The rules on the exercise of external functions by managers and persons responsible for independent control functions of regulated companies in the Belgian financial sector were recently clarified by the National Bank of Belgium (NBB). The Communication gives more insight into concrete actions a financial institution can take to comply with its obligations.

What is the regulatory framework in Belgium on the exercise of external functions by managers and persons responsible for independent control functions of regulated companies in the Belgian financial sector ?

The framework for the exercise of external functions by managers and directors in the Belgian financial sector is not new, but was recently reviewed following the entry into force of the Law of 27 June 2021, which in particular extended its scope ratione personae to the persons responsible for the independent control functions of the financial institutions.

Concretely, the legal framework for external functions applies to:

1. non-executive directors;

2. members of the management committee (whether directors or not);

3. persons responsible for independent control functions; and

4. senior managers (within the meaning of the Regulation of 9 November 2021).

The framework for external functions concerns the mandates that the managers and persons responsible for independent control functions of financial institutions may exercise outside these institutions in :

– companies pursuing an industrial, commercial or financial activity;

– undertakings of another form governed by Belgian or foreign law pursuing an industrial, commercial or financial activity; or

– Belgian or foreign public institutions pursuing an industrial, commercial or financial activity.

Which clarifications were brought by the National Bank of Belgium?

In its Communication on the exercise of external functions by managers and  persons responsible for independent control functions of regulated companies of 12th of July 2022, the National Bank of Belgium reiterated the principles of the existing legal framework and issued some concrete guidance on the application of the existing legal framework.

The guidance on the conditions for the exercise of external functions focuses on the following topics:

1. Adoption of internal rules on the exercise of external functions

2. Authorisation on the basis of a dossier

3. Rules on availability

4 Rules on conflicts of interest

5. Special rules for listed companies

6. Disclosure of external functions

Adoption of internal rules on the exercise of external functions.

The Communication foresees that internal rules must be adopted by the institution’s statutory governing body, as they relate to the general policy of the institution. This body will periodically ensure that the adopted rules are still appropriate. The periodicity should be specified in the internal rules.

The NBB points out that the Regulation of 9 November 2021 sets out an obligation to establish an appropriate monitoring procedure, as well as a system of sanctions for any infringements on the internal rules.