1. General provisions
The Company’s corporate governance charter has been adopted in accordance with the recommendations set out in the Belgian Code on Corporate Governance (the “Code”) that has been issued on 9 December 2004 by the Belgian Corporate Governance Committee. Corporate governance has been defined in the Code as a set of rules and behaviours according to which companies are managed and controlled. The Code is based on a “comply or explain” system: Belgian listed companies should follow the Code, but can deviate from its provisions and guidelines (though not from the principles) provided they disclose the justifications for such deviation. The Company will adopt a corporate governance charter in accordance with the recommendations set out in the Belgian Code on Corporate Governance (the “Code”) issued on 9 December 2004 by the Belgian Corporate Governance Committee. The Company’s board of directors intends to comply with the Belgian Code on Corporate Governance, but believes that certain deviations from its provisions are justified in view of the Company’s particular situation. These deviations will include, but are not limited to, the following:
- the remuneration of the CEO will not be disclosed on an individual basis, but only as part of the disclosure of the aggregate executive remuneration: the Company does not consider it appropriate nor useful to disclose the remuneration of the CEO on an individual basis but believes that its stakeholders are sufficiently informed with the disclosure of the aggregate executive remuneration;
- the Company will not install a management committee in accordance with article 524bis of the Belgian Companies Code: the size of the Company and the size and quality of its board of directors does not necessitate the installation of a separate management committee in accordance with article 524bis of the Belgian Companies Code;
- in its criteria used to assess whether a director can be considered independent, the Company is allowed to assess on a case by case basis whether a director that has had a significant business relation with the Company within the last year can still be considered independent. The Company believes that such requirement may otherwise cause highly valued candidates to be technically excluded and trusts that its nomination committee will not support any candidates which cannot genuinely be considered to be independent; and
- meetings of the remuneration and nomination committees will only occur on an ad-hoc basis: Taking into account the size of the Company and the size and quality of its board of directors, the Company does not consider it appropriate to require its remuneration and nomination committees to meet on a regular basis, although such committees will meet if and when appropriate.
The board of directors of the Company will review its corporate governance charter from time to time and make such changes as it deems necessary and appropriate. The charter will be made available on the Company’s website (www.transics.com) and can be obtained free of charge at the registered office of the Company after completion of the offering and listing. In its annual report for the financial year ended 31 December 2007, to be published in 2008, the board of directors will also devote a specific chapter to corporate governance, describing the Company’s corporate governance practices during that year and including explanations, if applicable, on any deviations from the Code, in accordance with the requirement to “comply or explain”.
2. Board of directors
2.1. General provisions
The board of directors of the Company has the broadest powers to manage and represent the Company, except to the extent provided otherwise by applicable law or the Company’s articles of association. The board of directors acts as a collegiate body but can delegate its competencies for special and specific matters to an authorised representative, even if this person is not a shareholder or a director.
Pursuant to the Company’s articles of association, the board of directors of the Company is to be composed of at least 3 and maximum 10 directors. Upon completion of the offering and the listing of the shares, at least half of the directors shall be non-executive directors and at least three (3) directors shall be independent directors. The directors of the Company are appointed by the general shareholders’ meeting. Directors may be dismissed by the general shareholders’ meeting at all times. Resigning directors may be reappointed.
In accordance with the Belgian Companies Code, if the mandate of a director becomes vacant due to his death or resignation, the remaining directors have the right to appoint temporarily a new director to fill the vacancy until the first general shareholders’ meeting after the mandate became vacant. The new director completes the term of the director whose mandate became vacant. The corporate governance charter provides that directors can be appointed for a maximum (renewable) term of four years.
A meeting of the board of directors is validly constituted if there is a quorum, consisting of at least half of the members present in person or represented at the meeting. If this quorum is not present, a new board meeting may be convened to deliberate and decide on the matters on the agenda of the board meeting for which a quorum was not present. In any event, the board of directors may only validly proceed if at least two directors are present. Meetings of the board of directors are convened by the chairman of the board or by at least two directors whenever the interests of the Company so require. In principle, the board will meet at least five (5) times per year.
The chairman of the board of directors has a casting vote on matters submitted to the board of directors.
2.2. Chairman
The board of directors appoints a chairman amongst the independent directors. The CEO cannot be the chairman.
