request the board of directors and the statutory auditor to call a general meeting. It is generally accepted that it is also possible for these shareholders to determine the agenda for the meeting. Pursuant to Article 7:130 of the CCA, shareholders holding at least 3 per cent of the share capital of a listed company have the right to submit proposals regarding items on the agenda and propose resolutions (this does not apply to meetings held on second call; namely meetings called because the required quorum was not met at the first meeting).

Shareholders also have the right to ask the directors (and the statutory auditor) questions during general meetings or in writing before the meeting (to be answered at the meeting). The directors or the statutory auditor, as the case may be, are duty-bound to answer these questions. There is an exception to this rule, however: directors and the statutory auditor can refuse to answer a question if doing so would cause harm to the business of the company or violate their or the company's duty of confidentiality.

One or more shareholders owning at least 95 per cent of the securities to which voting rights are attached can initiate a squeeze-out to obtain 100 per cent of all voting securities or securities that allow their holders to acquire voting securities.

ii Shareholder duties and responsibilities

The 2020 Code stipulates that, in companies with one or more controlling shareholders, the board should endeavour to have the controlling shareholders make considered use of their position and respect the rights and interests of minority shareholders. The board should encourage the controlling shareholders to respect the 2020 Code. In addition, it is recommended to enter into a relationship agreement with the majority shareholders.

The 2020 Code specifically mentions certain best practices with regard to institutional investors, namely that the company should discuss with institutional investors the implementation of their policy on the exercise of voting rights in the relevant financial year and ask institutional investors and their voting agencies for explanations about their voting behaviour.

iii Shareholder activism

The general meeting of shareholders determines the remuneration of directors but not of executive managers (except for the approval of severance pay in certain cases). The general meeting of shareholders has the power to vote separately on the remuneration report in which the remuneration policy is described.

Directors can be held liable, in accordance with the CCA, for shortcomings in their management of the company, violations of rules of law or the company's articles of association and, in certain cases, breach of their general duty of care (the relevant standard is how a reasonably prudent director would have acted under the same circumstances). Directors are jointly liable for any violation of the law or the articles of association. To avoid liability, directors must disclose the violation to the board of directors. The overall liability for negligence, with the exception of recurring negligence and gross negligence, is capped at €12 million. The general meeting of shareholders has the power to initiate proceedings on behalf of the company against one or more directors on the above-mentioned grounds. A decision should be approved by a majority of the votes cast. No action can be taken if the general meeting has already discharged the directors. It is also possible for minority shareholders to initiate proceedings on behalf of the company if they represent at least 1 per cent of the voting securities or held at least €1.25 million of the company's capital on the date the general meeting voted to discharge the directors. Minority shareholders who validly approved the discharge cannot bring such proceedings.

At the request of one or more shareholders holding at least 1 per cent of the total voting rights or securities representing at least €1.25 million of the company's capital, the court may also appoint, if there are indications that the interests of the company are seriously jeopardised or could be jeopardised, one or more experts to verify the company's books and accounts and the actions of its corporate bodies.

The CCA provides for the possibility to solicit proxies for certain shareholder meetings. However, this solicitation should comply with the requirements of the CCA.13 A public solicitation of proxies (i.e., when advertisements or intermediaries are used or if more than 150 shareholders are targeted) should be approved by the FSMA and a number of requirements should be met.14 Proxy solicitation is mostly done by associations that defend (minority) shareholder rights. Further to the SRD II, proxy advisers are subject to the CCA and must adopt a code of conduct, which must be made public (Article 7:146/1 et seq.).

iv Takeover defences

In general, the following measures can be taken by the target company to frustrate a takeover bid

Capital increase with the issuance of new shares

Only the general meeting of shareholders is entitled to increase a company's share capital, unless the board of directors has been authorised to do so (pursuant to the CCA). Such an authorisation is not valid in the context of a takeover bid, during which the board, in general, cannot increase the share capital by means of a contribution in kind or in cash with the cancellation or restriction of the shareholders' pre-emptive right. However, under certain conditions the general meeting may authorise the board of directors to increase the share capital during the offer period by means of a contribution in kind or in cash with cancellation or restriction of the shareholders' pre-emptive right.

Acquisition of own shares by the company

In general, the general meeting of shareholders must authorise the acquisition of own shares by the company unless the board of directors has been authorised to do so (pursuant to the CCA). As an exception to this rule, the board may acquire own shares to avoid serious, imminent harm to the company, provided the articles of association so allow (for a maximum of three years). In this case, other conditions governing the acquisition of own shares also apply.

Poison pill

In general, certain advance measures are available to protect companies against potential takeover bids. Only the general meeting of shareholders (thus not the board) can grant rights to third parties liable to have a significant effect on the company's assets or give rise to a significant debt or obligation on behalf of the company, when the exercise of the rights depends on the launch of a takeover bid or a change in control. During the offer period, only the target company's (general meeting of) shareholders can take decisions or execute transactions that could have a significant impact on the composition of the company's assets or liabilities or enter into transactions without effective compensation. Such decisions and transactions cannot, in any case, be made subject to the outcome of the bid.

