The Dutch Corporate Governance Code was first adopted in 2003. The Code contains principles and best practice provisions that regulate the relationship between the management board, the supervisory board and the shareholders of a company. The Code applies to all companies with registered offices in the Netherlands whose shares or depositary receipts for shares have been admitted to trading on a regulated market or a comparable system and to all large companies with registered offices in the Netherlands (balance sheet value > € 500 million) whose shares or depositary receipts for shares have been admitted to trading on a multilateral trading facility or a comparable system.
Many other companies use the Code as a source of inspiration and voluntarily choose to apply the Code. Throughout the years, the Code has increasingly gained an important position. In the eyes of the Supreme Court of the Netherlands, the Code is an expression of the general legal belief prevailing in the Netherlands. Therefore, in any possible lawsuit – including lawsuits against companies to whom the Code does not apply – value might be assigned to the principles and best provisions in the Code. It is therefore important for all company directors to be aware of those principles and best practice provisions.
Just a few months ago, the responsible committee published an updated version of the Code. The most important amendments are about sustainable long-term value creation, the stakeholders of the company and diversity and inclusion.
- Sustainable long-term value creation
The management board of the company is responsible for long-term value creation by the company. This means that the board is expected to take into account the impact of the actions of the company on people and the environment. To that end, de board weighs the relevant interests of the stakeholders of the company. With regard to sustainable long-term value creation, the Code mentions that awareness and anticipation of developments in new technologies is required. This includes cybersecurity, data protection and a responsible use of new technologies.
A stakeholder is an individual or organisation who can influence or is being influenced by the functioning of the company. To ensure that the interests of the stakeholders are considered, the management board needs to draw up an outline policy for effective dialogue with the stakeholders with regard to at least the sustainability aspects of the company’s strategy. The company needs to facilitate this dialogue, unless it is not in the interest of the company.
- Diversity and inclusion
Companies need to draw up a policy on diversity and inclusion for the entire company. The policy should contain specific, appropriate and ambitious targets in order to achieve a good balance in gender diversity and other aspects that are relevant for the company. This applies to the composition of the management board, the supervisory board and a category of employees in managerial positions. The category of employees needs to be determined by the management board.
In short: besides the law, it is important to be aware of the significance of the Corporate Governance Code and its contents. Would you like to know more about the Dutch Corporate Governance Code or do you have any questions about the aforementioned?
Feel free to contact Eveline Bakker, attorney-at-law, or Jarno de Graaf, legal assistant