The chairman of the board of directors is responsible for the leadership of the board of directors.
The chairman takes the necessary measures to develop a climate of trust within the board of directors, contributing to open discussion, constructive dissent and support for the decisions of the board of directors. The chairman promotes effective interaction between the board and the executive management. The chairman establishes a close relationship with the CEO, providing support and advice, while fully respecting the executive responsibilities of the CEO.
The chairman has additional specifi c tasks. These are further described in the terms of reference of the board of directors as set out in the Company’s corporate governance charter.
Upon closing of the offering, the chairman of the board of directors will be Mr. Luc Vandewalle.
2.3. Independent directors
As to independent directors, a director can only be considered an independent director if he or she meets at least the criteria set out in Article 524 of the Belgian Companies Code, which can be summarised as follows:
(a) During a term of two years prior to his or her election he or she has not exercised the mandate or function of director, manager, executive committee member, day-to-day manager or executive in the Company or an affiliate of the Company. This criterion does not apply to the re-election of an independent director.
(b) He or she does not own any corporate rights that represent 10% or more of the share capital, the corporate funds or of a category of shares of the Company.
If he or she has corporate rights which represent less than 10%, then:
(i) such rights, taken together with rights in the same Company held by companies over which he or she has control, may not represent 10% or more of the share capital, the corporate funds or of a category of shares of the Company; or
(ii) the disposal of these shares, or the exercise of the rights attached thereto may not be subject to agreements or unilateral commitments entered into by him or her.
(c) He or she is not the spouse of, is not the unmarried legal partner of, or is not a relative (via birth or marriage) up to the second degree of a person who (i) is a director, manager, executive committee member, day-to-day manager or executive in the Company or an affiliate of the Company, or (ii) has a financial interest as set out under (b) above.
(d) He or she does not have a relationship with the Company that is of a nature to prejudice his or her independency.
In considering a director’s independence, the criteria set out in the Company’s corporate governance charter will also be taken into account. The board of directors will disclose in its annual report which directors it considers independent directors.
Upon closing of the offering, the independent directors of the Company will be Carthagon BVBA (represented by Mr. Tom Dechaene), Leyman Consult BVBA (represented by Mr. Peter Leyman) and Mr. Luc Vandewalle.
2.4. Composition of the board of directors
Upon completion of the offering and listing of the Company’s shares, the board of directors will consist of eight (8) members.
Luc Vandewalle, Chairman (independent director)
2011 Dewittelaan 19/0402, 8670 Koksijde, Belgium
Walter Mastelinck, CEO (executive)
2011 Casselrylaan 26, 9800 Deinze, Belgium
Vladimir Lasocki, Independent director (non-executive)
2011 31 Stephendale Road, London SW6 2LT, United Kingdom
Carthagon BVBA, represented by
Tom Dechaene, Independent director
2011 Arboretumlaan 30, 3080 Tervuren, Belgium
Leyman Consult BVBA, represented by
Peter Leyman, Independent director
2011 Elshout 25, 9031 Gent – Drongen, Belgium
3. Committees within the board of directors
The board of directors can set up specialised committees to analyse specific issues and advise the board of directors on those issues. The committees are advisory bodies only and the decision-making remains within the collegial responsibility of the board of directors. The board of directors determines the terms of reference of each committee with respect to the organisation, procedures, policies and activities of the committee.
The board of directors has established an audit committee, a nomination committee and a remuneration committee. The board of directors does not currently anticipate setting up any other committees as it deems that the size of the Company does not justify such additional committees.
4. Executive management
4.1. General provisions
The board of directors has appointed the executive management of the Company. The terms of reference of the executive management have been determined by the board of directors in close consultation with the management committee.
Prior the offering, Walter Mastelinck followed up closely on strategy, technology and sales, whereas Ludwig Lemenu focused primarily on finance, administrative matters, and relations with suppliers.
Since his arrival on 30 April 2007, the chief operations officer has taken over part of the sales and operations activities of the two other members of the management committee.
In view of the IPO, it has been decided that Walter Mastelinck will take up the overall senior executive role as CEO of the Company.
