I. Introduction
Previously, we reported on the EU Corporate Sustainability Reporting Directive (“CSRD”), including who must comply and when the CSRD becomes applicable.
On 28 November 2024, the Belgian Parliament adopted legislation transposing the CSRD into Belgian law. In this article, we delve into the recent updates to the Belgian Companies and Associations Code (“BCAC”).
II. Recent updates to the Belgian Companies and Associations Code
Book 3, Title 4 of the BCAC has been amended, with Chapter 1 updated and new Chapters 2/1 and 3/1 introduced to address the assurance of sustainability information.
Below, we discuss the key changes in Chapters 1 and 2/1. The provisions in Chapter 3/1, which concern the assurance of consolidated sustainability information, closely mirror those of Chapter 2/1 and, therefore, will not be discussed separately.
A. General provisions regarding the statutory audit of the annual accounts and the assurance of sustainability information
1. The mandate for the assurance of sustainability information
a. Statutory auditor or company auditor
The assurance of a company’s sustainability information (as defined in Article 3:55, paragraph 2 BCAC) is carried out by (a) the company’s statutory auditor (commissaris / commissaire) or (b) a company auditor (bedrijfsrevisor / reviseur d’entreprise), appointed by the company’s general assembly.
b. Mandate duration
The mandate of the statutory auditor or the company auditor appointed for the assurance of a company’s sustainability information is set for a fixed duration of three years, with the possibility of renewal.
If the assurance engagement is entrusted to the company’s statutory auditor, the duration of the first mandate may exceptionally be less than three years.
Finally, the limit of three consecutive terms applicable in case of public interest companies (i.e. mandatory auditor/audit firm rotation) does not apply to the company auditor appointed exclusively for the assurance of sustainability information.
c. Competences
The statutory auditors or company auditors may, at any time, review the company’s books, correspondence, minutes, and all relevant documents. They are entitled to request clarifications and information from the director(s), authorised representatives, and employees to conduct any verifications necessary for the assurance of sustainability information.
They may also request relevant information from the director(s) regarding affiliated entities, insofar as it is deemed necessary for verifying the company’s sustainability information.
Finally, they may, at their own expense, seek assistance from any other persons (for whom they remain responsible).
d. Liability
Article 3:71 of the BCAC has been amended to extend the existing liability rules, including statutory limitations thereon, to company auditors entrusted with the assurance of sustainability information.
B. The assurance of sustainability information
1. Assurance report
In accordance with the sustainability information included in the company’s annual report, the statutory auditor or the company auditor is required to prepare a comprehensive written assurance report. To facilitate this process, the management body (director(s) or board of directors) must provide the necessary documents at least one month prior to the scheduled date of the general meeting. For listed companies, this period is extended to forty-five days before the planned general meeting date.
If the management body fails to provide the required documents within the legal deadline as outlined above, an assurance report of non-finding will be issued. This occurs if the statutory auditor or the company auditor is unable to meet the submission deadlines prescribed by the BCAC for their assurance report.
2. Criminal sanctions
The criminal sanctions provided for in article 3:97 of the BCAC have been amended, now also including violations in relation to the assurance of a company’s sustainability information.
A violation by the director(s) is subject to a fine of up to ten thousand euros. If the violation is committed with fraudulent intent, the penalty may also include, in addition to said fine, imprisonment of up to one year.
Furthermore, a statutory auditor or a company auditor responsible for certifying the company’s sustainability information, who is aware of a violation by the director(s), is subject to the same penalties.
III. Conclusion
The CSRD has been incorporated into Belgian law. Compliance is imperative for the companies within scope. The recent amendments to the BCAC clearly define the liability and penalties for the directors and the statutory auditor or the company auditor in relation to sustainability reporting.
Companies within scope must act promptly. Prioritising sustainability is vital to ensure regulatory compliance, mitigate potential risks, and maintain a competitive position in an increasingly ESG-driven market landscape.
