4.3.7 Who are the supervisors of the compliance with the national corporate governance code and the comply or explain principle, and by what means do they perform supervision?

The corporate governance committee opted for a combined monitoring system on code compliance and in its preamble explicitly mentions the four parties involved in the monitoring and compliance (Belgian Code 2009, Preamble). Supervision only by the market itself (directors and shareholders) was considered insufficient, hence the supervision by a government body (the Banking Finance and Insurance Commission - currently the Financial Services and Markets Authority) and independent third parties (external auditors). The four parties involved in the monitoring of compliance are explicitly listed in the code's preamble:

The board of directors (i) must ensure an operational internal monitoring system, especially regarding the disclosure of the corporate governance statement and charter. It is its responsibility to ensure the accuracy and completeness of the charter and statement. Obviously in Belgium the members of the board of directors cannot be considered supervisors of code compliance, but they do have a monitoring function inside the company and are accountable in the case of malfunction.

The shareholders (ii) ought to monitor code compliance closely, both where the contents and the form of the corporate governance statement are concerned (material and formal code compliance). They should consider the explanations in the case of non-compliance and be prepared to enter into dialogue when the explanation or non-compliance is not acceptable. Especially the block holders, institutional shareholders or shareholders acting in concert should use their powerful position (Van der Elst 2008, p. 26). Controlling shareholders who can appoint representatives to the board can monitor from both the inside and outside of the company.

The statutory auditor (iii) (commissaris revisor, wettelijk rekeningen controleur or externe auditor) has been added as supervisor in the 2009 code in the preamble. It is the responsibility of the statutory auditor to comment on the annual report, verify that the annual report includes the information required by law and that it is consistent with the financial statements. The statutory auditor is a member of the Institute of Auditors(Instituut der Bedrijfsrevisoren), is appointed by the general shareholders' meeting and nominated by the works council, if one has been established (Byttebier, Piu et al. 2003, p. 230). The Belgian terminology is confusing but in practice the commissaris revisor is simply the external statutory auditor of the company. He performs formal supervision of code compliance, verifying (i) that the annual report includes the information required by articles 96 and 119 of the Code on Companies and (ii) that this information (the corporate governance statement) is consistent with the financial statements (Belgian Code 2009, Preamble).

The Banking Finance and Insurance Commission (CBFA) (iv) (Commissie voor het Bank-, Financie- en Assurantiewezen) contributes to the external monitoring of the code. It lends its moral support to the implementation of the disclosure provisions which the code addresses to Belgian listed companies (among others principle 9 and its provisions). If no disclosure is made about a specific item as identified in the Belgian code, the CBFAwill draw the attention of the listed company to that specific fact and invite the company to disclose the reasons for non-compliance. The CBFA's role is limited to verifying the observance of the comply or explain principle, and to invite companies to adhere to it. Moreover, the CBFA publishes, from time to time, general comparative overviews of corporate governance practices in Belgian listed companies (Belgian Code 2009, Preamble). Hence, the CBFA performs formal supervision and not material supervision of code compliance, however it has the ability to force companies to reformulate disclosures or publish additional information (Van der Elst 2006, p. 10). On 1 April 2011 the CBFA changed its name to the Financial Services and Markets Authority (Autoriteit voor Financiële Diensten en Markten, hereinafter the FSMA) due to the new supervisory architecture for the Belgian financial sector (Twin Peaks model).

Belgium does not have a formally established monitoring committee for assessing code compliance or updating the code annually (Van der Elst 2008, p. 27). The corporate governance committee simply restarted activities in 2007 and published the latest code in 2008. In 2007 the Belgian corporate governance committee became a private foundation and is a standing committee, with its main objective being to ensure that the code's provisions remain relevant and are regularly updated with practice, legislation and international practice (Belgian Code 2009, Preamble).

Table 4.3.7 below provides a brief list of the Belgian compliance supervisors that are explicitly mentioned in the code and form part of the monitoring system, which consists of supervision by the market (shareholders), government (FSMA) and independent third parties (external auditor).