The structure and organisation of Transics is illustrated below:
Walter Mastelinck
CEO
Gertjan De Creus
COO
Ann Braet
Financial Officer
Patrick Bustraen
R&D Officer
Erwin Heyse
Sales&Marketing Officer
Dirk Staelens
Customer Care Officer
4.2. Management committee
The Company has established a management committee (which will not constitute an executive committee (directiecomité / comité de direction) within the meaning of article 524bis of the Belgian Companies Code). The management committee consists of three (3) members, being the CEO, the executive director and the chief operations officer. The members of the management committee closely cooperate on all matters which are of relevance to the Company and its activities.
4.2.1. Chief Executive Officer
The Chief Executive Officer (“CEO”) is appointed, and can be removed, by the board of directors of the Company.
The CEO is entrusted by the board of directors with the day-to-day management of the Company and is therefore also managing director of the Company. In this function, the CEO has the following general responsibilities:
- he is responsible vis-à-vis the board of directors for the management of the Company and the implementation of the decisions of the board of directors;
- he co-heads and oversees the management team and reports to the board of directors on their activities; and
- he is responsible for the development of proposals for the board of directors relating to strategy, business opportunities, operations and human resources, and such other matters that are to be dealt with at the level of the board of directors. The CEO has certain specific tasks. These are further described in the terms of reference of the CEO, as set out in the Company’s corporate governance charter.
4.2.2. Executive Director
The executive director is appointed, and can be removed, by the board of directors of the Company.
The executive director is a member of the management committee. He is entrusted with daily management powers by the board of directors. In this function, the executive director has the following general responsibilities:
- he assists the CEO in the management of the Company and the implementation of the decisions of the board of directors;
- he co-heads and oversees the management team.
4.2.3. Chief operations officer
The chief operations officer is appointed, and can be removed, by the board of directors of the Company.
The chief operations officer is a member of the management committee. In this function, the chief operations officer is in charge of the general operations and activities of the Company.
4.3. Other members of the executive management
The other members of the executive management are appointed and removed by the board of directors or by the CEO in close consultation with the board of directors of the Company. They report to the COO.
4.4. Composition of the executive management
Since 2 May 2007, the executive management consists of the following seven (7) members, and upon completion of the offering and listing of the Company’s shares, the executive management will consist of seven (7) members.
These members are:
Cassel BVBA (Walter Mastelinck) Chief Executive Officer
De Creus Consultancy BVBA (Gertjan De Creus) Chief Operations Officer
Ann Braet Financial Officer
Patrick Bustraen R&D Officer
CMTS BVBA (Erwin Heyse) Sales & Marketing Officer
Dirk Staelens Customer Care Officer
The executive management will not constitute an executive committee (directiecomité / comité de direction) within the meaning of Article 524bis of the Belgian Companies Code.
5. Remuneration of directors and executive management
5.1. Directors
Only the non-executive independent directors shall receive a fixed remuneration in consideration of their membership of the board of directors and their attendance at the meetings of committees of which they are members. They will not receive any performance related remuneration, nor will any option or warrants be granted to them in their capacity as director. However, upon advice of the remuneration committee, the board of directors may propose to the shareholders’ meeting to deviate from the latter principle in case in the board’s reasonable opinion the granting of option or warrants would be necessary to attract independent directors with the most relevant experience and expertise.
None of the other directors will receive any remuneration in consideration of their membership of the board.
The remuneration committee recommends the level of remuneration for independent directors, including the chairman of the board, subject to approval by the board and, subsequently, by the shareholders’ meeting.
The remuneration committee benchmarks independent directors’ compensation against peer companies to ensure that it is competitive. Remuneration is linked to the time committed to the board and its various committees. The remuneration package for the independent directors approved by the shareholders’ meeting of 15 May 2007 is as follows. The fixed annual fee of EUR 10,000 is supplemented with an attendance fee equal to EUR 2,000 for each day upon which board and/or committee meetings are being held.
Apart from the above remuneration for independent directors, all directors will be entitled to a reimbursement of out-of-pocket expenses actually incurred to participate to board meetings
The board sets and revises, from time to time, the rules and level of compensation for directors carrying out a special mandate or sitting on one of the board committees and the rules for reimbursement of directors’ business-related out-of-pocket expenses.
Remuneration for directors will be disclosed to shareholders in accordance with applicable laws and stock exchange rules.
The directors’ mandate may be terminated ad nutum (at any time) without any form of compensation.
The Company has not made any loans to the members of the board of directors.
