The One-Tier Board (IVOR nr. 85) 2012/6.11:6.11 Annex Frijns Code 2008

The One-Tier Board (IVOR nr. 85) 2012/6.11

6.11 Annex Frijns Code 2008

Documentgegevens:

Mr. W.J.L. Calkoen, datum 16-02-2012

Datum: 16-02-2012
Auteur: Mr. W.J.L. Calkoen
JCDI: JCDI:ADS601866:1
Vakgebied(en): Ondernemingsrecht (V)

Hereunder a short summary of the points of the Frijns code:

Preamble:

2: applies to Dutch listed companies, with influence on others;
4: comply or explain;
7: stakeholders important, while endeavours to create long term shareholders value (text cited above in 4.2.5);
8: taking account of stakeholders, including CSR, all stakeholders must be confident their interests are represented; good entrepreneurship, including integrity and transparency and effective supervision and accountability;
9: management weighs interests for strategy, while supervisory board oversees process; both are accountable for these roles; management and supervisory board guided by interests of the company and its affiliated enterprise, e.g. shareholders may have their own interest;
10: this can create tension and the code is designed to carefully handle the process and to help weigh the interests carefully; good relations and dialogue with stakeholders are important;
1: in takeover situations this tension can be most pronounced, therefore special role of supervisory board.

Principles and best practice provisions:

P = Principle

I: Compliance with Code
1.1: report in annual report;
1.2: changes discussed in AGM;

II

Management board

1 P

Role: achieving company's aims, strategy and risk profile and CSR; guided by the interests of the company and affiliated enterprise; provide supervisory board with information; responsible for compliance with law and risk management;

1.1

4 years;

1.2

submit to supervisory board for approval

(a): objectives
(b): strategy
(c): parameters for strategy
(d): CSR

1.3

risk management

(a): risk analysis
(b): code of conduct
(c): guides for financial reports
(d): system for monitoring

1.4

annual report

(a): risks to strategy
(b): effectiveness of risk management
(c): major failings in risk management

1.5

assurance that financial reporting not contain material errors;

1.6

annual report describes sensitivity to external factors;

1.7

internal whistleblower complaints possible to chairman;

1.8

not too many functions;

1.9

shareholders give 180 days waiting time to board to discuss any agenda point; management shall use the time for constructive consultation; the supervisory board shall monitor this;

1.10

if a takeover bid on the company's shares is being prepared, supervisory board must be involved;

II.2

Remuneration

2 P

level and composition; fixed and variable; variable part must be

transparent; long term shares held, long term;

2.3

long term;

2.8

dismissal 1 year salary max;

2.9

no loans;

P:

supervisory board determines remuneration based on policy adopted by general meeting, remuneration full in report;

2.10

if conditional and new circumstance: supervisory board may determine downward or upward;

2.11

claw back;

2.12

report on policy on website;

2.14

contract public;

2.15

severance pay in report;

11.3

Conflicts of interest

3 P

conflicting deals require approval supervisory board;

3.1

management may not

(a): compete
(b): accept gifts
(c): provide unjust advantages
(d): take business advantages for themselves

3.2

report any conflict to chairman and other management board members;

3.3

not take part in any discussion about conflicting deals;

3.4

conflicting deals entered into require consent of supervisory board and in annual report;

III

Supervisory board

III.1

Role and procedure

P:

supervise policy of management board and give advice;

1.1

division of duties within supervisory board described in terms of reference, in relation to management board, general meeting and works council on website;

1.2

annual accounts report on supervisory board;

1.3

data on each member including gender and other positions;

1.4

retire in event of inadequate performance or conflict;

1.6

supervision on

(a): objectives
(b): strategy
(c): risk management
(d): financial reporting process
(e): compliance law
(f): shareholder relationship
(g): CSR

1.7

at least once a year meet alone to evaluate itself, committees and management board;

1.8

at least once a year discuss with management corporate strategy and main risks, these discussions in report of supervisory board in annual report;

1.9

supervisory board members have own responsibility to obtain info from management board, auditor and officers and external advisors;

111.2

Independence

P:

act critically and independently of one another, management board and any particular interest;

2.1

all independent but one;

2.2

not independent if

(a): employee within 5 years before
(b): receives other remuneration from company
(c): he or partnership he belongs to has had business relationship
(d): cross board membership
(e): holds 10% or more in the company
(f): board member of company that holds 10% or more
(g): temporarily managed the company

111.3: Expertise and composition
P:: each can assess overall + specific expertise role designated to him in company profile
3.1: profile;
3.2: at least one financial expert;
3.3: induction + further training if necessary;
3.4: max five board memberships, chairmanship counts double;
3.5: max 4 years term;
3.6: retirement ladder;

111.4

Chairman and company secretary

P:

chair ensures proper functioning of supervisory board and committees and acts on behalf of supervisory board with management and shareholders regarding the functioning of management and supervisory board members and ensure efficient general meeting; helped by company secretary;

4.1

chairman ensures that

(a): supervisory board members follow induction and education or training
(b): supervisory board members receive timely information
(c): sufficient time for decision making
(d): committees function properly
(e): evaluation management board once p.a.
(f): supervisory board elects vice-chairman
(g): supervisory board has proper contact with management and works council

4.2

chairman may not be former member of management board;

4.3

helped by company secretary;

4.4

vice-chairman replaces chairman and is contact for supervisory board and management board for functioning of chairmen (see UK SID);

111.5

Composition of 3 key committees audit committee:

-: not chaired by chairman or former manager
-: at least one financial expert

remuneration committee:

selection and appointment committee:

III.6: Conflicts
6.1: immediately report to chairman;
6.2: not take part in discussion;
6.3: public transactions in accounts;
6.4-5: terms of reference;
6.6: limited delegated director;
6.7: if supervisory director takes on temporary management he has to resign as supervisory director;

III.7

Remuneration of supervisory directors by general meeting:

-: no shares for supervisory directors by way of remuneration (different from US)
-: any shares held must be long term
-: no loans from company

III.8: One tier
P:: in case of one-tier composition shall be of such that independence of non-executives is assured;
8.1: chairman not executive;
8.2: chairman check proper functioning of entire board;
8.3: committee requirements the same, committees only of non-executives;
8.4: majority of non-executives;

IV: Shareholders
1: Powers
P:: shareholders participate in decision making of general meeting; vote by proxy; general meeting should be able to influence management board decisions, major change needs consent;
1.1: general meeting may cancel binding nominations for management board;
1.2: votes on financing preference share votes limited;
1.3: if public bid on more than one-third of value of the company, board must make its decision public;
1.4: policy of reserves and dividends an agenda point;
1.5: decision dividends separate agenda point;
1.6: dischargeof directors voted separately;
1.7: determination of registration date;
1.8: chairman responsible for worthwhile discussion in general meeting;

2: DRs
: trust office conditions; not to be used as anti-takeover device; issue proxies to vote as shareholders;
3: Information and logistics
: management board provide press and analysts with carefully handled and structured info; management board and supervisory board provide general meeting in good time info for general meeting;
3.1: analysts meetings, presentations to investors and press conferences announced on website and by press releases; provisions for attendance by all shareholders.