The Dutch Corporate Governance Code : a full translation to English
8 December 2016
Monitoring Committee
The Dutch
UNOFFICIAL TRANSLATION
8 December 2016
secretariat: PO Box 20401
2500 EK The Hague, The Netherlands
www.mccg.nl
The Dutch
Monitoring Committee
The Dutch Corporate Governance Code | December 2016 PAGE 5
CONTENTS
Preamble 7
Compliance with the Code 11
Chapter 1. Long-term Value Creation 13
Principle 1.1 Long-term value creation 13
Principle 1.2 Risk management 14
Principle 1.3 Internal audit function 14
Principle 1.4 Risk management accountability 15
Principle 1.5 Role of the supervisory board 15
Principle 1.6 Appointment and assessment of the functioning of the external auditor 16
Principle 1.7 Performance of the external auditor’s work 17
Chapter 2. Effective Management and Supervision 19
Principle 2.1 Composition and size 19
Principle 2.2 Appointment, succession and evaluation 21
Principle 2.3 Organisation of the supervisory board and reports 22
Principle 2.4 Decision-making and functioning 24
Principle 2.5 Culture 25
Principle 2.6 Misconduct and irregularities 26
Principle 2.7 Preventing conflicts of interest 27
Principle 2.8 Takeover situations 28
Chapter 3. Remuneration 31
Principle 3.1 Remuneration policy – management board 31
Principle 3.2 Determination of management board remuneration 32
Principle 3.3 Remuneration – supervisory board 32
Principle 3.4 Remuneration accountability 33
Chapter 4. The General Meeting 35
Principle 4.1 The general meeting 35
Principle 4.2 Provision of information 36
Principle 4.3 Casting votes 37
Principle 4.4 Issuing depositary receipts for shares 38
Chapter 5. One-tier Governance Structure 41
Principle 5.1 One-tier governance structure 41
Entry Into Force 42
Explanatory Notes to the Code 43
Composition Monitoring Committee Corporate Governance Code 50
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PREAMBLE
Focusing on the governance of listed companies, the Dutch Corporate Governance Code (referred to below
as the Code) provides guidance for effective cooperation and management. Governance is about management and control, about responsibility and influence, and about supervision and accountability. The purpose
of the Code is to facilitate – with or in relation to other laws and regulations – a sound and transparent system
of checks and balances within Dutch listed companies and, to that end, to regulate relations between the
management board, the supervisory board and the shareholders (including the general meeting of shareholders). Compliance with the Code contributes to confidence in the good and responsible management of
companies and their integration into society.
The Code was first adopted in 2003 and was amended once in 2008. At the request of the National
Federation of Christian Trade Unions in the Netherlands (CNV), Eumedion, the Federation of Dutch Trade
Unions (FNV), Euronext NV, the Association of Stockholders (VEB), the Association of Securities-Issuing
Companies (VEUO) and the Confederation of Netherlands Industry and Employers (VNO-NCW), the Code
has been amended by the Corporate Governance Code Monitoring Committee (referred to below as the
Committee). Ongoing developments, the spirit of the times and overlaps with legislation were reasons to
amend the Code. The present Code replaces the 2008 Code.
Scope
The Code applies to:
- all companies whose registered offices are in the Netherlands and whose shares, or depositary receipts
for shares, have been admitted to trading on a regulated market or a comparable system; and
- all large companies whose registered offices are in the Netherlands (balance sheet value > €500 million)
and whose shares, or depositary receipts for shares, have been admitted to trading on a multilateral
trading facility or a comparable system.
For the purposes of the Code, holders of depositary receipts issued with the cooperation of the company
are equated with shareholders. The Code does not apply to an investment company or an undertaking for
collective investment in transferable securities that is not a manager within the meaning of Section 1:1 of the
Financial Supervision Act (Wet op het financieel toezicht/Wft).
Contents of the Code
The Code contains principles and best practice provisions that regulate relations between the management
board, the supervisory board and the shareholders (including the general meeting of shareholders). The principles and provisions are aimed at defining responsibilities for long-term value creation, risk control, effective
management and supervision, remuneration and the relationship with shareholders (including the general
meeting of shareholders) and stakeholders. The principles may be regarded as reflecting widely held general
views on good corporate governance. The principles have been supplemented in the form of best practice
provisions. These provisions contain standards for the conduct of management board members, supervisory
board members and shareholders. They reflect best practices and supplement the general principles of good
corporate governance. Companies may depart from these best practice provisions, provided that they give
reasons for doing so. The conditions for departures are explained below under ‘Compliance with the Code’
The relationship between the company and its employees (representatives) is regulated by law. This relationship is addressed in the Code in those provisions which relate to culture and the contact between the supervisory board and the employee participation body.
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Underlying notions
The Code is based on the notion that a company is a long-term alliance between the various stakeholders of
the company. Stakeholders are groups and individuals who, directly or indirectly, influence – or are influenced
by – the attainment of the company’s objectives: employees, shareholders and other lenders, suppliers,
customers and other stakeholders. The management board and the supervisory board have responsibility for
weighing up these interests, generally with a view to ensuring the continuity of the company and its affiliated
enterprise, as the company seeks to create long-term value.
If stakeholders are to cooperate within and with the company, they need to be confident that their interests
are duly taken into consideration. Good entrepreneurship and effective supervision are essential conditions
for stakeholder confidence in management and supervision. This includes integrity and transparency of the
management board’s actions and accountability for the supervision by the supervisory board. The operation
of the Code is not determined by the extent to which it is complied with to the letter, but rather by the extent
to which all stakeholders are guided by the spirit of the Code.
Shareholders and institutional investors
Shareholders can give priority to their own interests, as long as they act in keeping with the principles of
reasonableness and fairness in relation to the company, its organs and their fellow shareholders. This includes
the willingness to engage with the company and fellow shareholders. The greater the interest which the
shareholder has in a company, the greater is his responsibility to the company, fellow shareholders and other
stakeholders. Institutional investors are responsible to the ultimate beneficiary owners for the careful and transparent assessment of how to exercise their rights as shareholders of companies.
Relation to legislation
The Code was formed by self-regulation. It was made by, and is intended for, the parties addressed by the
Code. Self-regulation means that parties draw up their own rules, without government intervention, to which
they then commit themselves by following, enforcing and updating those rules. Self-regulation supplements
government regulation. The Code should be viewed in the context of Dutch and European legislation and
case law on corporate governance. The particular merit of the Code as an instrument of self-regulation is that
the Code focuses more on the behaviour of management board members, supervisory board members and
shareholders.
The amendments to the Code are based on the applicable legislation and case law on the external and internal relations of companies, and take into account relevant corporate governance trends. When formulating
the principles and best practice provisions, overlaps with legislation have been avoided as much as possible.
For the sake of the Code’s readability and its internal coherence, some overlap between legislation and the
Code is unavoidable, if only because the Code can supplement statutory provisions.
One-tier governance structure
The Netherlands traditionally works with a dualistic governance model (i.e. a two-tier governance structure).
The Code is focused on this model. In companies with a two-tier governance structure, management and
supervision are divided between two company bodies: the management board and the supervisory board.
Chapter 5 pertains to companies with a one-tier governance structure. Companies with a one-tier governance
structure have a single management board comprised of executive and non-executive directors. In this situation, the latter supervise the former, and there is no supervisory board. Non-executive directors and executive
directors have joint management responsibility. It is important that independent supervision by non-executive
directors is sufficiently ensured.
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The Dutch Corporate Governance Code | December 2016 PAGE 11
COMPLIANCE WITH THE CODE
The management board and the supervisory board are responsible for the corporate governance of the
company and for compliance with this Code. Compliance with the Code is based on the ‘comply or explain’
principle. Unlike legislation, the Code offers flexibility in that it provides room to depart from the principles
and best practice provisions. The management board and the supervisory board account for compliance with
the Code in the general meeting, and provide a substantive and transparent explanation for any departures
from the principles and best practice provisions.
The broad outline of the company’s corporate governance is set out each year in a separate chapter of the
management report or published on the company’s website, partly on the basis of the principles stated in
this Code. Here the company explicitly states the extent to which it complies with the principles and best
practice provisions stipulated in this Code and, where it does not comply with them, why and to what extent
it deviates from them.
Importantly, the explanation of any departures should in any event include the following elements:
- how the company departed from the principle or the best practice provision;
- the reasons for the departure;
iii. if the departure is of a temporary nature and continues for more than one financial year, an indication of
when the company intends to comply with the principle or the best practice provision again; and
- where applicable, a description of the alternative measure that was taken and either an explanation of
how that measure attains the purpose of the principle or the best practice provision or a clarification of
how the measure contributes to good corporate governance of the company.
Shareholders, businesses that specialise in rating the corporate governance of listed companies and persons
who advise on the exercise of voting rights attaching to shares should carefully assess the reason for each and
every departure from the Code’s principles and best practice provisions. Shareholders as well as the management board and supervisory board should be prepared to engage with each other to discuss the reason
why a principle or best practice provision was not applied. It is up to the shareholders to call the management
board and the supervisory board to account for compliance with the Code. The guiding principle here is
that corporate governance requires a tailor-made approach and departures may be justified. Companies and
shareholders share responsibility for good self-regulation according to the ‘comply or explain’ principle so
that it can serve as an effective alternative to legislation.
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CHAPTER 1.
LONG-TERM VALUE CREATION
Principle 1.1 Long-term value creation
The management board is responsible for the continuity of the company and its affiliated enterprise. The
management board focuses on long-term value creation for the company and its affiliated enterprise, and
takes into account the stakeholder interests that are relevant in this context. The supervisory board monitors
the management board in this.
1.1.1 Long-term value creation strategy
The management board should develop a view on long-term value creation by the company and its affiliated
enterprise and should formulate a strategy in line with this. Depending on market dynamics, it may be necessary to make short-term adjustments to the strategy.
