The Belgian Constitutional Court annuls part of the Walloon Governance Decree

On 16 January 2020, the Belgian Constitutional Court ruled on an action for annulment filed in August 2018 by Intégrale SA/NV against 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 – see Eubelius Spotlights June 2018). This appeal concerned the annulment of a series of provisions of the Governance Decree, including the three types of supervisory powers ("tutelles") created and the rules regarding the caps on remuneration.

In its judgment, the Constitutional Court found that the dual criterion chosen by the Walloon legislator to determine whether there is significant public participation (i.e. either the holding of a majority shareholding or the ability to appoint more than half of the members of the management body) does not respect its territorial competence because, if the same dual criterion was used by another region, some entities would risk being subject to two sets of legislation. The Constitutional Court therefore maintains only the first criterion relating to the holding of a majority shareholding.

Next, the Constitutional Court found that the control established by the Governance Decree by means of the assent ("avis conforme") procedure, power of revocation ("tutelle d'annulation") and power of substitution ("tutelle de substitution") exceeds the competence of the Walloon legislator as regards insurance undertakings. Indeed, insurance undertakings are already subject to supervision by the National Bank of Belgium under the legislation resulting from the Solvency II Directive. There would therefore be a risk of contradictory injunctions from supervisory authorities. The Constitutional Court has therefore annulled the provisions organising the assent procedure and the supervision of companies with significant local public participation to the extent that they apply to insurance undertakings.

For the rest, and in particular with regard to the remuneration caps, the Constitutional Court rejects the action and upholds the Governance Decree.