No remuneration and benefits have been paid to the directors in 2006.
5.2. Executive management
The remuneration of the members of the executive management is determined by the CEO or by the board of directors upon recommendation by the remuneration committee, after recommendation by the CEO to such committee.
The remuneration of the executive management is designed to attract, retain and motivate executive managers.
The remuneration of the members of the executive management currently consists of the following elements:
- Each member of the executive management is entitled to a basic fixed remuneration designed to fi t responsibilities, relevant experience and competences, in line with market rates for equivalent positions.
- The Company pays a variable remuneration dependent on the executive management member meeting individual and/or team objectives.
- Each member of the executive management who is a salaried employee may be entitled to a number of fringe benefits, which may include participating in a defined contribution pension or retirement scheme, disability insurance, a company car, a mobile telephone, a laptop computer and/or fixed allowances according to general Company policy, and other benefits (such as hospitalisation insurance and meal vouchers).
Ann Braet, Patrick Bustraen and Dirk Staelens are engaged on the basis of an employment contract. The employment contracts are generally for an indefi nite term, with a trial period. The employment contracts may be terminated at any time by the Company, subject to a severance payment not exceeding market standards. The employment contracts include, where appropriate, non-compete undertakings, as well as confidentiality and IP transfer undertakings (that will try to seek maximum protection of the Company’s interests, under applicable laws and subject to the conditions provided for in the employment contracts).
Cassel BVBA (Walter Mastelinck), Janis BVBA (Ludwig Lemenu), CMTS BVBA (Erwin Heyse) and De Creus Consultancy BVBA (Gertjan De Creus) are engaged on the basis of service agreements, which can be terminated at any time, subject to certain pre-agreed notice periods and/ or compensations. The service agreements include a confidentiality undertaking as well as a non-compete undertaking.
Executive members who are engaged on the basis of services agreements do not receive fringe benefits, except that they may be provided with a mobile phone and laptop computer according to general Company policy.
The total remuneration and benefits paid to the aforementioned 6 persons (i.e., excluding De Creus Consultancy BVBA (Gertjan De Creus)) in 2006 was EUR 1,313,395 (of which EUR 772,310 of basic remuneration, EUR 479,647 of variable remuneration and EUR 61,437 of fringe benefits).
For income year 2007, the total remuneration and benefits for the 7 members of the executive management will likely increase to approximately EUR 1,527,810 (of which EUR 887,873 of basic remuneration, EUR 578,500 of variable remuneration and EUR 61,437 of fringe benefits).
Contrary to the Belgian Code on Corporate Governance, the board of directors has currently opted not to disclose the individual remuneration of the CEO, due to privacy reasons and as the board of directors believes that the remuneration of the CEO is set at reasonable market standards.
6. Shares and warrants held by directors and executive management
6.1. Shares and warrants held by directors
No shares or warrants are held by the independent directors. Executive directors holding shares or warrants are included in section 4.6.2 below. Representatives of the institutional shareholder (see section3.7.2) also serve as a board member (see section 4.2.4). None of such representatives, however, directly owns any shares or warrants in the Company.
6.2. Shares held by executive management
The table below provides an overview of the shares held by the executive management (or, in the case of management companies, their permanent representatives), including the executive directors.
7. The statutory auditor
BDO ATRIO Bedrijfsrevisoren - BDO ATRIO Reviseurs d’Entreprises CVBA/SCRL, a civil company, having the form of a cooperative company with limited liability (coöperatieve vennootschap met beperkte aansprakelijkheid) organised and existing under the laws of Belgium, with registered offi ce at 9820 Merelbeke, Axxes Business Park, Guldensporenpark 14 (Blok B), Belgium, represented by Veerle Catry, has been appointed statutory auditor of the Company on 18 May 2006 for a term of 3 years. The annual remuneration of the statutory auditor for the performance of its three-years mandate for the audit of the Belgian statutory GAAP accounts and the consolidated IFRS accounts of the Company amounts to kEUR 33 (excl. VAT).
8. Transactions with affiliated companies
8.1. General
Each director and executive manager is encouraged to arrange his personal and business affairs so as to avoid direct and indirect conflicts of interest with the Company. The Company’s corporate governance charter provides that any transaction between the Company or its subsidiaries and any board member or executive manager shall require the prior approval of the board of directors, irrespective of whether or not such transaction would fall within the scope of the applicable statutory rules. Such transaction can only be entered into at market conditions.
