A consultation document which includes a proposal to revise the Corporate Governance Code was published by the Dutch Corporate Governance Code Monitoring Committee on 3 August 2016. This proposal entails the application of the Code to one tier boards and is a follow-up to the Committee's comprehensive proposal for revision of the Code which was published in February 2016.
Additions to the earlier proposal
To date, the Code is virtually exclusively ascribed to two tier boards (consisting of a management board and a separate supervisory board). A one tier board consists of both executive directors and non-executive directors having seat in one and the same board. Due to the emergence in practice of the one tier board , the necessity has arisen to adapt the Code on subjects such as composition and functioning of a one tier board. In this specific context, a principle and certain best practices are proposed. According to these provisions, a one tier board should in majority consist of non-executive directors. The non-executive directors should account for their supervision conducted over the past financial year in the annual report. Furthermore it is proposed that the chairman of the board should be an independent non-executive director, who will be responsible for the control and the proper functioning of the entire board and its board committees. It is also envisaged that the CEO is appointed from amongst the executive directors.
Guidance for applying the Code to one tier boards
Finally, the proposal offers guidance provisions on the use of the general principles of the Code. By providing guidance, the Committee follows the Financial Reporting Council in England that has already been working with guidance documents regarding its governance code for some time now. The guidance provisions provide an explanation on how companies should apply the (traditionally two tier board ascribed) Code provisions to a one tier board.
Publication final Code and guidance
The consultation period for this proposal ends on 28 September 2016. Van Doorne will make use of the opportunity to react to the consultation document. Publication of the final Code, in which both proposals will be integrated, is expected after the summer. The guidance will be published separately.