When developing the strategy, attention should in any event be paid to the following:
- the strategy’s implementation and feasibility;
- the business model applied by the company and the market in which the company and its affiliated
enterprise operate;
iii. opportunities and risks for the company;
- the company’s operational and financial goals and their impact on its future position in relevant markets;
- the interests of the stakeholders; and
- any other aspects relevant to the company and its affiliated enterprise, such as the environment, social
and employee-related matters, the chain within which the enterprise operates, respect for human rights,
and fighting corruption and bribery.
1.1.2 Involvement of the supervisory board
The management board should engage the supervisory board early on in formulating the strategy for realising
long-term value creation. The management board renders account to the supervisory board of the strategy
and the explanatory notes to that strategy.
1.1.3 Role of the supervisory board
The supervisory board should supervise the manner in which the management board implements the longterm value creation strategy. The supervisory board should regularly discuss the strategy, the implementation
of the strategy and the principal risks associated with it. In the report drawn up by the supervisory board, an
account is given of its involvement in the establishment of the strategy, and the way in which it monitors its
implementation.
1.1.4 Accountability of the management board
In the management report, the management board should give a more detailed explanation of its view on
long-term value creation and the strategy for its realisation, as well as describing which contributions were
made to long-term value creation in the past financial year. The management board should report on both the
short-term and long-term developments.
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Principle 1.2 Risk management
The company should have adequate internal risk management and control systems in place. The management board is responsible for identifying and managing the risks associated with the company’s strategy and
activities.
1.2.1 Risk assessment
The management board should identify and analyse the risks associated with the strategy and activities of the
company and its affiliated enterprise. It is responsible for establishing the risk appetite, and also the measures
that are put in place in order to counter the risks being taken.
1.2.2 Implementation
Based on the risk assessment, the management board should design, implement and maintain adequate
internal risk management and control systems. To the extent relevant, these systems should be integrated into
the work processes within the company and its affiliated enterprise it, and should be familiar to those whose
work they are relevant to.
1.2.3 Monitoring of effectiveness
The management board should monitor the operation of the internal risk management and control systems
and should carry out a systematic assessment of their design and effectiveness at least once a year. This
monitoring should cover all material control measures relating to strategic, operational, compliance and reporting risks. Attention should be given to observed weaknesses, instances of misconduct and irregularities,
indications from whistleblowers, lessons learned and findings from the internal audit function and the external
auditor. Where necessary, improvements should be made to internal risk management and control systems.
Principle 1.3 Internal audit function
The duty of the internal audit function is to assess the design and the operation of the internal risk management and control systems. The management board is responsible for the internal audit function. The supervisory board oversees the internal audit function and maintains regular contact with the person fulfilling this
function.
1.3.1 Appointment and dismissal
The management board both appoints and dismisses the senior internal auditor. Both the appointment and
the dismissal of the senior internal auditor should be submitted to the supervisory board for approval, along
with the recommendation issued by the audit committee.
1.3.2 Assessment of the internal audit function
The management board should assess the way in which the internal audit function fulfils its responsibility
annually, taking into account the audit committee’s opinion.
1.3.3 Internal audit plan
The internal audit function should draw up an audit plan, involving the management board, the audit committee and the external auditor in this process. The audit plan should be submitted to the management board,
and then to the supervisory board, for approval. In this internal audit plan, attention should be paid to the
interaction with the external auditor.
1.3.4 Performance of work
The internal audit function should have sufficient resources to execute the internal audit plan and have access
to information that is important for the performance of its work. The internal audit function should have direct
access to the audit committee and the external auditor. Records should be kept of how the audit committee is
informed by the internal audit function.
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1.3.5 Reports of findings
The internal audit function should report its audit results to the management board and the essence of its
audit results to the audit committee and should inform the external auditor. The research findings of the internal audit function should, at least, include the following:
- any flaws in the effectiveness of the internal risk management and control systems;
- any findings and observations with a material impact on the risk profile of the company and its affiliated
enterprise; and
iii. any failings in the follow-up of recommendations made by the internal audit function.
1.3.6 Absence of an internal audit department
If there is no separate department for the internal audit function, the supervisory board will assess annually
whether adequate alternative measures have been taken, partly on the basis of a recommendation issued by
the audit committee, and will consider whether it is necessary to establish an internal audit department. The
supervisory board should include the conclusions, along with any resulting recommendations and alternative
measures, in the report of the supervisory board.
Principle 1.4 Risk management accountability
The management board should render account of the effectiveness of the design and the operation of the
internal risk management and control systems.
1.4.1 Accountability to the supervisory board
The management board should discuss the effectiveness of the design and operation of the internal risk
management and control systems referred to in best practice provisions 1.2.1 to 1.2.3 inclusive with the audit
committee, and render account of this to the supervisory board.
1.4.2 Accountability in the management report
In the management report, the management board should render account of:
- the execution of the risk assessment, with a description of the principal risks facing the company in relation to its risk appetite. These risks may include strategic, operational, compliance and reporting risks;
- the design and operation of the internal risk management and control systems during the past financial year;
iii. any major failings in the internal risk management and control systems which have been observed in the financial year, any significant changes made to these systems and any major improvements planned, along with a
confirmation that these issues have been discussed with the audit committee and the supervisory board; and
- the sensitivity of the results of the company to material changes in external factors.
1.4.3 Statement by the management board
The management board should state in the management report, with clear substantiation, that:
- the report provides sufficient insights into any failings in the effectiveness of the internal risk management
and control systems;
- the aforementioned systems provide reasonable assurance that the financial reporting does not contain
any material inaccuracies;
iii. based on the current state of affairs, it is justified that the financial reporting is prepared on a going
concern basis; and
- the report states those material risks and uncertainties that are relevant to the expectation of the company’s continuity for the period of twelve months after the preparation of the report.
Principle 1.5 Role of the supervisory board
The supervisory board should supervise the policies carried out by the management board and the general
affairs of the company and its affiliated enterprise. In so doing, the supervisory board should also focus on the
effectiveness of the company’s internal risk management and control systems and the integrity and quality of
the financial reporting.
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1.5.1 Duties and responsibilities of the audit committee
The audit committee undertakes preparatory work for the supervisory board’s decision-making regarding
the supervision of the integrity and quality of the company’s financial reporting and the effectiveness of the
company’s internal risk management and control systems. Among other things, it focuses on monitoring the
management board with regard to:
- relations with, and compliance with recommendations and following up of comments by, the internal
and external auditors;
- the funding of the company;
iii. the application of information and communication technology by the company, including risks relating
to cybersecurity; and
- the company’s tax policy.
1.5.2 Attendance of the management board, internal auditor and external auditor at audit committee consultations
The chief financial officer, the internal auditor and the external auditor should attend the audit committee
meetings, unless the audit committee determines otherwise. The audit committee should decide whether
and, if so, when the chairman of the management board should attend its meetings.
1.5.3 Audit committee report
The audit committee should report to the supervisory board on its deliberations and findings. This report
must, at least, include the following information:
- the methods used to assess the effectiveness of the design and operation of the internal risk management and control systems referred to in best practice provisions 1.2.1 to 1.2.3, inclusive;
- the methods used to assess the effectiveness of the internal and external audit processes;
iii. material considerations regarding financial reporting;
- the way material risks and uncertainties referred to in best practice provision 1.4.3 have been analysed
and discussed, along with a description of the most important findings of the audit committee.
1.5.4 Supervisory board
The supervisory board should discuss the items reported on by the audit committee as per of best practice
provision 1.5.3.
Principle 1.6 Appointment and assessment of the functioning of the external auditor
The supervisory board should submit the nomination for the appointment of the external auditor to the
general meeting, and should supervise the external auditor’s functioning.
1.6.1 Functioning and appointment
The audit committee should report annually to the supervisory board on the functioning of, and the developments in, the relationship with the external auditor. The audit committee should advise the supervisory board
regarding the external auditor’s nomination for appointment/reappointment or dismissal and should prepare
the selection of the external auditor. The audit committee should give due consideration to the management
board’s observations during the aforementioned work. Also on this basis, the supervisory board should determine its nomination for the appointment of the external auditor to the general meeting.
1.6.2 Informing the external auditor about their functioning
The supervisory board should give the external auditor a general idea of the content of the reports relating to
their functioning.
1.6.3 Engagement
The audit committee should submit a proposal to the supervisory board for the external auditor’s engage-
The Dutch Corporate Governance Code | December 2016 PAGE 17
ment to audit the financial statements. The management board should play a facilitating role in this process. In
formulating the terms of engagement, attention should be paid to the scope of the audit, the materiality to be
used and remuneration for the audit. The supervisory board should resolve on the engagement.
1.6.4 Accountability
The main conclusions of the supervisory board regarding the external auditor’s nomination and the outcomes
of the external auditor selection process should be communicated to the general meeting.
1.6.5 Departure of the external auditor
The company should publish a press release in the event of the early termination of the relationship with the
external audit firm. The press release should explain the reasons for this early termination.
Principle 1.7 Performance of the external auditor’s work
The audit committee and the external auditor should discuss the audit plan and the findings of the external
auditor based on the work the external auditor has undertaken. The management board and the supervisory
board should maintain regular contact with the external auditor.
1.7.1 Provision of information to the external auditor
The management board should ensure that the external auditor will receive all information that is necessary for
the performance of his work in a timely fashion. The management board should give the external auditor the
opportunity to respond to the information that has been provided.
1.7.2 Audit plan and external auditor’s findings
The external auditor should discuss the draft audit plan with the management board before presenting it to
the audit committee. The audit committee should annually discuss with the external auditor:
- the scope and materiality of the audit plan and the principal risks of the annual reporting identified by the
external auditor in the audit plan; and
- based also on the documents from which the audit plan was developed, the findings and outcomes of
the audit work on the financial statements and the management letter.
1.7.3 Publication of financial reports
The audit committee should determine whether and, if so, how the external auditor should be involved in the
content and publication of financial reports other than the financial statements.
1.7.4 Consultations with the external auditor outside the management board’s presence
The audit committee should meet with the external auditor as often as it considers necessary, but at least once
per year, outside the presence of the management board.
1.7.5 Examination of discussion points arising between the external auditor and the management board
The supervisory board should be permitted to examine the most important points of discussion arising between
the external auditor and the management board based on the draft management letter or the draft audit report.
