Corporate governance is important to DNB because it provides the basis for control of business operations. If the top management of an undertaking is not properly organised, the control of risks in the undertaking’s operational processes will certainly not be either. Good corporate governance thus helps to protect the interests and claims of shareholders, creditors, policyholders and other stakeholders. An adequate system of corporate governance must be arranged in order to protect all the stakeholders involved in an undertaking. Specific requirements have been drawn up for this purpose for the different sectors.
Dutch Corporate Governance Code
One of the main building blocks in this field is the Dutch Corporate Governance Code. The Tabaksblat Committee presented this code on 9 December 2003. The code applies to all companies which have their registered office in the Netherlands and whose shares or depositary receipts for shares have been admitted to an official listing on a government-recognised stock exchange. It does not therefore apply to all supervised undertakings. However, it does provide important guidelines for the structuring of the governance and the system of checks and balances for all these undertakings. This forms the basis for the control of these organisations.
Corporate governance provisions in the Wft governing financial undertakings
Corporate governance is also an important topic in the Financial Supervision Act (Wet op het financieel toezicht / Wft). This includes:
- controlled operations
- integrity in the conduct of business operations (sound operations)
- trustworthiness of managing directors and persons determining or co-determining policy
- expertise of managing directors and persons determining or co-determining policy
- avoidance of conflicts of interests
- financial services on preferential staff terms
- positions requiring a high degree of integrity
- role of auditor and actuary
Pension Fund Governance
Corporate governance for pension funds is regulated in the principles for good pension fund governance. These principles have been drawn up by the Labour Foundation (Stichting van de Arbeid) and laid down in the Pension Act (Pensioenwet / Pw).
The ‘Principles for good pension fund governance’ consist of the following elements:
- careful management
- internal supervision
It is aimed mainly at the organisation and processes of a pension fund. One of the new elements is, for example, the obligation to establish an accountability body, i.e. a body to which the management board of the pension fund is accountable. In addition, a management board is required to set up a system of internal supervision to take a critical look at the pension fund (and its management board). This must be done by independent experts.
The management board has final responsibility for all activities of the pension fund. It will often seek assistance by specialised advisors such as actuaries, auditors, investors, pension lawyers, tax specialists and communication experts. The description of the pension fund governance states what advisers are retained for what duties. If the management board has established advisory committees to prepare decisions of the board, either with or without the help of external experts, the composition of these committees must be stated. The management board checks the adequate implementation of the business processes, even where they are outsourced.