8.2.6 The enforcement of the requirements regarding independence

This subsection addresses the enforcement of independence. Although regulations and law regarding independence may be in place, without enforcement of regulations and law there might be no benefits. Therefore this final issue is important for the discussion about independence.

Section 2: 391 paragraph 5 DCC states that further provisions with regard to the content of the annual report may be set by a Regulation. In this Regulation provisions can be included in order to comply with a Code of Conduct. By means of a Regulation, the DCGC, in which the Dutch independence criteria are included, is set as the Code of Conduct as mentioned in section 2: 391 paragraph 5 DCC (Staatsblad 747 2004; Staatsblad 545 2009). In accordance with preamble 6 of the DCGC, section 3 of the Regulation prescribes the use of the comply or explain principle in the implementation of the corporate governance principles and best practices. This means that the company must either mention that they comply with the principles and best practices provided in the DCGC or explain and motivate why they do not.

The preamble of the DCGC specifies the group of companies to which the DCGC applies: ‘The Code applies to all companies whose registered offices are in the Netherlands and whose shares or depositary receipts for shares have been admitted to listing on a stock exchange, or more specifically to trading on a regulated market or a comparable system, and to all large companies whose registered offices are in the Netherlands (balance sheet value [amp]lt; € 500 million) and whose shares or depositary receipts for shares have been admitted to trading on a multilateral trading facility or a comparable system’ (Corporate Governance Code Monitoring Committee 2008: 5). This implies that the DCGC applies to Dutch companies with a listing abroad, but foreign companies with a listing in Amsterdam (in addition to another listing abroad) need not comply with the DCGC (Maeijer et al. 2009: 30).

Through the obligation to include a section in the annual report about the implementation and compliance with the DCGC, the general meeting receives information about compliance with the DCGC. According to the preamble of the DCGC: “It is up to the shareholders to call the management board and the supervisory board to account for compliance with the Code” (Corporate Governance Code Monitoring Committee 2008: 5-6). As the section about the implementation and compliance with the DCGC is part of the annual report, the auditor and the supervisory board should approve the content about compliance with the DCGC (Timmerman 2004: 1635). Refer to Bartman (2004) for a critical reflection on the applicability of the DCGC.