4.6.6 How is the disclosure of the corporate governance statement arranged and who is accountable for this disclosure?

The first principle and first two best practice provisions of the Dutch 2008 code give an initial answer to the question above:

As stated above, in the Netherlands the corporate governance statement includes a separate chapter in the annual report in which the corporate governance structure of the company is explained as well as the compliance with and deviations from the Dutch code. In each annual report such a statement must be present and according to the above principle the management and supervisory boards are responsible and accountable for the corporate governance structure and compliance with the code towards the shareholders, who should asses the reasons given for deviations from the code. Hence, part of the corporate governance statement is an explanation of the corporate governance structure of the company, taking the code's principles into account, and the remainder of the statement involves the comply or explain principle. By means of article 2a, paragraph 3 of the administrative order on the corporate governance statement (Staatsblad 154, 2009) it is codified that the corporate governance statement is part of the annual report (Klaassen 2010). As part of the annual report the statement can be a specific part of or be attached1 to the report. An electronically provided statement is allowed as long as it is directly and permanently accessible and referred to in the annual report.

Principle I states that the management board and the supervisory board are responsible for the corporate governance structure of the company and compliance with this code. Article 2a of the administrative order on the corporate governance statement is formulated in more general terms and claims that the company must publish the corporate governance statement (Staatsblad 154, 2009). It is remarkable that article 3 quotes that the comply or explain principle is applicable only to the principles and best practice provisions that are addressed to the management or the supervisory boards of the company. The explanation for this 'limitation' of the comply or explain principle is that shareholders do not have a role in preparing the annual report; it neither contains any shareholder statements nor is drawn up by them. Furthermore, discussion exists in the Netherlands about the accountability for the disclosure and contents of the corporate governance statement, which is perhaps strengthened by the fact that the Dutch government decided that implementation of this aspect of the directive was not necessary (Beckman 2008, p. 396) (Klaassen 20 1 0)2 (Tweede Kamerstukken 31508, nr. 3, 2007, p. 10). The general rules for liability as laid down in the Dutch Civil Code were considered sufficient. In short, these rules imply that the general internal responsibility and liability of board members towards the company for proper performance of the duties entrusted to them are governed by article 2:9 BW (jo. art. 2:101 and 2:210 BW where their duties in relation to the annual accounts and report are filed). External liability, as far as this concerns misleading financial statements, is provided for in article 2:139 and article 2:249 BW and, in the case of bankruptcy, in article 2:138 and 2:248 BW (Tweede Kamerstukken 31508, nr. 3, 2007, p. 10). With respect to the supervisory board members, implementation was not considered necessary either. Under articles 2:140 and 2:250 BW the supervisory board has a general supervisory role and it signs the financial statements as well (art. 2:210 par. 2 BW and 2:101 par. 2 BW). In the case of bankruptcy of the entity, the supervisory board members are jointly and severally liable if the obligations relating to disclosure of the financial statements and annual report have not been fulfilled (art. 2:149 and 259 jo. articles 2:138 and 2:248 BW). Moreover, the supervisory board is held liable for a proper performance of its duties and each member is liable in the case of deficiencies (art. 2: 259 and 2:149 jo. article 2:9 BW).

As will be reviewed in the chapters to come, in practice the disclosure of the corporate governance statement seems to work in the Netherlands. Nevertheless, several judicial questions and ambiguities still exist regarding responsibility and liability. Whether the corporate governance statement also has to provide information on future events - as in Germany - remains unclear. And in the end, the comply or explain principle seems slightly 'limited' since it only applies to the best practice provisions on the management and supervisory boards and not to chapters IV and V of the code.