9.1.2.1 Board composition

The introductory text of chapter 3.2 mentions that the size and composition of the board should be such that a company’s affairs can be managed effectively and independently. Therefore, the board should embrace various qualifications and meet the independence criteria. Rule 3.2.1 states that the composition should be appropriate, with the operations, phase of development and other considerations being taken into account. The aim should be an equal gender distribution and the qualities and competences of the board members should be diverse as well.

With respect to size, rule 3.2.2 provides that the size of the total board may not be such that simple and effective working methods are not possible. The proposal of the Code Group suggested in rule 3.2.4, which underlies rule 3.2.2 of the SCCG 2005, a maximum board size of nine, equal to the requirement in the CGP. For banks a larger number might be necessary. This proposal of a maximum generated some criticism1 and therefore the Code Group decided to leave it out of the SCCG 2005 and formulate the rule more as a principle (Code Group 2004b: 36, 38).

Regarding composition, rule 3.2.3 provides that only one member of the board may be a member of senior management. In the original proposal of the Code Group, it was provided in rule 3.2.3 that the managing director was the only member of senior management allowed on the board. However, after consultation the Code Group decided to allow other senior managers to be the (only) member of senior management on the board (Code Group 2004b: 38-39).