1.7.6 External auditor’s attendance of supervisory board meetings
The external auditor should in any event attend the meeting of the supervisory board at which the report of
the external auditor on the audit of the financial statements is discussed.
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CHAPTER 2.
EFFECTIVE MANAGEMENT AND SUPERVISION
Principle 2.1 Composition and size
The management board and the supervisory board should be composed such that the requisite expertise,
background, competencies and – as regards the supervisory board – independence are present for them to
carry out their duties properly. The size of these two bodies reflects these requirements.
2.1.1 Profile
The supervisory board should prepare a profile, taking account of the nature and the activities of the enterprise affiliated with the company. The profile should address:
- the desired expertise and background of the supervisory board members;
- the desired diverse composition of the supervisory board, referred to in best practice provision 2.1.5;
iii. the size of the supervisory board; and
- the independence of the supervisory board members.
The profile should be posted on the company’s website.
2.1.2 Personal information
The following information about each supervisory board member should be included in the report of the
supervisory board:
- gender;
- age;
iii. nationality;
- principal position;
- other positions, in so far as they are relevant to the performance of the duties of the supervisory board
member;
- date of initial appointment; and
vii. current term of office.
2.1.3 Executive committee
If the management board works with an executive committee, the management board should take account
of the checks and balances that are part of the two-tier system. This means, among other things, that the
management board’s expertise and responsibilities are safeguarded and the supervisory board is informed
adequately. The supervisory board should supervise this whilst paying specific attention to the dynamics and
the relationship between the management board and the executive committee.
In the management report, account should be rendered of:
- the choice to work with an executive committee;
- the role, duty and composition of the executive committee; and
iii. how the contacts between the supervisory board and the executive committee have been given shape.
2.1.4 Expertise
Each supervisory board member and each management board member should have the specific expertise
required for the fulfilment of his duties. Each supervisory board member should be capable of assessing the
broad outline of the overall management.
2.1.5 Diversity policy
The supervisory board should draw up a diversity policy for the composition of the management board,
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the supervisory board and, if applicable, the executive committee. The policy should address the concrete
targets relating to diversity and the diversity aspects relevant to the company, such as nationality, age, gender,
and education and work background.
2.1.6 Accountability about diversity
The corporate governance statement should explain the diversity policy and the way that it is implemented in
practice, addressing:
- the policy objectives;
- how the policy has been implemented; and
iii. the results of the policy in the past financial year.
If the composition of the management board and the supervisory board diverges from the targets stipulated
in the company’s diversity policy and/or the statutory target for the male/female ratio, if and to the extent that
this is provided under or pursuant to the law, the current state of affairs should be outlined in the corporate
governance statement, along with an explanation as to which measures are being taken to attain the intended
target, and by when this is likely to be achieved.
2.1.7 Independence of the supervisory board
The composition of the supervisory board is such that the members are able to operate independently and
critically vis-à-vis one another, the management board, and any particular interests involved.
In order to safeguard its independence, the supervisory board is composed in accordance with the following
criteria:
- any one of the criteria referred to in best practice provision 2.1.8, sections i. to v. inclusive should be
applicable to at most one supervisory board member;
- the total number of supervisory board members to whom the criteria referred to in best practice provision 2.1.8 are applicable should account for less than half of the total number of supervisory board
members; and
iii. for each shareholder, or group of affiliated shareholders, who directly or indirectly hold more than ten
percent of the shares in the company, there is at most one supervisory board member who can be considered to be affiliated with or representing them as stipulated in best practice provision 2.1.8, sections
- and vii.
2.1.8 Independence of supervisory board members
A supervisory board member is not independent if they or their spouse, registered partner or life companion,
foster child or relative by blood or marriage up to the second degree:
- has been an employee or member of the management board of the company (including associated
companies as referred to in Section 5:48 of the Financial Supervision Act (Wet op het financieel toezicht/
Wft)) in the five years prior to the appointment;
- receives personal financial compensation from the company, or a company associated with it, other than
the compensation received for the work performed as a supervisory board member and in so far as this is
not in keeping with the normal course of business;
iii. has had an important business relationship with the company or a company associated with it in the year
prior to the appointment. This includes in any event the case where the supervisory board member, or
the firm of which he is a shareholder, partner, associate or adviser, has acted as adviser to the company
(consultant, external auditor, civil notary or lawyer) and the case where the supervisory board member
is a management board member or an employee of a bank with which the company has a lasting and
significant relationship;
- is a member of the management board of a company in which a member of the management board of
the company which he supervises is a supervisory board member;
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- has temporarily performed management duties during the previous twelve months in the absence or
incapacity of management board members;
- has a shareholding in the company of at least ten percent, taking into account the shareholding of natural persons
or legal entities cooperating with him or her on the basis of an express or tacit, verbal or written agreement;
vii. is a member of the management board or supervisory board – or is a representative in some other way – of a
legal entity which holds at least ten percent of the shares in the company, unless the entity is a group company.
2.1.9 Independence of the chairman of the supervisory board
The chairman of the supervisory board should not be a former member of the management board of the
company and should be independent within the meaning of best practice provision 2.1.8.
2.1.10 Accountability regarding supervisory board member independence
The report of the supervisory board should state that, in the opinion of the supervisory board, the independence
requirements referred to in best practice provisions 2.1.7 to 2.1.9 inclusive have been fulfilled and, if applicable,
should also state which supervisory board member(s), if any, it does not consider to be independent.
Principle 2.2 Appointment, succession and evaluation
The supervisory board should ensure that a formal and transparent procedure is in place for the appointment
and reappointment of management board and supervisory board members, as well as a sound plan for the
succession of management board and supervisory board members, with due regard to the diversity policy.
The functioning of the management board and the supervisory board as a collective and the functioning of
individual members should be evaluated on a regular basis.
2.2.1 Appointment and reappointment periods – management board members
A management board member is appointed for a maximum period of four years. A member may be reappointed for a term of not more than four years at a time, which reappointment should be prepared in a timely
fashion. The diversity objectives from best practice provision 2.1.5 should be considered in the preparation of
the appointment or reappointment.
2.2.2 Appointment and reappointment periods – supervisory board members
A supervisory board member is appointed for a period of four years and may then be reappointed once for
another four-year period. The supervisory board member may then subsequently be reappointed again for
a period of two years, which appointment may be extended by at most two years. In the event of a reappointment after an eight-year period, reasons should be given in the report of the supervisory board. In any
appointment or reappointment, the profile referred to in best practice provision 2.1.1 should be observed.
2.2.3 Early retirement
A member of the supervisory board or the management board should retire early in the event of inadequate
functioning, structural incompatibility of interests, and in other instances in which this is deemed necessary
by the supervisory board. In the event of the early retirement of a member of the management board or the
supervisory board, the company should issue a press release mentioning the reasons for the departure.
2.2.4 Succession
The supervisory board should ensure that the company has a sound plan in place for the succession of
management board and supervisory board members that is aimed at retaining the balance in the requisite
expertise, experience and diversity. Due regard should be given to the profile referred to in best practice
provision 2.1.1 in drawing up the plan for supervisory board members. The supervisory board should also
draw up a retirement schedule in order to avoid, as much as possible, supervisory board members retiring
simultaneously. The retirement schedule should be published on the company’s website.
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2.2.5 Duties of the selection and appointment committee
The selection and appointment committee should prepare the supervisory board’s decision-making and
report to the supervisory board on its deliberations and findings.
The selection and appointment committee should in any event focus on:
- drawing up selection criteria and appointment procedures for management board members and supervisory board members;
- periodically assessing the size and composition of the management board and the supervisory board,
and making a proposal for a composition profile of the supervisory board;
iii. periodically assessing the functioning of individual management board members and supervisory board
members, and reporting on this to the supervisory board;
- drawing up a plan for the succession of management board members and supervisory board members;
- making proposals for appointments and reappointments; and
- supervising the policy of the management board regarding the selection criteria and appointment procedures for senior management.
2.2.6 Evaluation by the supervisory board
At least once per year, outside the presence of the management board, the supervisory board should evaluate its own functioning, the functioning of the various committees of the supervisory board and that of the
individual supervisory board members, and should discuss the conclusions that are attached to the evaluation. In doing so, attention should be paid to:
- substantive aspects, the mutual interaction and the interaction with the management board;
- events that occurred in practice from which lessons may be learned; and
iii. the desired profile, composition, competencies and expertise of the supervisory board.
2.2.7 Evaluation of the management board
At least once per year, outside the presence of the management board, the supervisory board should evaluate both the functioning of the management board as a whole and that of the individual management board
members, and should discuss the conclusions that must be attached to the evaluation, such also in light of
the succession of management board members. At least once annually, the management board, too, should
evaluate its own functioning as a whole and that of the individual management board members.
2.2.8 Evaluation accountability
The supervisory board’s report should state:
- how the evaluation of the supervisory board, the various committees and the individual supervisory
board members has been carried out;
- how the evaluation of the management board and the individual management board members has been
carried out; and
iii. what has been or will be done with the conclusions from the evaluations.
Principle 2.3 Organisation of the supervisory board and reports
The supervisory board should ensure that it functions effectively. The supervisory board should establish committees to prepare the supervisory board’s decision-making. The foregoing does not affect the responsibility
of the supervisory board as an organ and of the individual members of the supervisory board for obtaining
information and forming an independent opinion.
2.3.1 Supervisory board’s terms of reference
The division of duties within the supervisory board and the procedure of the supervisory board should be laid
down in terms of reference. The supervisory board’s terms of reference should include a paragraph dealing
with its relations with the management board, the general meeting, the employee participation body (if any)
and the executive committee (if any). The terms of reference should be posted on the company’s website.
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2.3.2 Establishment of committees
If the supervisory board consists of more than four members, it should appoint from among its members an
audit committee, a remuneration committee and a selection and appointment committee. Without prejudice
to the collegiate responsibility of the supervisory board, the duty of these committees is to prepare the decision-making of the supervisory board. If the supervisory board decides not to establish an audit committee, a
remuneration committee or a selection and appointment committee, the best practice provisions applicable
to such committee(s) should apply to the entire supervisory board.
