Communication CBFA_2009_22/ Derogation policies for audit committees

rue du Congrès 12-14 | 1000 Bruxelles t +32 2 220 53 42| f +32 2 220 54 93 | www.cbfa.be Communication CBFA_2009_22 of 25 May 2009 Derogation policy regarding audit committees

Scope:
Credit institutions, investment firms, insurance companies, management companies for collective investment undertakings under Belgian law, as well as branches established in Belgium by such institutions subject to the law of non-member States of the European Economic Area.

Summary/Objectives:
The CBFA sets out in this communication the policy it will follow to grant derogations from the obligation incumbent on certain financial institutions to establish an audit committee.

Madam,
Sir,

Pursuant to the Law of 17 December 2008, credit institutions, insurance companies, investment firms and management companies for UCITS (hereinafter "financial institutions") are required, if they exceed certain quantitative limits1 to establish an audit committee within their statutory administrative body. The Law requires that this committee be composed of non-executive members of the statutory administrative body. At least one member of the audit committee must be an independent member of the statutory administrative body and be competent in accounting and/or auditing. Furthermore, the members of the audit committee must possess collective competence in the field of activities of the relevant financial institution and in accounting and auditing. The criteria for independence to which the independent director must comply are set out in the new Article 526ter of the Companies Code2 Financial institutions must ensure that the persons they propose as independent directors permanently meet the criteria provided for in Article 526ter of the Companies Code. If an independent director is also proposed as a member of the audit committee, the institution must additionally ensure that this person is competent in accounting and/or auditing. Finally, the annual report of the statutory administrative body of the financial institution must justify the individual and collective competence of the members of the audit committee.

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

• average number of employees greater than 250;
• total balance sheet greater than 43 million euros;
• net annual turnover greater than 50 million euros.
  The way in which these concepts are to be understood is clarified in the explanatory memorandum of the Law. 2 Article 24, § 2, of the Law of 17 December 2008 provides, however, that members of the statutory 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 statutory administrative body to determine their independence, may continue to sit as independent members until 1 July 2011.

CBFA_2009_22 of 25 May 2009 2 / 2
CBFA rue du Congrès 12-14 | 1000 Bruxelles 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 regard 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 the granting of these derogations. The Law provides that the CBFA make its derogation policy public. You will find in the annex the derogation policy as established by the CBFA. This document is also available on the CBFA website (www.cbfa.be). We ask you to accept, Madam, Sir, the assurance of our distinguished consideration. The President,

Jean-Paul SERVAIS

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