Actualidad Holland

Corporate governance principles for listed companies

The Dutch Corporate Governance Code 2016

The Corporate Governance Code Monitoring Committee has recently published a draft of the new version of the Dutch Corporate Governance Code. The initial Code from 2003 (reformed in 2008) was created by the market and not by the regulatory bodies.  

The Committee has been gathering feedback from the stakeholders -corporations, markets and regulators- in order to reform the Code, adapting to the new standards of corporate governance ensuing on the worldwide financial crises.

The Code follows the comply or explain principle and must be referred to in listed companies annual reports. Its main focus is on the following points:

  • Long-term value creation
  • More robust risk management
  • More effective supervision and management systems
  • A longer-term culture as an essential element in corporate governance
  • Transparent, simplified design of remuneration policy
  • Better protection of shareholders

The proposed reform of the Code is structured as indicated in the following chart:

1. Long-term value creation

Long-term sustainability

  • The Board of Directors is responsible for formulating and approving the corporate strategy with a long-term focus; and the Supervisory Board is responsible for supervising that this is applied.

Risk management

  • Entities must have suitable risk and internal control mechanisms. The Board of Directors is responsible for determining risk appetite and how to manage risks associated to the entities’ activity.

Internal Audit

  • The Audit department must assess the effectiveness of the risk management and control systems. The Board of Directors is responsible for its performance.
  • The Supervisory Board will supervise the Internal Audit activity and will be in regular contact with the head of the department.


  • The Board of Directors is accountable for ensuring that the design and activity of the risk-management and internal-control mechanism are effective. The Supervisory Board oversees their activity, with the support of the Audit Committee, for suitable decision making.

Appointment and assessment of external auditor

  • The Supervisory Board must propose the appointment of the external auditor to the General Meeting, taking into account the recommendations from the Audit Committee, and is responsible for supervising its activity.

Audit Committee

  • The Audit Committee and the external auditor must discuss the observations in the auditors’ paragraphs of emphasis.
  • It should meet at least once a year without the presence of the Board of Directors.
  • The Board of Directors and the Supervisory Board will maintain regular contact with the external auditor.  

2. Effective management and supervision

Composition and size. Gender diversity

  • The Board of Directors and the Supervisory Board must comprise members with experience, skills and knowledge of the corporation’s activity.
  • Supervisory Board:
      • Should design a diversity policy regarding members of both boards, which must ensure gender diversity with a minimum of 30% female board members.
      • A minimum of one of its members must be an independent director.
      • Must be chaired by an independent director.
      • The entity may designate supervisory directors holding a minimum of 10% of the company shares, up to a maximum that may not be more than half the total members of the board.
  • The entity must also have an Executive Committee to support both Boards.

Appointment, succession and assessment

  • Members of the Board of Directors and the Supervisory Board will be appointed for a maximum term of four years, and may be re-elected for a further maximum four years in office.
  • Members of the Supervisory Board may be re-elected for a further two years after their second term of office in exceptional cases.
  • The Supervisory Board must ensure that the entity has a succession plan for members of both boards.
  • The Supervisory Board:
      • Will ensure that its members receive an induction plan on joining the entity.
      • Will carry out yearly assessments of the Board of Directors and its individual members.
      • Will assess its own activity, that of its members and of the operation of its Board Committees that may be set up to support it.
      • Will ensure there is a succession plan for the members of the Board of Directors and the Supervisory Board.

Support Committees for the Supervisory Board

  • The Supervisory Board may appoint committees to support it in the performance of its duties.
  • If the Board comprises more than four members, it must appoint an audit committee, an appointments committee and a remuneration committee.
  • Half the seats on the committees must be held by independent directors.
  • Committees may not be chaired by the chair of the Supervisory Board or by a member of the Board of Directors.

Conflicts of Interest

  • The Supervisory Board will be responsible for making decisions on the prevention and management of conflicts of interest relating to members of the Board of Directors and the Supervisory Board.

3. Remuneration

Board of Directors remuneration

  • Must be transparent and promote the creation of long-term value for the entity
  • The Supervisory Board will determine the remuneration, after submission of a report from the Remuneration Committee, and following the policy approved by the General Meeting of Shareholders. The Supervisory Board will also determine the remuneration of the members of the Executive Committee, after consultation with the Board of Directors.

Supervisory Board remuneration

  • The Supervisory Board will propose its remuneration to the General Meeting. It must promote suitable performance of its duties and not depend directly on the earnings of the corporation.
  • Remuneration should reflect the time members spend on performing their duties.


  • The remuneration report (published on the corporation’s website) must contain a clear, transparent account of the remuneration policy of the Supervisory Board members.

4. General Meeting of Shareholders

  • The General Meeting will deal with actions taken by the members of the Board of Directors and Supervisory Board that play a fundamental role in the corporation’s results.
  • Shareholders should participate actively in the General Meeting decision-making process.
  • The Board of Directors and the Supervisory Board must ensure that the shareholders receive all information necessary for the General Meetings.
  • The external auditor will attend the General Meetings to report on the veracity of the financial statements.

The Code also contains a proposal on technical changes that may be made as a consequence of the adoption of new provisions.