2.3.3 Committees’ terms of reference
The supervisory board should draw up terms of reference for the audit committee, the remuneration committee and the selection and appointment committee. The terms of reference should indicate the role and
responsibility of the committee concerned, its composition and the manner in which it discharges its duties.
The terms of reference should be posted on the company’s website.
2.3.4 Composition of the committees
The audit committee or the remuneration committee should not be chaired by the chairman of the supervisory board or by a former member of the management board of the company. More than half of the members of
the committees should be independent within the meaning of best practice provision 2.1.8.
2.3.5 Committee reports
The supervisory board should receive from each of the committees a report of their deliberations and findings. In the report of the supervisory board it should comment on how the duties of the committees were
carried out in the financial year. In this report, the composition of the committees, the number of committee
meetings and the main items discussed at the meetings should be mentioned.
2.3.6 Chairman of the supervisory board
The chairman of the supervisory board should in any case ensure that:
- the supervisory board has proper contact with the management board, the employee participation body
(if any) and the general meeting;
- the supervisory board elects a vice-chairman;
iii. there is sufficient time for deliberation and decision-making by the supervisory board;
- the supervisory board members receive all information that is necessary for the proper performance of
their duties in a timely fashion;
- the supervisory board and its committees function properly;
- the functioning of individual management board members and supervisory board members is assessed
at least annually;
vii. the supervisory board members and management board members follow their induction programme;
viii. the supervisory board members and management board members follow their education or training
programme;
- the management board performs activities in respect of culture;
- the supervisory board recognises signs from the enterprise affiliated with the company and ensures that any
(suspicion of) material misconduct and irregularities are reported to the supervisory board without delay;
- the general meeting proceeds in an orderly and efficient manner;
xii. effective communication with shareholders is assured; and
xiii. the supervisory board is involved closely, and at an early stage, in any merger or takeover processes.
The chairman of the supervisory board should consult regularly with the chairman of the management board.
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2.3.7 Vice-chairman of the supervisory board
The vice-chairman of the supervisory board should deputise for the chairman when the occasion arises.
2.3.8 Delegated supervisory board member
A delegated supervisory board member is a supervisory board member who has a special task. The delegation may not extend beyond the responsibilities of the supervisory board itself and may not include the
management of the company. Its purpose is more intensive supervision and advice and more regular consultation with the management board. The delegation should be of a temporary nature only. The delegation may
not detract from the duties and powers of the supervisory board. The delegated supervisory board member
continues to be a member of the supervisory board and should report regularly on the execution of his special
duty to the plenary supervisory board.
2.3.9 Temporary management board function of a supervisory board member
A supervisory board member who temporarily takes on the management of the company, where the management board members are absent or unable to fulfil their duties, should resign from the supervisory board.
2.3.10 Company secretary
The supervisory board should be supported by the company secretary. The secretary:
- should ensure that the proper procedures are followed and that the statutory obligations and obligations
under the articles of association are complied with;
- should facilitate the provision of information of the management board and the supervisory board; and
iii. should support the chairman of the supervisory board in the organisation of the affairs of the supervisory
board, including the provision of information, meeting agendas, evaluations and training programmes.
The company secretary should, either on the motion of the supervisory board or otherwise, be appointed and
dismissed by the management board, after the approval of the supervisory board has been obtained.
If the secretary also undertakes work for the management board and notes that the interests of the management board and the supervisory board diverge, as a result of which it is unclear which interests the secretary
should represent, the secretary should report this to the chairman of the supervisory board.
2.3.11 Report of the supervisory board
The annual statements of the company include a report by the supervisory board. In this report, the supervisory board should render account of the supervision conducted in the past financial year, reporting in any
event on the items referred to in best practice provisions 1.1.3, 2.1.2, 2.1.10, 2.2.8, 2.3.5 and 2.4.4 and, if
applicable, the items referred to in best practice provisions 1.3.6 and 2.2.2.
Principle 2.4 Decision-making and functioning
The management board and the supervisory board should ensure that decisions are made in a balanced and
effective manner whilst taking account of the interests of stakeholders. The management board should ensure
that information is provided in a timely and sound manner. The management board and the supervisory board
should keep their knowledge and skills up to date and spend sufficient time on their duties and responsibilities. They should ensure that, in performing their duties, they have the information that is required for effective
decision-making.
2.4.1 Stimulating openness and accountability
The management board and the supervisory board are each responsible for stimulating openness and accountability within the organ of which they form part, and between the different organs within the company.
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2.4.2 Other positions
Management board members and supervisory board members should report any other positions they may
have to the supervisory board in advance and, at least annually, the other positions should be discussed at the
supervisory board meeting. The acceptance of membership of a supervisory board by a management board
member requires the approval of the supervisory board.
2.4.3 Point of contact for the functioning of supervisory board and management board members
The chairman of the supervisory board should act on behalf of the supervisory board as the main contact for
the management board, supervisory board members and shareholders regarding the functioning of management board members and supervisory board members. The vice-chairman should act as contact for individual
supervisory board members and management board members regarding the functioning of the chairman.
2.4.4 Attendance at supervisory board meetings
Supervisory board members should attend supervisory board meetings and the meetings of the committees
of which they are a part. If supervisory board members are frequently absent from these meetings, they
should be held to account on this. The report of the supervisory board should state the absenteeism rate from
supervisory board and committee meetings of each supervisory board member.
2.4.5 Induction programme for supervisory board members
All supervisory board members should follow an induction programme geared to their role. The induction
programme should in any event cover general financial, social and legal affairs, financial reporting by the
company, any specific aspects that are unique to the relevant company and its business activities, the
company culture and the relationship with the employee participation body (if any), and the responsibilities of
a supervisory board member.
2.4.6 Development
The management board and the supervisory board should each conduct an annual review for their own
organ to identify any aspects with regard to which the supervisory board members and management board
members require training or education.
2.4.7 Information safeguards
The management board should ensure that internal procedures are established and maintained which safeguard that all relevant information is known to the management board and the supervisory board in a timely
fashion. The supervisory board should supervise the establishment and implementation of these procedures.
2.4.8 Supervisory board members’ responsibility for obtaining information
The supervisory board and each individual supervisory board member have their own responsibility for
obtaining the information from the management board, the internal audit function, the external auditor and
the employee participation body (if any) that the supervisory board needs in order to be able to carry out its
duties as a supervisory organ properly.
2.4.9 Obtaining information from officers and external parties
If the supervisory board considers it necessary, it may obtain information from officers and external advisers
of the company. The company should provide the necessary means to this end. The supervisory board may
require that certain officers and external advisers attend its meetings.
Principle 2.5 Culture
The management board is responsible for creating a culture aimed at long-term value creation for the
company and its affiliated enterprise. The supervisory board should supervise the activities of the management board in this regard.
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2.5.1 Management board’s responsibility for culture
The management board should adopt values for the company and its affiliated enterprise that contribute to a
culture focused on long-term value creation, and discuss these with the supervisory board. The management
board is responsible for the incorporation and maintenance of the values within the company and its affiliated
enterprise. Attention must be paid to the following, among other things:
- the strategy and the business model;
- the environment in which the enterprise operates; and
iii. the existing culture within the enterprise, and whether it is desirable to implement any changes in this.
The management board encourages behaviour that is in keeping with the values, and propagates these
values through leading by example.
2.5.2 Code of Conduct
The management board should draw up a code of conduct and monitor its effectiveness and compliance
with this code, both on the part of itself and of the employees of the company. The management board
should inform the supervisory board of its findings and observations relating to the effectiveness of, and compliance with, the code. The code of conduct will be published on the company’s website.
2.5.3 Employee participation
If the company has established an employee participation body, the conduct and culture in the company and
its affiliated enterprise should also be discussed in the consultations between the management board, the
supervisory board and such employee participation body.
2.5.5 Accountability regarding culture
In the management report, the management board should explain:
- the values and the way in which they are incorporated in the company and its affiliate enterprise; and
- the effectiveness of, and compliance with, the code of conduct.
Principle 2.6 Misconduct and irregularities
The management board and the supervisory board should be alert to indications of actual or suspected
misconduct or irregularities. The management board should establish a procedure for reporting actual or
suspicion of misconduct or irregularities, and take appropriate follow-up action on the basis of these reports.
The supervisory board monitors the management board in this.
2.6.1 Procedure for reporting actual or suspicion of misconduct or irregularities
The management board should establish a procedure for reporting actual or suspected irregularities within
the company and its affiliated enterprise. The procedure will be published on the company’s homepage. The
management board should ensure that employees have the opportunity to file a report without jeopardising
their legal position.
2.6.2 Informing the chairman of the supervisory board
The management board should inform the chairman of the supervisory board without delay of any signs of
actual or suspected material misconduct or irregularities within the company and its affiliated enterprise. If the
actual or suspected misconduct or irregularity pertains to the functioning of a management board member,
employees can report this directly to the chairman of the supervisory board.
2.6.3 Notification by the external auditor
The external auditor should inform the chairman of the audit committee without delay if, during the performance of his duties, he discovers or suspect an instance of misconduct or irregularity. If the actual or suspected misconduct or irregularity pertains to the functioning of a management board member, the external
auditor should report this directly to the chairman of the supervisory board.
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2.6.4 Oversight by the supervisory board
The supervisory board monitors the operation of the procedure for reporting actual or suspected misconduct
or irregularities, appropriate and independent investigations into signs of misconduct or irregularities, and,
if an instance of misconduct or irregularity has been discovered, an adequate follow-up of any recommendations for remedial actions.
In order to safeguard the independence of the investigation in cases where the management board itself is
involved, the supervisory board should have the option of initiating its own investigation into any irregularities
that have been discovered and to coordinate this investigation.
Principle 2.7 Preventing conflicts of interest
Any form of conflict of interest between the company and the members of its management board or supervisory board should be prevented. To avoid conflicts of interest, adequate measures should be taken. The
supervisory board is responsible for the decision-making on dealing with conflicts of interest regarding management board members, supervisory board members and majority shareholders in relation to the company.
