Belgian listed companies are by law obliged to apply the 2009 Belgian Code on Corporate Governance. Companies can deviate from the 2009 Code, however, they must clearly indicate which parts of the 2009 Code they depart from and specify the reasons for such departure. The flexibility provided by the 'comply or explain' principle allows for account to be taken of company's specificities (such as size, shareholding structure...).

But how can we improve the transparency of the application of the Code and the quality of ‘explaining’?

The Committee commissioned an external partner to conduct a study to report on how the ‘comply or explain’ principle was being implemented in the various European countries. The study concluded that there is a general consensus in Europe that the quality of ‘explaining’ needs to be improved. Furthermore, the study brought forward a few criteria for reporting.

On the basis of this study, the Committee has developed in February 2012 a set of practical rules enabling listed companies to provide high-quality ‘explaining’.

In 2016, the Corporate Governance Committee decided not to modify its practical rules to the recommendation of the European Commission (2014/208/EU) on the quality of corporate governance reporting (‘comply or explain’), but to alert listed companies about the existence of the European Commission’s recommendation and the differences between the recommendation and the Corporate Governance Committee’s practical rules (see Annex of the 2016 version).

Study Linklaters (French version) Study Linklaters (Dutch version) Practical rules for high-quality explanations (2016 version)