Code Lippens – The first Belgian corporate governance code
The Importance of the 2004 Belgian Corporate Governance Code
The first publication of the Belgian Corporate Governance Code in December 2004 marked a turning point for listed companies in Belgium. Known as the “Lippens Code” (named after committee chair Maurice Lippens), it was conceived in response to profound changes in the corporate landscape: globalization, technological modernization, and the enlargement of the European Union. These dynamics demanded a governance framework that could foster competitiveness while ensuring transparency and accountability. The Code provided a coherent set of best corporate governance practices designed to strengthen trust in Belgian capital markets and align with international standards while keeping solid checks & balances.
Prior to 2004, Belgium operated under fragmented governance recommendations issued by different bodies. This lack of uniformity created uncertainty for companies and investors alike. The Lippens Code consolidated these disparate rules into a single, authoritative reference, positioning Belgium alongside leading jurisdictions in corporate governance. Its adoption was not merely a regulatory exercise; it was a strategic move to enhance investor confidence and safeguard the reputation of Belgian listed companies.
Key principles of the 2004 Code Lippens
The Code is designed as “soft law” and structured around three layers of guidance: principles, provisions, and guidelines. The nine principles form the backbone of good governance, addressing board effectiveness, integrity, specialised board committees, remuneration, shareholder rights, and transparency. Provisions detail how each of these principles should be implemented, while guidelines offer qualitative advice without imposing obligations. This structure ensures clarity and adaptability, enabling companies to tailor governance practices without compromising core values.
One of the Code’s defining features is its “comply or explain” approach, a principle widely endorsed by the OECD and the European Commission. Rather than imposing rigid compliance, the Code allows companies to deviate from specific provisions when justified by their circumstances as long as they disclose and explain these deviations transparently. This flexibility respects the diversity of Belgian listed companies, from large multinationals to smaller, newly listed firms, while maintaining accountability through disclosure. It also allows for improvement of the Code. If most companies explain their reasons to deviate from certain provisions, it provides a viewpoint for the regulators on the challenges of the market.
Transparency is another essential part of the Code. It requires companies to publish a Corporate Governance Charter on their website and include a dedicated governance section in their annual report. These disclosures cover board composition, committee structures, remuneration policies, and any deviations from the Code. By mandating such openness, the Code empowers shareholders and external stakeholders to exercise effective oversight, reinforcing market discipline and trust.
Value creation as a cornerstone
The ultimate objective of the Lippens Code is long-term value creation. Good governance is not an end in itself; it is a means to sustainable performance. By promoting integrity, accountability, and strategic oversight, the Code helps companies attract capital at lower cost, mitigate risks, and build resilience. In doing so, it delivers benefits beyond shareholders, contributing to economic growth and protecting private investment.
The 2004 Code remains a key milestone as the first comprehensive, principlebased corporate governance code for listed companies in Belgium. In retrospect, the 2004 Code was more than a response to regulatory trends; it was a proactive step toward embedding governance as a driver of corporate success. Its principles remain relevant today, reminding us that transparency and responsibility are indispensable foundations for thriving in an increasingly complex business environment.