Areas of focus

1. Long-term value creation.

The Commission emphasises the relevance of long-term value creation for companies and their affiliated businesses. In this respect, the Commission proposes that management boards will be responsible for preparing and implementing a vision and strategy on long-term value creation. This strategy shall be subject to the approval of a company’s supervisory board. Furthermore, the management board of a company will, in each management report included in a company’s annual report, have to provide a substantive description of: (i) its vision for long-term value creation in the company; (ii) the strategy for accomplishing this; and (iii) how it has contributed to accomplishing this in the previous financial year.

2. Strengthening of risk management.

The Proposal aims to clarify the meaning and scope of proper risk management. Management boards will be responsible for the functioning and assessment of a company’s internal risk management and control systems. For such purposes management boards shall monitor the available systems and assess the effectiveness of their company’s risk management systems. The control of non-financial risks (e.g., influence on environment) will also form part of the risk management.

In addition, a company’s management board and external accountant are required to inform the supervisory board, without delay, of any material irregularity within the company, including irregularities with respect to the integrity of financial reporting.

3. Effective management and supervision.

One of the recurring areas of focus of the Commission is the increase of responsibility of supervisory directors and the professionalisation of the position of supervisory directors. Furthermore, the Commission proposes to have certain provisions of the Code that currently solely apply to supervisory directors apply to managing directors as well. The respective changes relate to, amongst other things: (i) composition and size of the respective corporate bodies; (ii) the process of managing directors’ and supervisory directors appointment, succession and assessment; (iii) and takeover situations.

Executive committee

The Commission considers it of relevance that companies with an executive committee are aware of the risks for corporate governance that are connected with having an executive committee. The Commission therefore proposes to introduce a new provision that focuses on safeguarding the necessary expertise and responsibility of management boards. Moreover, in their management reports, management boards will have to account for: (i) the choice of working with an executive committee; (ii) the role and composition of the executive committee; and (iii) the manner in which the executive committee and the supervisory board interact and communicate.


The Commission also focuses on diversity and proposes to have diversity requirements, as set out in a company’s diversity policy, apply to both the supervisory board and management board. The meaning and scope of the term ‘diversity’ should, according to the Commission, be interpreted broadly (i.e., encompassing gender, age nationality, expertise and independence). Therefore, the Commission proposes that management boards should, in the corporate governance declaration included in the company’s annual report, clarify: (i) the objectives of the company’s diversity policy; (ii) how the diversity policy has been implemented; and (iii) the outcome of the implementation of the diversity policy in the previous financial year.

Supervisory directors

In line with the Commission’s focus on long-term value creation, the Commission proposes to change the independence criteria for supervisory directors, i.e., more than one supervisory director may be independent if he/she (or a relative) possesses a shareholding of at least 10%. Furthermore, the Commission proposes to reduce the term of office of the supervisory directors from three periods of four years to two periods of four years.

Takeover situations

The Commission proposes to introduce a new provision dealing with takeover situations (i.e., a public offer on the shares of a company representing a significant value). In such takeover situations, a company is required to establish a special committee that shall be entrusted with the responsibility of the decision-making process. This special committee shall consist of managing directors and supervisory directors.

4. Incorporating culture explicitly into corporate governance.

In connection with the importance of the proper functioning of a company and its long-term value creation, the Commission is of the opinion that safeguarding a culture of openness and responsiveness is of significant relevance. For such purposes the Commission proposes that companies (i.e., their management boards) shall be responsible for giving content to the meaning of ‘culture’ by means of implementing a so-called code of conduct, in accordance with each company’s vision and strategy on long-term value creation.

5. Simplification of the remuneration provisions in the Code.

With reference to the monitoring reports on the Code from previous financial years, the Commission acknowledges a correlation between the Code’s current complex remuneration provisions and the relatively low compliance and lack of clarity surrounding these provisions. Therefore, the Commission proposes to greatly simplify the current provisions on executive remuneration, with the main points of focus being transparency and simplicity. In this respect, supervisory boards will be responsible for implementing the proposed changes.

Given the professionalisation of the position of supervisory directors, the Commission furthermore proposes to reflect the aforesaid in the remuneration of supervisory directors (i.e., by taking into account the time and responsibility inherent to this position and allowing for payment in shares to be part of the remuneration).

6. Shareholders and shareholders’ meetings.

The Commission has proposed to clarify certain rights and obligations of shareholders as set out in the Code, such as the response time. The Commission proposes to further clarify: (i) the meaning of a ‘change in strategy’; and (ii) the responsibility of the management board to explain to a shareholders’ meeting how it has used the response time to create a constructive dialogue with the shareholders and whether it has explored any alternative. Supervisory boards shall supervise whether the board has applied the response time efficiently and provide the management board with advice in this respect.

7. Quality requirements regarding the ‘comply or explain’ statements.

As the Code is applied on a ‘comply or explain’ principle, its functioning strongly relies on the quality of the explanation given. In light hereof, the Commission proposes to introduce minimum standards to ensure that due explanation is given by companies in the event of a deviation from any of the Code’s provisions. The minimum standards to be included in a company’s explanation include the following elements: (i) the manner in which the company has deviated from a provision; (ii) the reason for the deviation; (iii) in case a particular deviation continues in the next fiscal year, an obligation to report when the company expects to comply with the provision again; and (iv) an obligation to report the alternative measure(s) the company has decided to apply and an explanation on how the latter measure supports the company’s corporate governance.