8.2. Conflicts of interest of directors
Article 523 of the Belgian Companies Code provides for a special procedure within the board of directors in the event of a possible direct or indirect conflict of interest of a patrimonial nature of one or more directors with one or more decisions or transactions within the authority of the board of directors.
In the event of a conflict of interest, the director concerned has to inform his fellow directors of his conflict of interest before the board of directors deliberates and takes a decision in the matter concerned. Furthermore, the conflicted director cannot participate in the deliberation and voting by the board on the matter that gives rise to the potential conflict of interest. The minutes of the meeting of the board of directors must contain the relevant statements by the conflicted director, and a description by the board of the conflicting interests and the nature of the decision or transaction concerned.
The minutes must also contain a justification by the board for the decision or transaction, and a description of the financial consequences thereof for the Company. The relevant minutes must be included in the (statutory) annual report of the board of directors. The conflicted director must also notify the statutory auditor of the conflict. The statutory auditor must describe in his annual (statutory) audit report the financial consequences of the decision or transaction that gave rise to
the potential conflict.
In case of non-compliance with the foregoing, the Company may request the annulment of the decision or the transactions which have taken place in breach of these provisions if the counterparty to the decision or the transaction was, or should have been, aware of such breach.
The procedure does not apply to decisions or transactions in the ordinary course of business at customary market conditions. It also does not apply to transactions or decisions between companies of which one holds (directly or indirectly) at least 95% of the voting securities of the other, and transactions or decisions between companies whereby at least 95% of the voting securities of both companies are (directly or indirectly) held by another company.
Article 524ter of the Belgian Companies Code provides for a similar procedure in the event of confl icts of interest of executive committee members. In the event of such conflict, only the board of directors will be authorised to take the decision that has led to the conflict of interest. The Company’s executive management team does not qualify as an executive committee in the sense of article 524bis of the Belgian Companies Code.
Currently, the directors do not have a conflict of interest within the meaning of article 523 of the Belgian Companies Code that has not been disclosed to the board of directors. The Company does not foresee any potential conflicts of interest in the near future. In addition, the Company’s corporate governance provides that any transaction between the Company or its subsidiaries and any board member or executive manager shall require the prior approval of the board of directors, irrespective of whether or not such transaction would fall within the scope of the applicable statutory rules. Such transaction can only be entered into at market conditions.
8.3. Transactions with affiliates
Article 524 of the Belgian Companies Code, which will apply to the Company following completion of the offering, provides for a special procedure that applies to intra-group or related party transactions with affiliates. The procedure applies to decisions or transactions between the Company and affiliates of the Company that are not a subsidiary of the Company. It also applies to decisions or transactions between any of the Company’s subsidiaries and such subsidiaries’ affiliates that are not a subsidiary of the Company.
Prior to any such decision or transaction, the board of directors of the Company must appoint a special committee consisting of three independent directors, assisted by one or more independent experts. This committee must assess the business advantages and disadvantages of the decision or transaction for the Company. It must quantify the financial consequences thereof and must determine whether or not the decision or transaction causes a disadvantage to the Company that is manifestly illegitimate in view of the Company’s policy. If the committee determines that the decision or transaction is not manifestly illegitimate, but is of the opinion that it will prejudice the Company, it must clarify which advantages are taken into account in the decision or transaction to compensate the disadvantages. All these elements must be set out in the committee’s advice. The board of directors must then take a decision, taking into account the opinion of the committee.
Any deviation from the committee’s advice must be motivated by the board of directors. Directors who have a conflict of interest are not entitled to participate in the deliberation and vote (as set out in section 4.8.2 above). The committee’s advice and the decision of the board of directors must be notified to the Company’s statutory auditor, who must render a separate opinion. The conclusion of the committee, an excerpt from the minutes of the board of directors and the opinion by the statutory auditor must be included in the (statutory) annual report of the board of directors.
The procedure does not apply to decisions or transactions in the ordinary course of business at customary market conditions, and transactions or decisions with a value of less than 1% of the consolidated net assets of the Company.
Apart from the foregoing procedure, the Company must also report in its annual report substantial restrictions or burdens imposed or maintained by the controlling parent Company if any, during the previous financial year.
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