4.3.8 Based on literature and previous studies, how is the national corporate governance code applied in practice?

Several studies on Belgian code compliance exist, of which even a few from before the implementation of the final version of the 2004 Code (Van der Elst 2006) (CBFA 2004). An overview of the results of these studies is provided below, showing how the Belgian corporate governance code is applied in practice. In the early years of the Belgian 2004 code various compliance studies were performed: two studies by the Belgian Governance Institute (the BGI) in cooperation with the Federation of Belgian Enterprises (the VBO) (VBO and BGI 2006) (VBO and BGI 2007) and several studies by researchers (Gysegem and Devos 2006) (Van der Elst 2006) (Trumpener, Vandemaele et al. 2007)

(Vermeersch and Van de Poel 2008).1 According to the VBO and the BGI the results were reassuring and only one year after the implementation of the code compliance is even called a success: 79.7% of the code is complied with; the BEL-20 companies take the lead and have an exemplary function (VBO and BGI 2007) (VbO and BGI 2006, p. 5). Nevertheless, the rules on conflict of interest disclosures, the possibility of putting items on the agenda of the shareholders' meetings, remuneration disclosures and the remuneration committee are hardly complied with and explanations of non-compliance are often not present (VBO and BGI 2006, p. 7) (Van der Elst 2006) (Gysegem and Devos 2006). During this first year some cases or explanations were unintentionally forgotten. But above all the researchers emphasise the great credit due to the Code Lippens for creating movement in companies' corporate governance structures (Gysegem and Devos 2006, p. 23). Trumpener, Vande-maele and Vergauwen also performed a small content analysis of 30 companies regarding the financial year 2005: on average, 76% of the companies complied and the compliance rate of large companies was higher than the rate for the small companies researched (Trumpener, Vandemaele et al. 2007, p. 24). Vermeersch and Van de Poel concluded that, during 2005, 60.27% of the 119 companies researched complied fully with all code provisions and 8.03% explained in case of non-compliance. With respect to the financial year 2008, a follow-up study on code compliance was performed by VBO and Guberna (the institute for executives) in 2009. This follow-up study was still focused on the 2004 code and 89.9% of the code was complied with. The highest levels of code compliance are again achieved by the BEL-20 companies, but especially the BEL Small companies have caught up (Guberna and VBO 2009, p. 3). The provisions on the disclosure of (individual) remuneration are still difficult to comply with, as well as the provision on the possibility of putting items on the agenda of the shareholders' meetings. Unfortunately, the companies that provide clarity regarding the provisions not complied with decreased from 90.6% to 79.8% and sometimes reasons for non-compliance are completely lacking (Guberna and VBO 2009, p. 5). The researchers conclude that there have been positive developments in the area of transparency and compliance, but there is no saturation point yet (Guberna and VBO 2009, p. 5). In the EU comparative study on code compliance during 2008, the same deviations, which occur frequently, can be seen in the 15 Belgian companies researched: the remuneration provisions, composition of committees, the possibility of putting items on the agenda and the maximum term for board members (RiskMetrics Group 2009, p. 89).

To conclude this key question, previous research shows that although a positive evolution in Belgian code compliance can be seen, too often the reasons provided for non-compliance are still insufficient and no saturation point has been reached yet. Regrettably not many recent studies on code compliance with respect to the 2009 code are available yet. Only the Belgian Banking Finance and Assurance Commission (the CBFA) published a study on compliance of the 2009 code in December 2010. This study focused on just four code topics2 and no comparison with previous studies is possible (CBFA 2010). The CBFA concluded that the provisions often not complied with concern the internal risk and control systems, board evaluation, the procedure on the development of a remuneration policy and the board remuneration in general. Moreover, the explanations for non-compliance with these provisions need to be improved, according to them (CBFA 2010).