The Dutch Corporate Governance Code Monitoring Committee (the Committee) published its document for public consultation (the Consultation Document) on the proposed amendment of the Dutch Corporate Governance Code (the Code) today. The Consultation Document contains proposals for topical areas of the existing Code that was first published in 2003 and was most recently revised in 2008[1]. Highlights of the consultation document are presented in this Legal Flash. 

Long-term value creation

Against the background of different financial and economic offences in recent years where companies seemed to have lost sight of their long-term business objectives, the Committee indicates that long-term value creation for companies requires more emphasis. To this end, a new principle is proposed requiring Management Boards to formulate and implement a strategy aimed at creating long-term value, and Supervisory Boards to monitor the way in which Management Boards apply this strategy.

Strengthening risk management

The Committee has intensified its focus on risk management as the means to create value in the long-term. Whilst determining an effective risk management and control system (i.e. based on a pre-determined risk appetite and related control measures) continues to be the responsibility of the Management Board and the internal audit function remains responsible for the review of risk management effectiveness, the Committee proposes to strengthen the internal audit function further. The proposals in this regard include (i) an intensified involvement of the audit committee in the functioning of the internal auditor; and (ii) having the internal auditor report to both the audit committee and the external auditor on any shortcomings in the implementation of recommendations from the internal and external auditors. 

In respect of the audit committee, the Committee refers to the tasks as described in Directive 2014/56/EU [2] and goes slightly further than the Directive by suggesting additional tasks (e.g. monitoring the company’s  Management Board  in respect of its relationship with the company’s internal and external auditors). The Committee also proposes to clarify the subjects on which the audit committee is required to report to the Supervisory Board. Among these subjects are the audit committee’s expectations on whether the continuity of the company is secured for the upcoming twelve months. The Committee suggests that a similar statement is made by the Management Board in its in control statement. 

Effective management and supervision

In respect of companies with an Executive Committee, the Committee points at the risks when it comes to preserving effective corporate governance. The best practice provision that is introduced in this regard requires that Management Boards of companies with an Executive Committee to take the concept of checks and balances into account and report on e.g. the reason for having an Executive Committee, its role and composition and the way in which it interacts with the Supervisory Board.

In addition, the Consultation Document provides for the possibility for dependent persons (i.e. persons who hold 10% or more of the shares in the share capital of the company) to serve as members of the Supervisory Board, provided that the total number of such dependent Supervisory Directors is less than one half of the total number of Supervisory Directors. In respect of the other independence criteria, the number of independent directors remains unchanged and is limited to one person only. For the Supervisory Directors’ term of office, the Committee takes a maximum term of office of 2 times 4 years as a starting point in order to ensure there is sufficient distance between the Supervisory Directors and the Management Board. Reappointment after this period will be subject to certain criteria being satisfied. 

With a new best practice provision, the Committee also introduces the possibility for the Management and Supervisory Boards to set up a special commission in preparation of the corporate decision-making in a takeover situation. 


The Consultation Document introduces a new principle that imposes a responsibility on the Management Board to create a culture aimed at long-term value creation. In that regard, the Management and Supervisory Boards are expected to stimulate a culture of openness and approachability within the company and to facilitate contradiction between Management and Supervisory Directors in order to advance their mutual dialogue. In addition, it is expected from the Management Board that it establishes mutual values that contribute to long-term value creation within the company, that it adopts a Code of Conduct that is complied with at each level within the company and that it plays a prominent role in this through exemplary conduct.  

Remuneration policies

With reference to the recent development of laws and regulations on the remuneration of directors, the Committee wishes to limit the scope of remuneration-related principles and best practice provisions in the Code to cover only the way in which remuneration policies are adopted and how these policies are accounted for in the remuneration report. The Committee’s proposals open the possibility of Supervisory Directors being granted a share-based remuneration, whilst they also require supervisory directors' remuneration to be a reflection of the time spent and the responsibilities of their function in view of the increasing professionalization of the position.

Shareholders’ Meeting

Whilst the Consultation Document suggests only limited amendments in respect of the rights and responsibilities of shareholders as currently embedded in the Code, the Committee does propose to amend the provisions on certification as a takeover defense structure. According to the Committee, certification should in such case only be allowed if it contributes to long-term creation of value for the company.    

Quality of explanations

In a revised version of the Code, the Monitoring Committee wishes to give more direction to the implementation of the “comply-or-explain” approach and provide a more prominent place for the quality of explanations. Among the requirements that are suggested to improve the quality of explanations is to elaborate on any alternative measures that have been taken in order to achieve the objectives of the relevant best practice provision or a clarification on how such alternative measures contribute to good corporate governance.