Fortis witnessed a number of important legislative and regulatory developments related to corporate governance in 2007.

Firstly, a number of initiatives were launched to ensure implementation of the European Commission’s Action Plan on the Modernisation of Company Law and Corporate Governance in the EU.

Directive 2007/36 on shareholders’ rights was adopted on 11 July 2007. Member States now have until 3 August 2009 to implement the directive in their national laws. The directive aims to facilitate the cross-border exercise of shareholders’ rights, in part by providing guidelines to ensure that shareholders of listed companies have timely access to relevant information ahead of the Annual General Meeting and can vote by electronic means. Key provisions include the abolition of share blocking and the introduction of a record date in all Member States, which may not be more than 30 days before the Annual General Meeting.

We have taken all necessary steps to achieve compliance with the Markets in Financial Instruments Directive (MiFID), which came into force throughout the European Union on 1 November 2007. MiFID introduces a single market and regulatory regime for investment services across the EU and breaks down barriers to cross-border trading of securities. The new rules help us to enhance protection to clients and to better match the risk level of a financial instrument with the client’s wishes. Greater transparency of financial markets combined with a client-focused execution policy allows for best execution of client orders in line with current market conditions.

Directive 2007/44 sets out procedural rules and evaluation criteria for the prudential assessment of acquisitions and increase of holdings in the financial sector. This directive – which Member States are required to implement no later than 31 March 2009 – should ensure that the acquisition process in the financial sector is examined in a clear and transparent manner by the competent home-country supervisor.

Belgium
In Belgium, there was an especially strong focus on the implementation of EU financial directives.

The Act of 14 December 2005 on the abolition of bearer securities and the related Royal Decree of 12 January 2006 aim at gradually abolishing all bearer securities and allowing only registered or dematerialised securities. Since 1 January 2008, new shares may be issued only in registered or in dematerialised form. Consequently, on 1 January 2008 all bearer Fortis shares held in a bank account were automatically converted into dematerialised Fortis shares. Owners of registered or dematerialised Fortis shares will no longer be able to request physical delivery of shares, and existing physical Fortis shares will have to be converted into registered or dematerialised shares by 31 December 2013.

The Act of 1 April 2007 implementing the Takeover Directive and the related Royal Decree of 27 April came into force on 1 September 2007. Under the new legislation, a mandatory bid must be launched by any person or entity that, acting alone or in concert, exceeds the threshold of 30% of the voting rights in a listed company. Like most other European Member States, Belgium decided to opt out of the board neutrality rule and the breakthrough rule, leaving it up to individual companies to opt in voluntarily by amending their articles of association. Companies that voluntarily opt to apply the neutrality rule or the breakthrough rule will be subject to the reciprocity exception.

The Act of 2 May 2007 implemented the EU Directive 2004/109/EC (Transparency Directive) and will come into force on 1 September 2008. Under this Act, any person or entity acting alone or in concert must notify Belgium’s Banking, Finance and Insurance Commission and the company concerned whenever they exceed or drop below the threshold of 5%, or any multiple of 5%, of the voting rights in a listed company. A company may also stipulate that such notification must be made when there are movements above or below the thresholds of 1%, 2%, 3%, 4% and 7.5%. Notification of four working days applies instead of the two days currently applicable.

The Act of 2 May 2007 and the related Royal Decree of 14 November 2007 also deal with periodic and ongoing information provided by listed companies, i.e. in the annual, half-yearly and quarterly financial figures. Under this legislation, the annual financial statements must be published within four months of the end of the previous year, and the half-yearly results within two months of the end of the second quarter. Fortis already complies with these rules.

Netherlands
In the Netherlands, the major governance-related legislative changes concerned the implementation of the EU Takeover Directive and the organisation of financial supervision.

The Financial Supervision Act (Wet op het financieel toezicht – Wft) came into effect on 1 January 2007. This Act shifts the emphasis from rule-based supervision to principle-based supervision, replacing eight former supervision acts governing the financial markets. The Act incorporates several requirements of the Markets in Financial Instruments Directive, such as rules of conduct. It also defines the supervisory duties of both De Nederlandsche Bank and the Authority for the Financial Markets and regulates their collaboration, and implements the EU Directive on Financial Conglomerates. Accordingly, De Nederlandsche Bank has been designated coordinator of ‘supplementary supervision’ for Dutch financial conglomerates, i.e. additional supervision to the regular national supervision of each sector.¹

The EU Takeover Directive was implemented by the Act of 22 May 2007 and the Decree of 14 September 2007, both of which came into force on 28 October 2007. Some of the changes are similar to those in Belgium, e.g. the freedom to choose whether or not to seek takeover protection (the opt-in or opt-out principle) and the obligation to launch a mandatory bid of any person or entity that, acting alone or in concert, exceeds the threshold of 30% of the voting rights in a listed company. Only a small number of exceptions apply.

The provisions on disclosure of shareholdings in the Transparency Directive were implemented in the Netherlands on 1 October 2006 through the Act on the Disclosure of Major Holdings in Listed Companies (now part of the abovementioned new Financial Supervision Act). At the time of printing this Annual Review, legislation implementing the provisions of the Transparency Directive on the flow of financial information to be published by listed companies was still pending.

¹ For Fortis, supplementary supervision is exercised jointly by the Belgian Banking, Finance and Insurance Commission (BFIC) and De Nederlandsche Bank pursuant to the terms of their agreement ‘Framework for the exercise of the supplementary supervision of Fortis dated 28 February 2002’, the BFIC having been designated as the coordinator.