The Dutch corporate governance code: Principles of good corporate governance and best practice provisions.
The Code applies on and after financial years beginning 1 January 2004. The Code was issued by the Tabaksblat Corporate Governance Committee on 9 December 2003.
Listed Companies on government recognized stock exchange
The Code is based on the principle accepted in the Netherlands that a company is a long-term form of collaboration between the various parties involved. The management board and supervisory board exist alongside each other and have overall responsibility for weighing up the interests of different stakeholders and ensuring the continuity of the enterprise. The Code has five sections:
I. Compliance with and enforcement of the Code,
II. The Management Board,
III. The Supervisory Board,
IV. The shareholders and general meeting of shareholders,
V. The audit of the financial reporting and the position of the internal auditor function and of the external auditor
Listed companies are obliged to state in their annual reports whether, and if so why and to what extent they do not apply the best practice provisions of the Code. This is known as the 'comply or explain' principle. Soon the comply or explain principle will also have statutory status and will be enforceable in a court of law (in a provision of Book 2 of the Netherlands Civil Code).
The Code follows concerns over excessive executive remuneration packages and corporate scandals e.g. Euro 970m loss at Ahold -the Dutch grocery group. It aims to build more confidence in Dutch corporate management by strengthening the 'checks' - the supervision of the management board and the 'balances' - the distribution of influence between the management board, supervisory board and the shareholders.
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