Within business administration, corporate governance is used to indicate how a business should be managed well, efficiently and responsibly. The term especially encompasses relations with the company’s most important stakeholders such as the owners (shareholders), workforce, customers and society as a whole.
In 2004, the Corporate Governance Commission published the first version of the Belgian Corporate Governance Code for listed companies. On 12 March 2009, the second version of the Belgian Corporate Governance Code was published. The revised Code was the result of work done by the Corporate Governance Commission chaired by Herman Daems. The 2009 Code takes account of the European and Belgian regulations in relation to corporate governance, developments in codes and best practices in the field of corporate governance in other EU states, and society’s and stakeholders’ expectations against the backdrop of far-reaching changes in the wake of the financial and economic crisis.
The Code lays down principles, provisions and guidelines. Nine principles form the pillars of good corporate governance. Provisions are recommendations that detail how the principles are applied. Companies are supposed to comply with these provisions or to explain why, in light of their specific situation, they do not do so. The Code is based on the “comply or explain” principle. The flexibility offered by this principle was opted for instead of strict application of a series of detailed rules, so that account can be taken of companies’ specific characteristics such as their scope, shareholder structure, business activities, risk profile and management structure. In specific cases, therefore, companies may derogate from the Code’s provisions provided they give a valid explanation for doing so. Companies decide what they regard as best practices in their own specific situation and give reasoned explanations for this in their Corporate Governance Statement (“explain”). For example, smaller companies may judge that some provisions are disproportionate or of less relevance. Additionally, holding and investment companies may have a different shareholder structure, which can affect the relevance of certain provisions. Companies citing valid reasons in their Corporate Governance Statement for why they derogate from the Code can still be regarded as complying with it. The provisions are supplemented by the guidelines, which serve as guidance on how a company applies or interprets the Code’s provisions.
The Act of 6 April 2010 to reinforce the corporate governance of listed companies requires such undertakings to state the corporate governance code that they apply. In addition, it has to be stated where the relevant code can be inspected. If the company does not fully apply the Corporate Governance Code, it has to state which parts of the Code its derogates from and why it derogates from the Code. Amendments to the companies legislation have made a number of corporate governance principles compulsory. These statutory provisions cannot be derogated from and the “comply or explain” principle is inapplicable. Companies are henceforth required to include a corporate governance statement and remuneration report in their annual report. The report also has to include a description of the most important features of the company’s internal control and risk management system.
In its Corporate Governance Charter, Quest for Growth explains the chief aspects of its corporate governance policy. The charter is freely available on the company’s website (www.questforgrowth.com). The board of directors applies the Corporate Governance Charter each time relevant developments arise.