Corporate Governance 2022
On December 20, 2022, the updated Dutch Corporate Governance Code was published. This may affect articles of association and regulations for the board of directors and the supervisory board. The updated Code will take effect from the fiscal year beginning on or after January 1, 2023.
For which companies does it apply?
Although application of the Code is mandatory only for listed companies, many other companies choose to voluntarily apply the Code in their by-laws. Thus, the Code can be of interest to all directors and all legal entities.
The main changes to the Corporate Governance Code address:
(i) sustainable long-term value creation,
(ii) the role of stakeholders,
(iii) digitalization and
(iv) diversity and inclusion.
The Code contains principles and best practice provisions that focus on encouraging good governance. The Code governs relations between the management board, supervisory board and shareholders.
(i) Sustainable long-term value creation
Directors of companies should put long-term sustainability and sustainability at the center of their strategy and decisions. The board is expected to consider the effects of its actions on people and the environment. In doing so, it weighs the qualifying interests of stakeholders.
(ii) Stakeholders.
Stakeholders are groups and individuals who influence or can be influenced by the achievement of company objectives. The Code lists employees, shareholders and other capital providers, suppliers, customers and other stakeholders. It is up to the board to determine on a case-by-case basis who the relevant stakeholders are in order to engage in dialogue with them.
(iii) Digitization
The Code identifies the transformation our society is undergoing in terms of digitalization. In the list of risks that directors must identify, risks are specifically cited in the areas of cybersecurity, data protection and risks associated with new technologies and business models.
(iv) Diversity and inclusion
The Code emphasizes that for valuable discussion, diversity of views, dissent, as well as teamwork and cohesion are essential conditions. The Code expects a policy on diversity and inclusion. This should set concrete, appropriate and ambitious goals to achieve a good balance in gender diversity and in other areas relevant to the company. This applies to the composition of the executive and supervisory boards, but also to a category of employees in leadership positions (management team) to be determined by the board.
Next steps and action items
As of January 1, 2023, companies are expected to apply the updated Code and will be held accountable for compliance. We advise directors to review whether adjustments are needed to the organization's articles of incorporation and bylaws and other documents for application of the Code.
It is also interesting to note that Minister Adriaansens (Economic Affairs and Climate) has not yet appointed a new Monitoring Committee, because there is a trend to implement many subjects more rule-based (Legislation) rather than principle-based (Advice). Relevant themes are therefore often already enshrined in legislation.
For questions about the Corporate Governance Code and shaping bylaws and regulations for the board of directors and supervisory board, please contact Oscar Beumer(oscar@arcpeople.nl / 06-43445016)
ARC People can also support you in the design and execution of key functions in Audit, Risk and Compliance.