Annual report 2006 - Dexia.com

CORPORATE GOVERNANCE
Separation of the functions of Chairman of the Board
of Directors and Chief Executive Officer
The bylaws of Dexia SA, as well as the internal rules of the
Board of Dexia SA, specifically define the rule for separation
of the functions of Chairman of the Board of Directors and
Chief Executive Officer. They must necessarily be entrusted to
different individuals of different nationalities, even when the
Chairman of the Board of Directors is unable to preside and is
replaced by another member of the Board.
Term of office
The term of office for Board members elected on or after
May 7, 2002 is a maximum of four years.
Duties and responsibilities of the Board
of Directors
The internal rules of the Board of Directors describe the
expertise and responsibilities of the Board of Directors in three
areas:
• strategy and general policy;
• management control and monitoring risks;
• relations with shareholders.
Strategy and general policy
The Dexia Board of Directors defines, in the name of all
shareholders and on the recommendation from or on the
advice of the Management Board, the strategy and general
policy of the company and the Dexia Group.
It also sets the standards for the Group and ensures the
implementation of the strategy for the Group.
The Board also ensures compliance with the principles of
good governance.
Dexia’s internal rules therefore require that the Board of
Directors:
• meets at least once a year to evaluate the challenges and
strategic stakes facing Dexia;
• reviews the strategic recommendations made by the
Management Board;
• defines the strategy for the different Dexia businesses, which
is implemented by the Management Board, sets the priorities,
approves the annual budget and ensures that the resources
committed are adequate for the strategy chosen;
• defines the values of the Dexia Group on the advice of the
Management Board.
The internal rules give the Board specific responsibilities for
major acquisitions and disposals of assets.
• assesses the performance of the members of the Board of
Directors;
• supervises the performance of the statutory and internal
auditors;
• establishes the organization of the Management Board in terms
of its composition, its activities, and its duties as recommended
by the Chief Executive Officer; the Board sets the compensation
of the members of the Management Committee based on the
recommendations of the Compensation Committee and the
Chief Executive Officer with regard to the compensation of
members of the Board of Directors, other than himself.
The role of the Board of Directors towards
the company shareholders
The Board’s actions are guided solely by the interest of the
company with respect to the shareholders, customers and
employees.
The Board ensures that its obligation toward its shareholders
are understood and met and reports to the shareholders on
the performance of its duties.
Operation of the Board of Directors
Bylaws
The company’s bylaws set forth the following rules that govern
the operation of the Board of Directors:
• All deliberations require the presence or representation of at
least half of the members of the Board.
• Decisions are approved by a majority vote of all members
present or represented. If there is a tie vote, the chairman or
the member replacing him shall cast the deciding vote.
• Decisions concerning the operations described below
require the presence or representation of at least two thirds of
the members of the Board, and a two-thirds majority vote of
all members present or represented:
• any decision to employ authorized capital or to submit to
the Ordinary Shareholders’ Meeting a resolution to approve
the issue of shares, convertible bonds or redeemable in
shares, warrants or other financial instruments eventually
conferring the right to shares, when the amount of the capital
increases that would result from the issue of such shares or
the conversion or redemption of such bonds or the exercise of
such warrants or other financial instruments exceeds 10% of
the amount of capital existing prior to these decisions;
MANAGEMENT REPORT
COMPTES CONSOLIDÉS
COMPTES SOCIAUX
Management control and risk management for the
company
The Board of Directors controls and directs the management
of the company and the Group and monitors risks.
For this purpose, the internal rules of the Dexia Board of
Directors provide that the Board:
• evaluates the implementation of strong and independent
control systems, which most notably include risk management,
and internal audit and compliance procedures on a centralized
basis;
• takes all appropriate measures to ensure that the financial
statements are accurate;
Dexia / Annual Report 2006 | 35