The Buysse Code, a set of recommendations on good governance for unlisted companies, has been updated. The Buysse III Code could be called a code by and for entrepreneurs, because this update pays considerable attention to the concerns of entrepreneurs, who were able to provide input during its revision.Read a brief summary of a number of updates here.
Much attention given to the board of directors
The main changes in the Buysse Code concern the board of directors: how can it function properly, what are its tasks, what profiles should be sought?
The right attitude
The code points out that the right attitude is a criterion for success. There must be a climate of openness within the enterprise. Sharing information, listening to outside parties, daring to depart from the day-to-day agenda, and having an eye for strategy and the long term: these are just a few of the factors that are required by the Code for a board of directors to function successfully.
Tasks of the board of directors
The code makes clear the differences between the tasks of the shareholders’ meeting, the management committee (“directiecomité”), management and the board of directors. Six tasks are foreseen for the latter:
1. Legal powers: these are the tasks that are required by law of the board of directors. Consider for example the drawing up of the annual accounts, approval of the annual report or the application of the alarm-bell procedure in the event of a severe decrease in net assets.
2. General management: this includes decisions on important and strategic issues such as strategy approval and follow-up of strategic projects, approval of project and investment financing, approval of acquisitions and divestments, and defining risk management policy.
3. Supervision: the board of directors supervises the exercise of the business activity, and assesses the quality of management.
4. Sounding board:the board of directors is a sounding board for management.
5. Employer: the board of directors is responsible for filling a number of key positions in the enterprise such as managing director, members of management and key executives, as well as determining their remuneration and evaluating these employees.
6. Ambassador: the directors have an exemplary function, in the enterprise and in the outside world.
Composition and diversity
The code emphasises the importance of diversity in gender and age, and aims at complementarity in the composition. Diverse competencies, backgrounds and personalities are recommended.
Much attention is paid in the new code to the role of the chair. The code underlines the importance of a competent chair. It is the chair who must organise corporate governance. In addition, he is the point of contact for directors, management and shareholders. He may, if necessary, mediate between parties but must also be able to make quick decisions.
New is the chapter devoted to the evaluation of the board of directors. The board must evaluate itself and its members on a regular basis. Central to this are the enterprise’s objectives. The chair must recommend any needed adjustments.
Risk management policy
The new Buysse Code III pays much attention to risk management policy and the role played in this by the board of directors. In this, the board relies on the analysis by management, taking into account the owner’s vision and the enterprise’s strategy. An enterprise may choose to entrust risk management control to a specific audit and finance committee. It is then up to the board of directors to monitor the competences of the members of these committees.
New and unique to other corporate governance guidelines are the provisions on private equity. The use of resources and expertise by a private equity investor can provide leverage for the enterprise’s growth. The Code devotes attention to the introduction of and working with such a partner.
The Buysse III Code remains a highly useful, voluntary and flexible tool for large and small unlisted companies. It is indispensable reading for all entrepreneurs. Because good governance advances the strategic development and growth of each company.