2.7.1 Preventing conflicts of interest
Management board members and supervisory board members are alert to conflicts of interest and should in
any case refrain from the following:
- competing with the company;
- demanding or accepting substantial gifts from the company for themselves or their spouse, registered
partner or other life companion, foster child or relative by blood or marriage up to the second degree;
iii. providing unjustified advantages to third parties at the company’s expense;
- taking advantage of business opportunities to which the company is entitled for themselves or for their
spouse, registered partner or other life companion, foster child or relative by blood or marriage up to the
second degree.
2.7.2 Terms of reference
The terms of reference of the supervisory board should contain rules on dealing with conflicts of interest,
including conflicting interests between management board members and supervisory board members on
the one hand and the company on the other. The terms of reference should also stipulate which transactions
require the approval of the supervisory board. The company should draw up regulations governing ownership of, and transactions in, securities by management or supervisory board members, other than securities
issued, by the company.
2.7.3 Reporting
A conflict of interest may exist if the company intends to enter into a transaction with a legal entity:
- in which a member of the management board or the supervisory board personally has a material financial
interest; or
- which has a member of the management board or the supervisory board who is related under family law
to a member of the management board or the supervisory board of the company.
A management board member should report any potential conflict of interest in a transaction that is of
material significance to the company and/or to such management board member to the chairman of the
supervisory board and to the other members of the management board without delay. The management
board member should provide all relevant information in that regard, including the information relevant to
the situation concerning his spouse, registered partner or other life companion, foster child and relatives by
blood or marriage up to the second degree.
A supervisory board member should report any conflict of interest or potential conflict of interest in a transaction that is of material significance to the company and/or to such supervisory board member to the chairman
of the supervisory board without delay and should provide all relevant information in that regard, including
The Dutch Corporate Governance Code | December 2016 PAGE 28
the relevant information pertaining to his spouse, registered partner or other life companion, foster child and
relatives by blood or marriage up to the second degree. If the chairman of the supervisory board has a conflict
of interest or potential conflict of interest, he should report this to the vice-chairman of the supervisory board
without delay.
The supervisory board should decide, outside the presence of the management board member or supervisory board member concerned, whether there is a conflict of interest.
2.7.4 Accountability regarding transactions: management board and supervisory board members
All transactions in which there are conflicts of interest with management board members or supervisory board
members should be agreed on terms that are customary in the market. Decisions to enter into transactions in
which there are conflicts of interest with management board members or supervisory board members that are
of material significance to the company and/or to the relevant management board members or supervisory
board members should require the approval of the supervisory board. Such transactions should be published
in the management report, together with a statement of the conflict of interest and a declaration that best
practice provisions 2.7.3 and 2.7.4 have been complied with.
2.7.5 Accountability regarding transactions: majority shareholders
All transactions between the company and legal or natural persons who hold at least ten percent of the
shares in the company should be agreed on terms that are customary in the market. Decisions to enter into
transactions with such persons that are of material significance to the company and/or to such persons should
require the approval of the supervisory board. Such transactions should be published in the management
report, together with a declaration that best practice provision 2.7.5 has been complied with.
2.7.6 Personal loans
The company should not grant its management board members and supervisory board members any personal loans, guarantees or the like unless in the normal course of business and on terms applicable to the personnel as a whole, and after approval of the supervisory board. No remission of loans should be granted.
Principle 2.8 Takeover situations
In the event of a takeover bid for the company’s shares or for the depositary receipts for the company’s shares,
in the event of a private bid for a business unit or a participating interest, where the value of the bid exceeds
the threshold referred to in Section 2:107a(1)(c) of the Dutch Civil Code, and/or in the event of other substantial changes in the structure of the organisation, both the management board and the supervisory board
should ensure that the stakeholder interests concerned are carefully weighed and any conflict of interest for
supervisory board members or management board members is avoided. The management board and the supervisory board should be guided in their actions by the interests of the company and its affiliated enterprise.
2.8.1 Supervisory board involvement
When a takeover bid for the company’s shares or for the depositary receipts for the company’s shares is being
prepared, in the event of a private bid for a business unit or a participating interest, where the value of the
bid exceeds the threshold referred to in Section 2:107a(1)(c) of the Dutch Civil Code, and/or in the event
of other substantial changes in the structure of the organisation, the management board should ensure that
the supervisory board is involved in the takeover process and/or the change in the structure closely and in a
timely fashion.
2.8.2 Informing the supervisory board about request for inspection by competing bidder
If a takeover bid has been announced for the shares, or depositary receipts for shares, in the company, and
the management board receives a request from a competing bidder to inspect the company’s records, the
The Dutch Corporate Governance Code | December 2016 PAGE 29
management board should discuss this request with the supervisory board without delay.
2.8.3 Management board’s position on a private bid
If a private bid for a business unit or a participating interest has been made public, where the value of the bid
exceeds the threshold referred to in Section 2:107a(1)(c) of the Dutch Civil Code, the management board of
the company should as soon as possible make public its position on the bid and the reasons for this position.
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CHAPTER 3.
REMUNERATION
Principle 3.1 Remuneration policy – management board
The remuneration policy applicable to management board members should be clear and understandable,
should focus on long-term value creation for the company and its affiliated enterprise, and take into account
the internal pay ratios within the enterprise. The remuneration policy should not encourage management
board members to act in their own interest, nor to take risks that are not in keeping with the strategy formulated and the risk appetite that has been established. The supervisory board is responsible for formulating the
remuneration policy and its implementation.
3.1.1 Remuneration policy proposal
The remuneration committee should submit a clear and understandable proposal to the supervisory board
concerning the remuneration policy to be pursued with regard to the management board. The supervisory
board should present the policy to the general meeting for adoption.
3.1.2 Remuneration policy
The following aspects should in any event be taken into consideration when formulating the remuneration policy:
- the objectives for the strategy for the implementation of long-term value creation within the meaning of
best practice provision 1.1.1;
- the scenario analyses carried out in advance;
iii. the pay ratios within the company and its affiliated enterprise;
- the development of the market price of the shares;
- an appropriate ratio between the variable and fixed remuneration components. The variable remuneration component is linked to measurable performance criteria determined in advance, which are predominantly long-term in character;
- if shares are being awarded, the terms and conditions governing this. Shares should be held for at least
five years after they are awarded; and
vii. if share options are being awarded, the terms and conditions governing this and the terms and conditions subject to which the share options can be exercised. Share options cannot be exercised during the
first three years after they are awarded.
3.1.3 Remuneration – executive committee
If the management board works with an executive committee, the management board should inform the
supervisory board about the remuneration of the members of the executive committee who are not management board members. The management board should discuss this remuneration with the supervisory board
annually.
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Principle 3.2 Determination of management board remuneration
The supervisory board should determine the remuneration of the individual members of the management
board, within the limits of the remuneration policy adopted by the general meeting. The remuneration committee should prepare the supervisory board’s decision-making regarding the determination of remuneration.
The inadequate performance of duties should not be rewarded.
3.2.1 Remuneration committee’s proposal
The remuneration committee should submit a proposal to the supervisory board concerning the remuneration of individual members of the management board. The proposal is drawn up in accordance with the remuneration policy that has been established and will, in any event, cover the remuneration structure, the amount
of the fixed and variable remuneration components, the performance criteria used, the scenario analyses that
are carried out and the pay ratios within the company and its affiliated enterprise.
3.2.2 Management board members’ views on their own remuneration
When drafting the proposal for the remuneration of management board members, the remuneration committee should take note of individual management board members’ views with regard to the amount and structure of their own remuneration. The remuneration committee should ask the members of the management
board to pay attention to the aspects referred to in best practice provision 3.1.2.
3.2.3 Severance payments
The remuneration in the event of dismissal should not exceed one year’s salary (the ‘fixed’ remuneration
component). Severance pay will not be awarded if the agreement is terminated early at the initiative of the
management board member, or in the event of seriously culpable or negligent behaviour on the part of the
management board member.
Principle 3.3 Remuneration – supervisory board
The supervisory board should submit a clear and understandable proposal for its own appropriate remuneration to the general meeting. The remuneration of supervisory board members should promote an adequate
performance of their role and should not be dependent on the results of the company.
3.3.1 Time spent and responsibility
The remuneration of the supervisory board members should reflect the time spent and the responsibilities of
their role.
3.3.2 Remuneration of supervisory board members
Supervisory board members may not be awarded remuneration in the form of shares and/or rights to shares.
3.3.3 Share ownership
Shares held by a supervisory board member in the company on whose supervisory board they serve should
be long-term investments.
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Principle 3.4 Accountability for implementation of remuneration policy
In the remuneration report, the supervisory board should render account of the implementation of the remuneration policy in a transparent manner. The report should be posted on the company’s website.
3.4.1 Remuneration report
The remuneration committee should prepare the remuneration report. This report should in any event describe, in a transparent manner, in addition to the matters required by law:
- how the remuneration policy has been implemented in the past financial year;
- how the implementation of the remuneration policy contributes to long-term value creation;
iii. that scenario analyses have been taken into consideration;
- the pay ratios within the company and its affiliated enterprise and, if applicable, any changes in these
ratios in comparison with the previous financial year;
- in the event that a management board member receives variable remuneration, how this remuneration
contributes to long-term value creation, the measurable performance criteria determined in advance
upon which the variable remuneration depends, and the relationship between the remuneration and
performance; and
- in the event that a current or former management board member receives a severance payment, the
reason for this payment.
3.4.2 Agreement of management board member
The main elements of the agreement of a management board member with the company should be published on the company’s website in a transparent overview after the agreement has been concluded, and
in any event no later than the date of the notice calling the general meeting where the appointment of the
management board member will be proposed.
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CHAPTER 4.
THE GENERAL MEETING
Principle 4.1 The general meeting
The general meeting should be able to exert such influence on the policies of the management board and the
supervisory board of the company that it plays a fully-fledged role in the system of checks and balances in the
company. Good corporate governance requires the fully-fledged participation of shareholders in the
decision-making in the general meeting.
4.1.1 Supervisory board supervision
The supervisory board’s supervision of the management board should include the supervision of relations
with shareholders.
