Freedom of choice between one-tier and two-tier boards: An analysis based on Belgian listed companies

Abstract

The aim of this master thesis is to provide Belgian listed companies with an overview of the opportunities that the newly introduced Code of Companies and Associations and the subsequently adapted Corporate Governance Code may have on them, as these now offer the possibility to choose between two corporate governance structures (one-tier or two-tier board). To this end, a thorough literature review was carried out, examining the differences, the advantages and disadvantages of the respective corporate governance structures using country-specific analyses conducted over the years. An analysis of the amendments to the Code of Companies and Associations and the newly published Corporate Governance Code was carried out to get a more detailed overview of what the adoption means for the Belgian legal situation. All this provided a solid basis for a qualitative research that consists of examining the corporate governance structures of the BEL 20 companies based on publicly available information in more detail and with the additional consideration of an expert's opinion. Thereby, the qualitative research consists of making recommendations to the BEL 20 companies resulting from the application of the findings identified in the theoretical part to practical elements found in the publicly available documents of the BEL 20 companies. The recommendations made are to be understood as mere suggestions. The results show that neither structure is superior to the other, therefore making the option of a choice a positive aspect that enables listed companies to adapt more flexibly and efficiently to their environment by choosing the form that best suits their individual needs and capabilities, and additionally providing them with a competitive advantage. Since the recommendations of the qualitative research regarding which structure best suits a company under investigation depend on many factors as well as on the preferences of the respective company and thus serve as mere food for thought, no generalisable results could be found in this context. It was found, however, that the introduction of the new legislation leaves some questions unanswered and creates gaps that can only be clarified by applying the legislation over a longer period of time.