Major reform of governance and transparency for public structures in the Walloon Region

15 June 2018

The Governance Decree of the Walloon Region of 29 March 2018 (Decree amending the Local Democracy and Decentralisation Code with a view to strengthening governance and transparency in the fulfilment of public mandates within local and supra-local structures and their subsidiaries), amended on 26 April 2018, entered into force on 24 May 2018. 

The Governance Decree ushers in a reform which has major implications for governance and transparency within public structures in the Walloon Region. Its scope includes inter-municipal associations and their subsidiaries, whether or not they carry out common or municipal-interest activities or activities in competitive sectors. 

Under the Decree, the power of revocation ("tutelle d'annulation") granted to the Walloon Government with respect to decisions of management bodies of inter-municipal associations is extended to cover companies in which inter-municipal associations hold a "significant local public participation" (i.e. companies in which inter-municipal associations hold more than 50% of the shares or may appoint more than half of the members of the management body). 

The Decree also grants the Walloon Government a power of substitution ("tutelle de substitution"), applicable inter alia for reasons of "general interest", with respect to decisions of  management bodies of inter-municipal associations and of companies in which they hold a significant local public participation. 

Moreover, subsidiaries (as defined in the Belgian Companies Code) are required to submit for the assent ("avis conforme") of the inter-municipal association such matters as the acquisition or disposal of participations or branches of activity or a universality of assets.

Finally, the Decree introduces new rules concerning incompatibility applicable to holders of public or derived mandates and establishes new remuneration thresholds. As a result, for example, a person holding a "local leadership function" (i.e. the individual occupying the highest hierarchical position – under an employment contract or as a civil servant – within inter-municipal associations, companies with significant local public participation etc.) is not allowed to receive more than EUR 245,000 annually. 

In addition to the Governance Decree, two "public director" decrees dated 29 March 2018, amending decrees of 12 February 2004, also entered into force on 24 May 2018. These two decrees aim at extending the Governance Decree's provisions on governance and transparency to para-public structures ("administration units") in the Walloon Region.