Revised Dutch Corporate Governance Code published

NL Law

The Dutch Corporate Governance Code Monitoring Committee (the Committee) adopted the revised Dutch Corporate Governance Code (the 2022 Code) on 20 December 2022. 

In February this year, the Commission released a proposal for a revised Code (the Consultation Document) for consultation. The main thrust of the proposal concerned a stronger commitment to sustainability and ESG, a greater focus on shareholder stewardship, a more comprehensive regulation of diversity and inclusion, and enhanced attention to behaviour and culture.

Compared with the Consultation Document, the 2022 Code made only a limited number of changes. The Consultation Document regards an ESG strategy as part of a vision of long-term value creation, while the 2022 Code states that directors of listed companies should focus on sustainable long-term value creation and should take into account the effects of the company's and its affiliated enterprise’s actions on people and the environment and, to this end, should weigh the relevant interests of stakeholders. The term 'stakeholders' has been expanded in the explanatory notes to principle 1.1 to include groups and individuals who may be affected by the achievement of the companies' objectives. The 2022 Code also pays more explicit attention to digitalisation and cybersecurity. According to best practice provision 1.1.1, the impact of new technologies and changing business models should in any case also be considered when shaping the strategy. Also new is the explanatory note to best practice provisions 2.1.4 and 2.4.6, which states that the management board and the supervisory board should have in-depth knowledge of and experience with the themes of sustainability and digitalization, and that it must be ensured that they receive sufficient training and education in these areas. In best practice provision 2.1.8 on the independence of supervisory board members, some ambiguities have been removed. The explanatory note to principle 4.1 further clarifies that a 'comply or explain' approach does not apply to the management board and the supervisory board insofar as the best practice provisions of the 2022 Code are aimed at shareholders, and the management board and supervisory board cannot exert influence on their compliance. The share lending rule in principle 4.3.8 has been somewhat simplified. Stibbe will study the 2022 Code and report on these changes in due course.

The 2022 Code takes effect from the financial year starting on or after 1 January 2023. Listed companies in the Netherlands must comply with the 2022 Code from that date onwards.

Listed companies in the Netherlands will be deemed to comply with the 2022 Code if they have implemented the regulations, procedures or other written commitments by 31 December 2023, as far as they need to be amended as a result of changes to principles or best practice provisions in the 2022 Code.

The Committee recommends that at the annual general meeting in 2024, (i) the chapter in the 2023 management report on the outline of the corporate governance structure and (ii) compliance with the 2022 Code be submitted to the general meeting as a separate agenda item for discussion.

The Commission has not yet made an English translation of the 2022 Code available. As soon as such a translation is available, it will be made accessible via the corporate governance portal on Stibbe's website.

For more information, please contact one of your Stibbe contacts.