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Conflicts of interest

Special mission of the statutory auditor

In case of a conflict of interest, the Companies Code prescribes specific procedures for transactions with board members and related party transactions.

Conflict of interest of a board member or management committee member:

  • When a board member has an interest, whereby he stands to derive direct or indirect personal advantage from a decision or transaction that falls under the authority of the board of directors, he must communicate this to the other board members prior to the decision. The board will then debate and vote on the question (if the company is quoted, the board member cannot participate on the debate and the vote).
  • The statutory auditor must be informed of the proposed transaction
  • The board minutes describe the proposed transaction, the financial consequences for the company, its decision and the justification thereof. The relevant paragraphs should be published in their entirety in the annual report of the board of directors accompanying the financial statements.
  • The auditor must describe and comment on the conflict of interest in his audit report under the chapter of additional information.
  • Transactions with companies that hold at least 95 % of the voting rights are excluded from this procedure. These rules do not apply in case of transactions in normal line of business of the entity and at normal market conditions.

Quoted companies: Conflict of interest of a shareholder

  • For quoted companies, when a decision or transaction from which a shareholder, who has significant influence on the appointment of board members, stands to derive direct or indirect personal advantage, falls under the authority of the board of directors, three independent directors, assisted by one or more expert(s), evaluate the financial consequences of the proposed transaction in a written report. They must demonstrate, in particular, that no privileged remuneration is attributed to a shareholder. The board will then debate and vote on the question (the board members representing the shareholder having the conflict of interests may not participate).
  • The statutory auditor must be informed of the proposed transaction.
  • The board minutes describe the proposed transaction, the financial consequences for the company (and if applicable, the conclusions of independent directors’ report), its decision and the justification thereof. The relevant paragraphs should be published in their entirety in the annual report of the board of directors accompanying the financial statements.
  • The auditor issues a report on the correctness of data in the independent directors’ report and the board minutes. Such report is also included in the annual report of the board of directors.

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