4.1.2 Proper conduct of business at meetings
The chairman of the general meeting is responsible for ensuring the proper conduct of business at meetings
in order to promote a meaningful discussion at the meeting.
4.1.3 Agenda
The agenda of the general meeting should list which items are up for discussion and which items are to be
voted on. The following items should be dealt with as separate agenda items:
- material changes to the articles of association;
- proposals relating to the appointment of management board and supervisory board members;
iii. the policy of the company on additions to reserves and on dividends (the level and purpose of the addition to reserves, the amount of the dividend and the type of dividend);
- any proposal to pay out dividend;
- resolutions to approve the management conducted by the management board (discharge of management board members from liability);
- resolutions to approve the supervision exercised by the supervisory board (discharge of supervisory
board members from liability);
vii. each substantial change in the corporate governance structure of the company and in the compliance
with this Code; and
viii. the appointment of the external auditor.
4.1.4 Proposal for approval or authorisation
A proposal for approval or authorisation by the general meeting should be explained in writing. In its explanation the management board should deal with all facts and circumstances relevant to the approval or authorisation to be granted. The notes to the agenda should be posted on the company’s website.
The Dutch Corporate Governance Code | December 2016 PAGE 36
4.1.5 Shareholder’s explanation when exercising the right to put items on the agenda
If a shareholder has arranged for an item to be put on the agenda, he should explain this at the meeting and, if
necessary, answer questions about it.
4.1.6 Placing of items on the agenda by shareholders
A shareholder should only exercise the right to put items on the agenda after they have consulted with the
management board on this. If one or more shareholders intend to request that an item be put on the agenda
that may result in a change in the company’s strategy, for example as a result of the dismissal of one or several
management board or supervisory board members, the management board should be given the opportunity
to stipulate a reasonable period in which to respond (the response time). The opportunity to stipulate the
response time should also apply to an intention as referred to above for judicial leave to call a general meeting
pursuant to Section 2:110 of the Dutch Civil Code. The relevant shareholder should respect the response time
stipulated by the management board, within the meaning of best practice provision 4.1.7.
4.1.7 Stipulation of the response time
If the management board stipulates a response time, this should be a reasonable period that does not exceed
180 days from the moment the management board is informed by one or more shareholders of their intention
to put an item on the agenda to the day of the general meeting at which the item is to be dealt with. The management board should use the response time for further deliberation and constructive consultation, in any
event with the relevant shareholder(s), and should explore the alternatives. At the end of the response time,
the management board should report on this consultation and the exploration to the general meeting. This
should be monitored by the supervisory board.
The response time may be stipulated only once for any given general meeting and should not apply to an item
in respect of which the response time had been previously stipulated, or to meetings where a shareholder
holds at least three-quarters of the issued capital as a consequence of a successful public bid.
4.1.8 Attendance of members nominated for the management board or supervisory board
Management board and supervisory board members nominated for appointment should attend the general
meeting at which votes will be cast on their nomination.
4.1.9 External auditor’s attendance
The external auditor may be questioned by the general meeting in relation to his report on the fairness of
the financial statements. The external auditor should for this purpose attend and be entitled to address this
meeting.
4.1.10 General meeting’s report
The report of the general meeting should be made available, on request, to the shareholders no later than
three months after the end of the meeting, after which shareholders should have the opportunity to react to
the report in the following three months. The report should then be adopted in the manner provided for in
the articles of association.
Principle 4.2 Provision of information
The management board and the supervisory board should ensure that the general meeting is adequately
provided with information.
4.2.1 Substantiation of invocation of overriding interest
If the management board and the supervisory board decide not to provide the general meeting with all
information desired with the invocation of an overriding interest on the part of the company, they must give
reasons for this.
The Dutch Corporate Governance Code | December 2016 PAGE 37
4.2.2 Policy on bilateral contacts with shareholders
The company should formulate an outline policy on bilateral contacts with the shareholders and should post
this policy on its website.
4.2.3 Meetings and presentations
Analyst meetings, analyst presentations, presentations to institutional or other investors and press conferences should be announced in advance on the company’s website and by means of press releases. Analysts’
meetings and presentations to investors should not take place shortly before the publication of the regular
financial information. All shareholders should be able to follow these meetings and presentations in real time,
by means of webcasting, telephone or otherwise. After the meetings, the presentations should be posted on
the company’s website.
4.2.4 Posting information in a separate section of the website
The company should post and update information which is relevant to the shareholders and which it is required to publish or submit pursuant to the provisions of company law and securities law applicable to it in a
separate section of the company’s website.
4.2.5 Management board contacts with press and analysts
The contacts between the management board on the one hand and the press and financial analysts on the
other should be handled and structured carefully and with due observance of the applicable laws and regulations. The company should not do anything that might compromise the independence of analysts in relation
to the company and vice versa.
4.2.6 Outline of anti-takeover measures
The management board should outline all existing or potential anti-takeover measures in the management
report and should also indicate in what circumstances and by whom these measures may likely be used.
Principle 4.3 Casting votes
Participation of as many shareholders as possible in the general meeting’s decision-making is in the interest of
the company’s checks and balances. The company should, in so far as possible, give shareholders the opportunity to vote by proxy and to communicate with all other shareholders.
4.3.1 Voting as deemed fit
A shareholder should vote as he sees fit. A shareholder who makes use of the voting advice of a third party is
expected to form his own judgment on the voting policy or the voting advice provided by this adviser.
4.3.2 Providing voting proxies or voting instructions
The company should give shareholders and other persons entitled to vote the possibility of issuing voting
proxies or voting instructions, respectively, to an independent third party prior to the general meeting.
4.3.3 Cancelling the binding nature of a nomination or dismissal
The general meeting of shareholders of a company not having statutory two-tier status (structuurregime)
may pass a resolution to cancel the binding nature of a nomination for the appointment of a member of the
management board or of the supervisory board and/or a resolution to dismiss a member of the management
board or of the supervisory board by an absolute majority of the votes cast. It may be provided that this majority should represent a given proportion of the issued capital, which proportion may not exceed one-third.
If this proportion of the capital is not represented at the meeting, but an absolute majority of the votes cast is
in favour of a resolution to cancel the binding nature of a nomination, or to dismiss a board member, a new
meeting may be convened at which the resolution may be passed by an absolute majority of the votes cast,
regardless of the proportion of the capital represented at the meeting.
The Dutch Corporate Governance Code | December 2016 PAGE 38
4.3.4 Voting right on financing preference shares
The voting right attaching to financing preference shares should be based on the fair value of the capital
contribution.
4.3.5 Publication of institutional investors’ voting policy
Institutional investors (pension funds, insurers, investment institutions and asset managers) should post annually, in any event on their website, their policy on the exercise of the voting rights for shares they hold in listed
companies.
4.3.6 Report on the implementation of institutional investors’ voting policy
Institutional investors should report annually, on their website and/or in their management report, on how
they implemented their policy on the exercise of the voting rights in the relevant financial year. In addition,
they should report on their website at least once per quarter on whether and, if so, how they have voted as
shareholders at general meetings. This report will be posted on the website of the institutional investor.
Principle 4.4 Issuing depositary receipts for shares
Depositary receipts for shares can be a means of preventing a majority (including a chance majority) of
shareholders from controlling the decision-making process as a result of absenteeism at a general meeting.
Depositary receipts for shares should not be issued as an anti-takeover protective measure. The board of the
trust office should issue voting proxies under all circumstances and without limitations to all depositary receipt
holders who request this. The holders of depositary receipts so authorised can exercise the voting right at
their discretion. The board of the trust office should have the confidence of the holders of depositary receipts.
Depositary receipt holders should have the possibility of recommending candidates for the board of the trust
office. The company should not disclose to the trust office information which has not been made public.
4.4.1 Trust office board
The board of the trust office should have the confidence of the holders of depositary receipts and operate
independently of the company that has issued the depositary receipts. The trust conditions should specify in
what cases and subject to what conditions holders of depositary receipts may request the trust office to call a
meeting of holders of depositary receipts.
4.4.2 Appointment of board members
The board members of the trust office should be appointed by the board of the trust office, after the job
opening has been announced on the website of the trust office. The meeting of holders of depositary receipts
may make recommendations to the board of the trust office for the appointment of persons to the position of
board member. No management board members or former management board members, supervisory board
members or former supervisory board members, employees or permanent advisers of the company should
be a member of the board of the trust office.
4.4.3 Board appointment period
A person may be appointed to the board of the trust office for a maximum of two four-year terms, followed by
a maximum of two two-year terms. In the event of a reappointment after an eight-year period, reasons should
be given in the report of the board of the trust office.
4.4.4 Attendance of the general meeting
The board of the trust office should attend the general meeting and should, if desired, make a statement
about how it proposes to vote at the meeting.
4.4.5 Exercise of voting rights
In exercising its voting rights, the trust office should be guided primarily by the interests of the depositary
The Dutch Corporate Governance Code | December 2016 PAGE 39
receipt holders, taking the interests of the company and the enterprise affiliated with it into account.
4.4.6 Periodic reports
The trust office should report periodically, but at least once per year, on its activities. The report should be
posted on the company’s website.
4.4.7 Contents of the reports
The report referred to in best practice provision 4.4.6 should, in any event, set out:
- the number of shares for which depositary receipts have been issued and an explanation of changes to
this number;
- the work carried out in the financial year;
iii. the voting behaviour in the general meetings held in the financial year;
- the percentage of votes represented by the trust office during the meetings referred to under iii.;
- the remuneration of the members of the board of the trust office;
- the number of meetings held by the management and the main items dealt with in them;
vii. the costs of the activities of the trust office;
viii. any external advice obtained by the trust office;
- the (other) positions held by the board members of the trust office; and
- the contact details of the trust office.
4.4.8 Voting proxies
The board of the trust office should issue voting proxies under all circumstances and without limitations to all
depositary receipt holders who request this. Each depositary receipt holder may also issue binding voting
instructions to the trust office in respect of the shares which the trust office holds on his behalf.
The Dutch Corporate Governance Code | December 2016 PAGE 41
CHAPTER 5.
