Introduction:
On March 21, 2024, the House of Representatives approved a number of amendments to the Code of Companies and Associations regarding reforms on governance of listed companies.
1. Professional ban for directors convicted of certain serious crimes
From now on, persons convicted of certain serious crimes, such as, among others money laundering, insider trading or bribery, will no longer be able to hold directorships in listed companies.
This ban applies to both directors and candidate directors and only to the extent it involves listed companies and public interest entities because of the responsibility for publicly raised money and with the aim of protecting the protection of investors. By doing so, the legislator seeks to boost confidence in the financial system in general and to the reputation and integrity of the relevant companies.
2. At least 3 independent directors
The approved bill also further provides for the obligation for listed companies to appoint at least 3 independent directors. A director in a listed company is considered independent if he does not have any relationship with the company or with no relationship with the company or with a major shareholder thereof that compromises his independence.
Indeed, independent directors play an important role within listed companies. For example, independent directors are better placed to control management than small shareholders in listed companies with a dispersed shareholding. They are furthermore essential to monitor the principles of good governance such as countering group-thinking within the board and providing a buffer against the preponderance of a potentially dominant shareholder. The legislator therefore opted to improve the important role of the independent director and consequently to further entrench and strengthen his position.
Failure to comply with this provision is not without risk. Indeed, the sanctions concern the same as for non-compliance with gender quotas. Thus, any financial or other benefit accruing to the directors by virtue of their mandate will be suspended if the composition of the board of directors is not brought into compliance with these requirements after the next general meeting. If the board of directors submits the appointment of an independent director to the Shareholders’ Meeting, it must also confirm that it has no knowledge of elements which could call into question its independence. are known that could call the independence into question. Should the latter be the case, the board of directors must the board of directors must clarify these elements and justify why they deem the candidate to be independent.
3. Shareholder approval in case of transfer of significant assets by listed companies
Currently, there are only two situations in which shareholders must approve the transfer of assets: (i) after notification of a takeover bid and (ii) in case of contribution of a universality.
From now on, shareholder approval will also be required when the transfer involves a significant portion of the listed company’s assets. The transfer of a very large portion of a company’s assets has, in fact, a profound impact on the future and operations of this company.
The legislator also clarifies when there is a significant part of the assets. This is the case when the transfer of the assets of the listed company or its subsidiaries constitutes three-fourths or more of the (consolidated) assets of the listed company. If this threshold is exceeded then the general meeting must give its prior approval. No attendance quorum is required and decisions are taken by a simple majority.