Issuance of convertible bonds or subscription rights (warrants)

These instruments may be issued by the general meeting of shareholders and may, for example, be convertible or exercisable upon the launch of a takeover bid. It is also possible to create a pyramidal ownership structure or issue share certificates.

Alternative bids

As a general rule, in keeping with the Takeover Directive, the target company's board of directors must act in the company's interests. It may, therefore, seek an alternative bidder (or white knight). Belgian law specifically provides that the target company need not inform the FSMA of the fact that it is searching for an alternative bidder (although it should inform the bidder and the FSMA of any decision in relation to the issuance of shares or that is liable to frustrate the bid).

Belgium has opted out of the provisions of the Takeover Directive aimed at restricting the use of defensive measures by the board of directors. Nevertheless, companies with their registered office in Belgium whose shares are (at least partially) listed on a regulated market may voluntarily include these restrictions in their articles of association (i.e., opt-in).

If the rights set out above in respect of a poison pill, issuance of convertible bonds or subscription right, or alternative bid cannot be exercised, reasonable compensation should be paid to their holders.

The company may also stipulate in its articles of association that these provisions shall apply only to the extent that the bidder or the company controlling the bidder is subject to the same restrictions on the application of defensive measures (the reciprocity rule).

v Contact with shareholders

The basic rule is that the company should treat all similarly situated shareholders equally.

The Royal Decree of 14 November 200715 regulates periodic (annual and semi-annual) and occasional information (i.e., inside information) to be disclosed by listed companies, in addition to the mandatory disclosures set out in the CCA (e.g., financial statements and annual reports). Periodic information should be disclosed quickly and on a non-discriminatory basis so that it can reach as many people as possible, and disclosure should take place, insofar as possible, simultaneously in Belgium and other EEA member states (the company should use media that are expected to ensure disclosure in all EEA member states). Any inside information should be disclosed simultaneously, insofar as possible, to all categories of investors in the Member States where the company has requested or agreed to trade its financial instruments on a regulated market.

The 2020 Code stipulates that the board should ensure an effective dialogue with shareholders and potential shareholders through appropriate investor relation programmes, so as to achieve a better understanding of their objectives and concerns. Individual directors have a duty to keep information about the company confidential unless required to disclose it pursuant to a statutory or ethical duty. This duty also extends to shareholders. Some scholars argue, however, that directors representing a controlling shareholder can consult with that shareholder on decisions to be made by the board of directors and the position the director will adopt in future deliberations, unless the board of directors specifically decides otherwise. This does not mean that directors can inform the persons they represent of information they can then use for their own purposes (e.g., to determine whether to sell or purchase shares). In addition, confidential information should be disclosed only with the approval of the board of directors and subject to agreed confidentiality obligations.

The general rule is that inside information should be disclosed immediately. However, a company can decide, at its own risk, to postpone the disclosure of inside information if the disclosure could harm the company's legitimate interests, provided the delay in disclosure does not mislead the public and confidentiality can be guaranteed. If inside information is disclosed in the normal exercise of the discloser's profession, function or work, the information should simultaneously be made public unless the person to whom the inside information is disclosed is bound by a duty of confidentiality (e.g., the printer or the communications department). If the disclosure of inside information is postponed, the company should take the necessary measures, inter alia, to bar access to this information to all persons who do not need it to perform their duties.


Belgian company law has undergone substantial changes in recent years. In addition, the SRD II was implemented in Belgium in 2020. No major changes are expected in the coming year.


1 Dirk Van Gerven is a partner at NautaDutilh.

3 Since most listed companies in Belgium take the form of an NV/SA (naamloze venootschap/société anonyme), the governance structures of other corporate forms are not discussed in this chapter.

4 See Code of Companies and Associations (CCA), Article 7:101, Section 1(3).

5 Applicable from the first day of the first financial year starting after 14 September 2011.

6 There is an exception for small listed companies that meet the criteria set out in the CCA, Article 7:100, Section 4. In that case, no remuneration committee need be set up. Rather, the board of directors will perform the duties of the remuneration committee and should have at least one independent member. If the chair of the board is an executive director, he or she cannot chair board meetings when the board is acting as the remuneration committee. There is also an exception for public undertakings for collective investment with variable capital, within the meaning of Article 3(5) of the Act of 3 August 2012 on institutions for collective investments that meet the conditions of Directive 2009/65/EC and for companies whose business is the issuance of asset-backed securities, as defined in Article 2(5) of Commission Regulation (EC) No. 809/2004.

7 In accordance with the requirements set out in Clause 3.5 of the 2020 Code and CCA, Article 7:87.

8 The 2020 Code provides that the remuneration policy should be submitted for approval to the general meeting of shareholders.

9 Some of the provisions also apply to companies whose securities or shares are listed on certain multilateral trading facilities.

10 The latter is applicable to companies whose shares or debt instruments are listed.

11 Except as mentioned in the CCA, Article 7:155.

12 It is generally accepted that, in certain cases, some powers can be delegated.

13 CCA, Article 7:144 CCA.

14 ibid., at Article 7:145 and Article 8:1 of the Royal Decree implementing the CCA.

15 Royal Decree of 14 November 2007 on the obligations of issuers of financial instruments traded on a regulated market, Moniteur belge/Belgisch Staatsblad, 3 December 2007.

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