CBFA Policy on Derogation for Audit Committees within Group Structures

Rue du Congrès 12-14 | 1000 Brussels t +32 2 220 53 42| f +32 2 220 54 93 | www.cbfa.be CBFA Communication CBFA_2009_22 of May 25, 2009 Derogation Policy concerning Audit Committees Scope:
Credit institutions, investment firms, insurance undertakings, management companies of collective investment undertakings under Belgian law, as well as branches established in Belgium by such institutions that fall under the law of non-EEA member states. Summary/Objectives:
In this communication, the CBFA sets out the policy it will follow for granting derogations from the obligation for certain financial institutions to establish an audit committee.
Madam,
Sir,
In accordance with the law of December 17, 2008, credit institutions, insurance undertakings, investment firms, and UCITS management companies (hereinafter "financial institutions") are required, if they exceed a certain number of quantitative limits1, to establish an audit committee within their legal administrative body. The law requires that this committee be composed of non-executive members of the legal administrative body. At least one member of the audit committee must be an independent member of the legal administrative body and be competent in accounting and/or auditing. Furthermore, the members of the audit committee must collectively possess competence in the field of the financial institution's activities and in accounting and auditing. The independence criteria that the independent director must meet are set out in the new Article 526ter of the Companies Code2. Institutions must ensure that the persons they propose as independent directors continuously meet the criteria set out in Article 526ter of the Companies Code. If an independent director is also proposed as a member of the audit committee, the institution must also ensure that this person is competent in accounting and/or auditing. Finally, the annual report of the financial institution's legal administrative body must justify the individual and collective competence of the audit committee members.

1 The obligation to establish an audit committee exists as soon as 2 of the following 3 criteria are met:

• average number of employees exceeding 250;
• total balance sheet exceeding 43 million euros;
• annual net turnover exceeding 50 million euros.
  The interpretation of these concepts is clarified in the explanatory memorandum to the law.
  2 Article 24, § 2, of the law of December 17, 2008, nevertheless provides that members of the legal administrative body who were appointed before the entry into force of the relevant title of this law and who meet the criteria defined and published in the annual report of the legal administrative body to determine their independence, may continue to serve as independent members until July 1, 2011.

CBFA_2009_22 of May 25, 2009 2 / 2
CBFA Rue du Congrès 12-14 | 1000 Brussels t +32 2 220 53 42| f +32 2 220 54 93 | www.cbfa.be Provided that an audit committee whose responsibilities extend to the entire group and which meets Belgian legal requirements or other equivalent European requirements has been established, the CBFA may, with respect to financial institutions that are subsidiaries or sub-subsidiaries of a mixed financial holding company, an insurance holding company, a financial company, or another financial institution, grant derogations from the aforementioned provisions and set specific conditions for granting these derogations. The law stipulates that the CBFA must make its derogation policy public. You will find the derogation policy as established by the CBFA in the annex. This document is also available on the CBFA website (www.cbfa.be). Please accept, Madam, Sir, the assurance of our distinguished consideration. The President,

Jean-Paul SERVAIS
Annex: CBFA_2009_22-1 / CBFA Policy concerning the establishment and composition of audit committees within a group structure.