Directors of regulated firms can no longer be bound by an employment contract

Until recently, directors of regulated firms were permitted to serve as directors on a self-employed basis and, at the same time, to perform their operational functions as employees. Those days are now over. This change has involved a number of stages.

The first milestone in this reform was the adoption of the Companies and Associations Code (CAC) in March 2019. The CAC expressly confirmed that directors of limited liability companies (Sociétés à Responsabilité Limitée, Sociétés Coopératives and Sociétés Anonymes) as well as members of the executive board and members of the supervisory board of public limited liability companies (Sociétés Anonymes) were prohibited from exercising their mandate under the status of employee. In other words, directors of these types of company are obliged to exercise their corporate mandate as self-employed persons.

This development in company law has had an impact on the governance of regulated firms, which were subject to specific governance rules. First, in 2020, the Belgian regulator of insurance and reinsurance undertakings – the National Bank of Belgium (NBB) – amended its overarching circular on governance to, among other things, enshrine the prohibition on holding a directorship or membership of the management committee of a (re)insurance undertaking under the social status of an employee. Indeed, the NBB specified that combining two social statuses (i.e. self-employed and employee) within the same undertaking was considered to be irreconcilable with the principles of good governance applicable to such undertakings.

By virtue of a law of 27 June 2021, such prohibition on combining social statuses was confirmed in the law on the supervision of (re)insurance undertakings, but was also expressly extended to most laws on the supervision of other regulated firms. Thus, from now on, members of the management committee (if any) of (i) UCITS management companies, (ii) AIF management companies, (iii) credit institutions incorporated as public limited companies (as well as those incorporated in a form other than public limited companies but having set up a management committee) and (iv) portfolio management and investment advisory firms incorporated as public limited companies must necessarily have the status of an independent person for the exercise of such corporate mandate. The said law came into force on 19 July this year.

In view of the above, affected firms will have to review the status of their directors to ensure that they comply with the new applicable regulations. Our regulatory and employment teams are at your disposal to assist you in this respect.



Benoît Vandervelde, Partner, Brussels

Florence Berchem, Junior Associate, Brussels

Anaïs Casteur, Junior Associate, Brussels

Related : CMS Belgium


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