Annual report 2010 - Dexia.com

Declaration of corporategovernanceManagement reportConsolidatedfinancial statementsAdditional information Annual financial statementsIntroductionReference CodeThe Belgian Code of corporate governance, which replaces therecommendations made on this issue by the Banking, Financeand Insurance Commission, the Federation of Enterprises inBelgium and Euronext Brussels became effective on 1 January2005, and was revised for the first time on 12 March 2009 inorder to take account, in particular, of recent developments inthe regulatory environment in Belgium and Europe, as well asthe new aspirations of civil society and stakeholders as to theconduct of companies and their executives.This code is the reference for Dexia within the meaning ofArticle 96, § 2 (1) of the Company Code. It is available onthe Belgian Gazette internet site as well as on the internetsite www.corporategovernancecommittee.be.The Belgian Code of corporate governance contains ninemandatory principles for publicly traded companies. Dexiarespects those nine principles.Considering its governance structure, Dexia wished to departfrom the following specific provisions of the Code:• provision 5.2.4, which recommends that the AuditCommittee be composed of a majority of independentdirectors: the Dexia Audit Committee, consisting of theAccounts Committee and the Internal Control, Risks andCompliance Committee, consists of seven non-executivedirectors, of which three are independent. Dexia considersthat the most pertinent criterion in the choice of membersof that committee is one of competence. Furthermore, Dexiapractice goes beyond the legal prescriptions applicable tolisted companies, those provisions stating that the committeemust contain at least one independent director, and theAccounts Committee consists of a majority of independentdirectors (three directors out of a total of five members).Finally, the two committees constituting the Audit Committeeare chaired by an independent director;• provision 8.8, which proposes the fixing of a threshold fromwhich a shareholder may submit proposals to the generalmeeting at 5% of the company’s equity: Dexia has chosento comply with applicable legal provisions, which is currentlya 20%-threshold, considering its shareholder structure andawaiting the forthcoming transposition into Belgian Lawof the European Directive in relation to the protection ofshareholders’ rights.Dexia practice goes beyond the Code in relation to the numberof independent directors within the Board of Directors: theBoard of Directors of Dexia SA includes seven independentdirectors, whilst the Belgian Code of Corporate Governance(provision 2.3) recommends a minimum of three independentdirectors.Corporate Governance CharterAt its meeting on 3 February 2005, the Board of Directors ofDexia SA created a “corporate governance” committee withinthe Board (composed of directors of Dexia SA), in charge ofconducting a study and formulating recommendations onthe various governance issues treated by the Belgian Code ofcorporate governance and on any adaptations for the existingsituation at Dexia.The work of this committee resulted notably in thedevelopment of a corporate governance charter, internal rulesfor the Audit Committee and a revision of the internal rulesof the Board of Directors and the Management Board.At its meeting on 13 November 2008, the Board ofDirectors of Dexia SA amended its internal rules in order tostrengthen its governance and risk management even more.On the one hand, the Audit Committee was split into twospecialist committees: the Accounts Committee and theInternal Control, Risks and Compliance Committee. Thesetwo committees together form the Audit Committee, inaccordance with the law of 17 December 2008 in particularinstituting an audit committee in publicly traded companiesand financial establishments. On the other hand, theAppointment Committee and the Compensation Committeewere combined in one single committee. In 2009, the internalrules of the Board of Directors were further amended in orderin particular to align the criteria of directors’ independenceretained by Dexia SA with the new legal criteria defined bythe Company Code, and to strengthen the rules applicable tothe executives of Dexia SA involved in proprietary trading inDexia shares.In 2010, the regulation was adapted in order to implementthe provisions of the Law of 6 April 2010 aimed in particularat strengthening corporate governance in listed companiesand autonomous public enterprises: on this occasion, theregulation provides that the Appointment and CompensationCommittee consists of a majority of independent nonexecutivedirectors.The Corporate Governance Charter of Dexia SA (hereafterthe “Charter”) gives a detailed overview of the principalgovernance aspects of the company. This document, whichthe Board of Directors wanted to be complete and transparent,contains five sections. The first section deals with the structureand organisational chart for the Dexia Group. It also contains20 Dexia Annual report 2010