ONE-TIER GOVERNANCE STRUCTURE
Principle 5.1 One-tier governance structure
The composition and functioning of a management board comprised of both executive and non-executive
directors must be such that the supervision by non-executive directors is properly carried out, and independent supervision can be assured.
5.1.1 Composition of the management board
The majority of the management board is made up of non-executive directors. The requirements for independence stipulated in best practice provisions 2.1.7 and 2.1.8 apply to the non-executive directors.
5.1.2 Chairman of the management board
The chairman of the management board chairs the meetings of the management board. The chairman of the
management board should ensure that the management board as a collective, as well as the management
board’s committees, have a balanced composition and function properly.
5.1.3 Independence of the chairman of the management board
The chairman of the management board should not be an executive director or former executive director of
the company, and should be independent within the meaning of best practice provision 2.1.8.
5.1.4 Composition of committees
The committees referred to in best practice 2.3.2 should be comprised exclusively of non-executive directors.
Neither the audit committee nor the remuneration committee can be chaired by the chairman of the management board or by a former executive director of the company.
5.1.5 Accountability for supervision by non-executive directors
The non-executive directors render account of the supervision exercised in the past financial year. They
should, as a minimum, report on the items referred to in best practice provisions 1.1.3, 2.1.2, 2.1.10, 2.2.8,
2.3.5 and 2.4.4 and, if applicable, the items referred to in best practice provisions 1.3.6 and 2.2.2.
The Dutch Corporate Governance Code | December 2016 PAGE 42
ENTRY INTO FORCE
- This Code will come into force as of the financial year starting on or after 1 January 2017. The
Committee recommends that companies submit to the general meeting, as a separate agenda item
in 2018, a chapter in the report of the management board broadly outlining the corporate governance structure and compliance with this Code.
- Where principles or best practice provisions in this Code, compared with the Code adopted in
2008, require changes to rules, regulations, procedures or other written records, a company will be
deemed to be compliant with this Code if such changes have been implemented no later than 31
December 2017.
- The term of appointment for supervisory board members stipulated in best practice provision 2.2.2 has
changed compared with the Code adopted in 2008. Best practice provision 2.2.2 does not apply:
- to supervisory board members who, as of the date of the entry into force of this Code, have
already held office for more than eight years, provided that best practice provision III.3.5 of the
Code adopted in 2008 is being complied with; and
- to supervisory board members who are to be nominated for reappointment for a third four-year
term at a general meeting in 2017, provided that best practice provision III.3.5 of the Code
adopted in 2008 is being complied with.
The Dutch Corporate Governance Code | December 2016 PAGE 43
EXPLANATORY NOTES TO THE CODE
Preamble – Scope of the Code
The Code does not apply to investment institutions or undertakings for collective investment in transferable
securities (UCITS) which are members of a group under central management, where this central management
falls within the scope of the Code.
1.1 Long-term value creation
Management board members and supervisory board members are expected to act in a sustainable manner
by focusing on long-term value creation in the performance of their work. Long-term sustainability is the key
consideration when determining strategy and making decisions, and stakeholder interests are taken into
careful consideration. Long-term value creation also requires awareness and anticipation of new developments in technology and changes to business models. Maintaining a sufficient level of awareness of the wider
context in which the enterprise affiliated with the company operates, contributes to continuing success, and is
therefore in line with the company’s interests.
There may be situations in which a focus on the long term is no longer relevant for a company – for example in
the event of a bankruptcy or takeover – and the company’s reason for existing ceases. In these situations, the
company should comply with the Code by explaining why long-term value creation is not, or is no longer, a
priority to be pursued.
1.1.1 Strategy for long-term value creation
The examples of relevant aspects of doing business specified in best practice provision 1.1.1, section vi reflect
the topics listed in the EU Directive on disclosure of non-financial and diversity information.1
In addition to the
topics listed in the Directive, section vi includes ‘the chain within which the enterprise operates’. The OECD
Guidelines for Multinational Enterprises provide guidance for companies with international operations in
fulfilling their supply chain responsibility.
1.1.2 Involvement of the supervisory board
‘Formulating the strategy’ also encompasses making material changes to the strategy.
1.2 Risk management
The risks to be identified and managed under Principle 1.2 comprise both internal and external risks, including the remuneration structure for management board members and employees.
The internal risk management and control systems must be tailored to the company in question. This makes it
possible for smaller listed companies to use less extensive procedures.
1.3.6 Absence of an internal audit department
The basic principle is that companies should establish their own internal audit department to undertake the
internal audit function. In the event of a departure from this principle, for example if the size of the company
is not suited to this, outsourcing may be an appropriate alternative. In case of outsourcing, the supervisory
board and the audit committee will remain involved in the execution of the internal audit function, as stipulated in best practice provisions 1.3.1 to 1.3.5, inclusive.
1 Directive 2014/95/EU of the European Parliament and of the Council of 22 October 2014 amending Directive 2013/34/EU
as regards disclosure of non-financial and diversity information by certain large undertakings and groups (OJEU 2014, L 330).
The Dutch Corporate Governance Code | December 2016 PAGE 44
1.4.2 Accountability in the management report
Pursuant to best practice provision 1.4.2, the management board describes, in the management report, the
design and operation of the internal risk management and control systems. Pursuant to section i, the company’s annual report must include a description of the main risks it encounters in carrying out its tasks. Rather
than providing an exhaustive list of all possible risks, the company should identify the main risks it faces. The
description of the main risks in section i is in keeping with the risk section prescribed in Section 2:391 of the
Dutch Civil Code and the description of essential risks under Section 5:25c of the Financial Supervision Act
(Wet op het financieel toezicht/Wft).
As regards best practice provision 1.4.2, section ii, it would be logical for the management board to indicate
in the description of the design and operation of the internal risk management and control systems what
framework or criteria (e.g. the COSO framework for internal control) were used in assessing the internal risk
management and control system.
1.4.3 Statement by the management board
Pursuant to best practice provision 1.4.3, the management board should make a statement confirming that it has
provided sufficient insight into the risks, including risks that are foreseen in the future that will be relevant to the
continuity of the company. This includes both material shortcomings that have been identified and material risks
and uncertainties that can reasonably be foreseen at the time at which the statement is being issued.
1.5.1 Duties and responsibilities of the audit committee
The majority of the audit committee’s duties already arise out of the relevant legislation, and are not repeated
in the Code. Specific reference is made to Article 39 of the EU Statutory Audits Directive (Directive 2006/43/
EC).2
This article will be implemented in Dutch legislation: Article 2:2 of the Decree of 26 July 2008.3
The
requirements for the composition and available expertise in relation to the preparation and auditing of the
financial statements will also be included in Article 2 of this decree.
In some cases, especially for companies operating in the financial sector, a risk committee is established in
addition to the audit committee. Article 39, paragraph 4 of the above-mentioned Directive stipulates that, if
another body has been designated to perform the functions of the audit committee, the management report
must state which body carries out those functions and how that body is composed.
2.1.3 Executive committee
The term ‘executive committee’ refers to a committee which is closely involved in the decision-making of
the management board, and which, in addition to members of the management board, may also include
members of senior management.
Best practice provision 2.1.3 and those other provisions that mention the term executive committee also apply in
cases where a term other than ‘executive committee’ is being used, but the function is essentially the same.
2.1.4 Expertise
It is important that sufficient expertise is available within the management board and the supervisory board to
identify opportunities and risks that may be associated with innovations in business models and technologies
in a timely manner.
2 Directive 2006/43/EC of the European Parliament and of the Council of the European Union of 17 May 2006 on statutory
audits of annual accounts and consolidated accounts, amending Council Directives 78/660/EEC and 83/349/EEC and repealing Council Directive 84/253/EEC (OJEU L 157 of 9 June 2006, p. 87). Directive 2006/43/EC was last amended by Directive
2014/56/EU of 16 April 2014 (OJEU 2014, L 158).
3 Decree of 26 July 2008 implementing Article 41 of Directive 2006/43/EC of the European Parliament and of the Council of
the European Union of 17 May 2006 on statutory audits of annual accounts and consolidated accounts, amending Council Directives 78/660/EEC and 83/349/EEC and repealing Council Directive 84/253/EEC (Bulletin of Acts and Decrees 2008, 323).
The Dutch Corporate Governance Code | December 2016 PAGE 45
The requirement for financial expertise within the supervisory board is provided for in law. Pursuant to the EU
Statutory Audits Directive (Directive 2006/43/EC),4
at least one member of the audit committee must have
competence in the preparation and auditing of the financial statements. This article will be implemented in
Dutch legislation: Section 2:3 of the Decree of 26 July 2008.5
2.1.5 Diversity policy & 2.1.6 Accountability about diversity
Diversity is also addressed in the EU Directive on disclosure of non-financial and diversity information.6
This
Directive will be implemented in Dutch legislation. However, the Code goes further than the Directive. Best
practice provision 2.1.5 stipulates that companies must explain what measures have been and will be taken
in the event that the diversity policy’s objectives are not achieved. In addition, the scope of the Directive is
limited to large companies, while the Code is applicable to all companies.
The legal target figure of at least 30% male/female diversity in the management board and the supervisory
board lapsed as of 1 January 2016. Legislation is currently pending to once again establish the legal target
figure in Section 2:166 of the Dutch Civil Code until 2020.7
2.1.7 Independence of the supervisory board
Best practice provision 2.1.7, section ii, stipulates that a majority of the supervisory board members should
be independent. This requirement may not be undermined by voting ratios within the supervisory board if
an arrangement is being used that allows for multiple voting rights under Section 2:140(4) of the Dutch Civil
Code.
2.2.2 Appointment and reappointment periods – supervisory board members
The effectiveness of the supervisory board is determined by its composition, with the size, expertise, diversity
and independence of the supervisory board being decisive factors. When reappointing supervisory board
members, a critical assessment will be made as to whether the relevant supervisory member maintains an
appropriate distance in undertaking their supervisory activities, and whether the required knowledge and
expertise are represented within the supervisory board. The basic principle is that supervisory members are
appointed for two four-year periods. Any subsequent reappointment must be accounted for in the report of
the supervisory board.
