Most Popular Article in Netherlands, November 2016
The Dutch Corporate Governance Code Monitoring Committee
published a consultation document on 3 August 2016 with a
proposal for the application of the Corporate Governance Code to
one-tier boards. This one-tier board proposal follows the
comprehensive proposal by the Committee of 11 February 2016 for a
revision of the Corporate Governance Code, which mainly addresses
two-tier board companies.
Contrary to the Committee's earlier communication, the
one-tier board proposal does not contain a separate code for
one-tier boards. The Committee proposes to only amend and expand
the current principle and best practice provisions that apply to
one-tier boards. The Committee also offers guidance on the
applicability of the Code to one-tier boards in a separate document
which is part of the consultation document. The consultation period
regarding this proposal ends on 28 September 2016.
The Committee's proposal clarifies the impact of the
proposed Code for one-tier boards, whilst allowing for
No separate code for one-tier boards
Traditionally, Dutch companies have applied a two-tier board
model and therefore the current Corporate Governance Code is mainly
geared towards two-tier companies. However, over the last years, an
increasing number of listed companies seem to be opting for a
In its February proposal, the Committee announced that it would
publish a separate code for one-tier boards. The now released
one-tier board proposal, however, states that the current practice
does not justify a full one-tier board code. The one-tier board
proposal therefore consists of some add-on provisions to the Code,
and includes a guidance document for application of the Code to
Amended and expanded best practices for one-tier boards
According to the proposed principle 2.8, the composition and
functioning of a one-tier board consisting of both executive
directors and non-executive directors should ensure proper and
independent supervision by the non-executive directors. This
principle is in line with principle III.8 of the current Code. The
Committee proposes a few amendments and additions to the best
practices for one-tier boards:
The chairman of the board is
primarily responsible for leadership within the board and for the
effectiveness of the board and its committees.
In accordance with the February
proposal, the chairman of the board should be independent.
The non-executive directors should
account for their supervision conducted over the past financial
year in the management report or in a separate report.
One of the executive directors should
be appointed as the chief executive officer (CEO) who leads the
day-to-day management of the company and its business and who will
regularly be consulted by the chairman.
A separate guidance document for one-tier boards
The Committee also gives guidance on how the principles and best
practice provisions of the Code can be applied by one-tier board
companies. The guidance document clarifies possible differences
between the two-tier board and the one-tier board, and indicates
where one-tier board companies can choose their preferred
The following topics are discussed in the guidance document:
collective responsibility and the
division of tasks, including a list of tasks of non-executive
approvals by a one-tier board
composition of and reporting by
reporting by non-executive
effective management and
The consultation period for the February proposal for a revision
of the Corporate Governance Code ended on 6 April 2016. The final
version of the revised Code is expected to be published after the
summer. If the final version of the revised Code differs from the
February proposal, the principle, best practice provisions and
guidance of the one-tier board proposal will be amended
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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An assignment of rights under a contract is normally restricted to the benefit of the contract. Where a party wishes to transfer both the benefit and burden of the contract this generally needs to be done by way of a novation.
Determining the limits of the capacity to have rights and
obligations of a joint-stock or limited liability company
("Company") is very crucial since it directly affects the
validity of a transaction that a Company performs
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