The key changes relate to long-term value creation and the introduction of ‘culture’ as a component of effective corporate governance. In its overview of the changes the committee said: “Many of the incidents of misconduct that have occurred over the past years – such as accounting fraud, corruption and cartel activity – can be traced back to a business model that focused too much on achieving short-term gains.”
The revised code stipulates that the management board should focus on long-term value creation, and take the stakeholder interests that are relevant in this context into account. The way in which the management board goes about putting this into practice must be explained in the annual management report, and will be supervised by the supervisory board.
In relation to corporate culture the revised code states that companies should develop this in a way that is appropriate for the company, and to explain this in the management report. Having a healthy corporate culture will, the committee believes, deter corporate misconduct
and irregularities. The committee added that misconduct and irregularities feature more prominently and are discussed at greater length in the revised code.
The revised code has also introduced a chapter focused on the corporate governance of single tier boards. Although currently only 10% of Dutch companies have a one-tier board structure – as opposed to the traditional Dutch two-tier structure – the committee said that this number may increase in the future.
In respect of executive remuneration the revised code requires transparency about the ratios between the remuneration of management board members and employees. The committee has also changed the structure of the code – shifting it from a functional to thematic structure, with the code explaining who fulfils which role within these areas.
The committee said: ” The thematic structure provides greater insight into the interaction and relationship between the management board and the supervisory board, and encourages an integrated approach to the topics. In addition, the Code must be viewed in the context of the relevant legislation and case law on corporate governance. The key principle in this revision was to avoid overlap with the relevant legislation as much as possible, and be in line with international practice.“