2.2.3 Early retirement
This provision does not change the fact that, in the case of companies not having statutory two-tier status
(structuurregime), the general meeting may suspend or dismiss supervisory board members at any time.
Under the provisions on companies having statutory two-tier status, the general meeting of such companies
may pass a resolution of no confidence in the entire supervisory board. The adoption of such a resolution
implies the immediate dismissal of all the members of the board.
2.2.6 Evaluation of the supervisory board & 2.2.7 Evaluation of the management board
The aim of the reviews is to assess the functioning of the members of the supervisory board and management board. A periodic review can enhance the quality of the functioning of the supervisory board and the
management board, and help to ensure that the right choices are made when preparing appointments or
reappointments of supervisory and management board members, for example where the appropriate composition of the boards, or the appropriate levels of diversity in their composition are concerned. The manner
in which the review is carried out is a matter for the company and may therefore differ from one company
4 Ibid. footnote 2.
5 Ibid. footnote 3.
6 Ibid. footnote 1.
7 Parliamentary Papers II 2015–2016, 34 435, No. 2.
The Dutch Corporate Governance Code | December 2016 PAGE 46
to another. The review can take place collectively, on an individual basis between the chairman and each
member separately, or through the input of an external adviser. Each supervisory board member and management board member should be able to confidentially express their views during the review.
2.3.5 Committee reports
These reports provide the content on the main items discussed at the committee meetings.
2.4 Decision-making and functioning
Management board members are required to actively provide information to the supervisory board. By the
same token, supervisory board members are required to actively gather the information they need in order to
be able to perform their supervisory role effectively.
2.5 Culture
‘Culture’ can be defined as the values that implicitly and explicitly inform employees’ actions and the resulting
behaviour. Culture is a frame of reference on the basis of which one’s own actions and those of others are
reviewed. A healthy culture helps to prevent misconduct and irregularities.
The Code addresses culture, but is not prescriptive as to exactly what the culture is or should be. It is up to the
management board to create the company’s culture. When doing so, the existence of different subcultures
within the enterprise should be taken into account.
2.6 Misconduct and irregularities
Principle 2.6 and the associated best practice provisions deal with the reporting of suspicion of misconduct
or irregularities. Pursuant to the House for Whistleblowers Act (Wet huis voor klokkenluiders), an employer
who usually employs at least fifty people is obliged to establish a procedure for dealing with reports of suspected misconduct within their organisation. This act is applicable to suspected misconduct that jeopardises
a social interest.8
The scope of the principle and the best practice provisions in the Code is wider, as these
also deal with the reporting of irregularities.
The opportunity to file reports applies to all parts of the enterprise affiliated with the company, regardless of
whether the enterprise’s activities take place in the Netherlands or abroad.
2.7 Preventing conflicts of interest
Book 2 of the Dutch Civil Code9
defines a conflict of interest as being a situation in which, in a process of consultation and decision-making, the direct or indirect personal interests of a management board member or supervisory board member conflict with the interests of the company. The term ‘conflict of interest’ in the Code
is aimed at preventing conflicts of interest in general, regardless of whether consultation or decision-making
is being undertaken. In addition, the legal provisions on conflicts of interest have been developed in greater
detail in the Code.
2.8.3 Management board’s position on a private bid
A private bid is not deemed to be ‘serious’ if it is clear that the bidder does not have sufficient financial
resources to finance the bid or if no right-thinking and sensible shareholder would wish the
management board to accept the bid, for example because the bid price does not reflect the true value
or the market value of the business unit or the participating interest.
8 Section 1(d), House for Whistleblowers Act.
9 Article 2:129, paragraph 6 of the Dutch Civil Code and Article 2:140, paragraph 5 of the Dutch Civil Code.
The Dutch Corporate Governance Code | December 2016 PAGE 47
3.1.2 Remuneration policy & 3.2.1 Remuneration committee’s proposal
‘Scenario analyses’ are defined as analyses, conducted by the supervisory board when formulating the remuneration policy and before determining the remuneration of individual management board members, of the
possible results of the variable remuneration components and the way in which this affects the remuneration
of the management board members. The supervisory board will establish whether the scenario analyses result
in appropriate levels of remuneration, and whether measures are required to limit the remuneration.
3.2.2 Management board members’ views on their own remuneration
The management board members’ views on their own remuneration are intended for the remuneration committee, and should not form part of the account given of the implementation of the remuneration policy.
3.4.1 Remuneration report
The legal requirements for the remuneration report are stipulated in Section 2:383c to Section 2:383e, inclusive of the Dutch Civil Code. Best practice provision 3.1.4, section iv stipulates that information about the pay
ratios within the company and its affiliated enterprise should form part of the remuneration report. The ratio
between the remuneration of the management board members and that of a representative reference group
determined by the company must be stated, along with whether there have been any changes in these ratios
compared to the previous financial year.
Material benefits awarded in exceptional cases should also be included in the remuneration report.
4.1.9 External auditor’s attendance
The chairman of the general meeting should ensure that there is an opportunity to question the external
auditor. The presence of the external auditor at the general meeting does not detract from the general duty
of the management board and the supervisory board to render account to the general meeting or their duty
to provide all requested information to the general meeting (unless there is an important reason for not doing
so). The external auditor can be questioned only in respect of his audit and audit report. Primary responsibility
for the content of the financial statements rests with the management board. It follows that the external
auditor should participate in the preparation of the general meeting. Reference is made to NBA (Royal
Netherlands Institute of Chartered Accountants) Practice Note 1118 on the position of the external auditor in
the general meeting.
4.2.1 Substantiation of invocation of overriding interest
Section 2:107(2) of the Dutch Civil Code stipulates that the management board and the supervisory board
must provide the general meeting with all the information desired, unless this is contrary to an overriding
interest on the part of the company. In addition to this, best practice provision 4.2.1 stipulates that reasons for
the invocation of an overriding interest must be given.
4.3.1 Voting as deemed fit
In so far as a shareholder uses the services of a voting adviser before exercising his voting right, it is
logical that he should check that the adviser provides balanced advice based on fair consideration of all the
issues.
4.3.4 Voting right on financing preference shares
Best practice provision 4.3.4 is intended to apply to future issues of financing preference shares. However,
the management board and supervisory board may agree with the holders of the existing financing preference shares to adjust the present control of the financing preference shares.
The Dutch Corporate Governance Code | December 2016 PAGE 48
5.1 One-tier governance structure
The Code is focused on companies with a two-tier governance structure, but also applies to companies with
a one-tier governance structure. In addition to Chapters 1 to 4 inclusive, Chapter 5 contains one principle and
five best practice provisions which apply specifically to companies with a one-tier governance structure.
Those provisions in the Code which pertain to supervisory board members also apply to non-executive directors, without prejudice to the other responsibilities these non-executive directors may have. Where this is not
possible, the ‘comply or explain’ principle applies.
5.1.1 Composition of the management board
The independence requirements for supervisory board members apply in full to non-executive directors. Best
practice provision 2.1.8, section i stipulates that a supervisory board member is not independent if, in the
five years prior to the appointment, they have been an employee or member of the management board. For
companies with a one-tier management structure, ‘management board member’ means ‘executive director’.
5.1.2 Chairman of the management board
Those duties which in Chapters 1 to 4 inclusive of the Code were specifically allocated to the chairman of the
supervisory board, in a company with a one-tier governance structure fall within the remit of the chairman of
the management board.
5.1.4 Composition of committees
It is important that a well-considered choice is made with regard to the reporting lines of the committees.
5.1.5 Accountability for supervision by non-executive directors
The account rendered by non-executive directors can form part of the management report, or be included in
a separate report. The report is published as an appendix to, or at the same time as, the financial statements.
The Dutch Corporate Governance Code | December 2016 PAGE 49
The Dutch Corporate Governance Code | December 2016 PAGE 50
Members
prof. dr. B.E. Baarsma
Director of knowledge Development Rabobank
Professor of market mechanism and competitive economy at the
University of Amsterdam
Crown-appointed member of the Social and Economic Council of
the Netherlands (SER)
drs. E.F. Bos
Chief executive officer at PGGM
Member of the supervisory council at Nederlandse Opera & Ballet
Non-executive director at Sustainalytics Holding BV
- P.J. Gortzak
Head of Policy Group Strategie en Beleid APG
Member of the supervisory council at CFK
Member of the committee Evaluatie Politiewet
Member supervisory council at Nationaal Register
Member of the board at NL Sporter
- S. Hepkema
Chairman of the supervisory board at Wavin NV
Member of the supervisory board at SBM Offshore NV
Member of the board at VEUO
R.J. van de Kraats RA
CFO & vice chairman at Executive Board Randstad Holding NV
Non-executive Director at OCI NV
Member of the supervisory board at Schiphol Group
prof. mr. H.M. Vletter-van Dort
Professor of Financial Law and Governance at Erasmus School of Law
Chairman of the supervisory board at Intertrust NV
Member of the supervisory board at NN Group NV
Chairman of the SRB’s Appeal Panel
Member of the board at IVO Center for Financial Law &
Governance
COMPOSITION
MONITORING COMMITTEE
CORPORATE GOVERNANCE CODE
Chairman
prof. dr. J.A. van Manen
Partner at Strategic Management Centre
Vice Chairman of the supervisory board at De Nederlandsche Bank NV
Member of the supervisory board at Bornet Groep Rotterdam BV
Member of the board at Stichting Maatschappij en Veiligheid
Member of the board at Stichting Endowment Museum Boijmans
Van Beuningen
Secretariat
- I.L.J.M. Heemskerk
Ministry of Economic Affairs, Directorate of Entrepreneurship
- van Kalleveen, MA
Ministry of Economic Affairs, Directorate of Entrepreneurship
- C.M. Molkenboer
Ministry of Economic Affairs, Directorate of Entrepreneurship
Advisors
- dr. M. Meinema en mr. L.D.V.M. Kompier
Directorate of Legislation, Ministry of Security and Justice
- M. Rookhuijzen, LLM
Directorate of Financial Markets, Ministry of Finance
The Dutch Corporate Governance Code | December 2016 PAGE 51
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