Modification of the Companies Code as regards the prohibition of variable remuneration for non-executive directors of listed companies

The Law of 7 November 2011 “modifying the Companies Code as regards share-related remuneration granted to non-executive directors of listed companies” has just been published in the Belgian State Gazette of 23 November 2011. A copy of that publication can be found by clicking here.

This Law extends to all non-executive directors the rules set forth in Article 554, 7th indent, of the Companies Code that until then only applied to independent directors.

As a result, provisions entitling a non-executive director (whether independent or not) to any variable remuneration require prior approval by the annual shareholders’ meeting. Any such provisions that are not approved by the shareholders’ meeting are null and void. It results from the wording of Article 554, 7th indent that any type of variable remuneration, including but not limited to share-related remuneration, granted to a non-executive director falls within the scope of the Law, notwithstanding its (confusing) title.

Moreover, a prior communication duty exists vis-à-vis the company’s works council, if any, which can make a (non-binding) recommendation (published on the company’s website) to the shareholders’ meeting as to the approval or not of those provisions.

These obligations apply to any contracts entered into or extended after 3 December 2011. They reinforce the provisions of the Law of 6 April 2010 “enhancing corporate governance in listed companies and autonomous state enterprises”. A copy of our briefing on that Law can be found by clicking here.

If you have any questions, or would like to discuss this further, please contact Thierry L'Homme (+32 (0)2 501 91 86), Pieter Puelinckx  (+32 (0)2 501 90 21), Ilse Brouwers (+32 (0)2 501 93 25), or your usual contact at Linklaters.