As of September 7, 2017 the revised Dutch Corporate Governance Code, replacing the version that was adopted in 2008, has a statutory basis. In 2018, Dutch listed companies will need to report on their compliance with the revised Code during the financial year 2017, and explain the reasons for any deviations from it.
The Corporate Governance Code (the Code) provides guidance for effective relationships between the management board, the supervisory board and the company's shareholders. It's based on the 'comply or explain' rule. The Code applies to all Dutch companies whose shares, or depositary receipts for shares, have been admitted to trading on a regulated market, multilateral trading facility or a comparable system. If a Dutch company decides to deviate from one or more provisions of the Code, the management report must include an explanation for this.
The revised Code is applicable to the financial years commencing on or after January 1th, 2017 and can be downloaded here. The most important changes to the 2008 version of the Code are the focus on long-term value creation and the introduction of 'culture' as an element of good corporate governance. In our News Update of December 2016 we discussed the most important changes of the revised Code in comparison to the version from 2008.
In addition to providing a statutory basis for the revised Code, the change in law expands the audit of the corporate governance statement. The auditor must check the corporate governance statement in the same manner as the other parts of the management report. To do so, the auditor must review the corporate governance statement that has been prepared to assess if it complies with all requirements and whether it is consistent with the annual accounts. Moreover, the auditor must review the statement for any material inaccuracies, taking into account the information obtained during the audit of the annual accounts.