13.2.2 Recommendations

The determination of the independence of a supervisor should be based on the assessment of the (supervisory) board or nomination committee. This assessment must focus on independence in fact instead of independence in form. The DCGC should therefore be revised with the UKCGC or SCCG in mind as an example. The SCCG should also revise its distinction between two types of independence.

There should be a balanced distribution between directors with executive tasks and monitoring tasks. The situation in Sweden with a board that may issue directives to the managing director should be reconsidered.

Independent supervisors should comprise a majority of the board or the supervisory board. The situation in Sweden with employee representatives and two types of independence should be revised. The Dutch situation with only one non-independent supervisory director is rather stringent and might be reconsidered.

The nomination committee of the (supervisory) board should consist solely of NEDs/SDs, the majority of whom are independent. The possibility in the United Kingdom to include executive directors and in Sweden to include shareholders should be excluded.

The provisions in the DCGC should be made appropriate for the Dutch unitary board structure.

CEO duality must be prohibited in all cases. The Companies’ Act in the United Kingdom should therefore exclude this possibility.

The procedures concerning the appointment and removal of supervisors must be constructed in such a way that not one single stakeholder has a dominant position. The procedures in Dutch structure regime companies can serve as an example for the United Kingdom and Sweden, where shareholders dominate these two procedures.

A transparent annual evaluation process of the whole (supervisory) board, the board committees and its members should be mandatory. Disclosure of the methodology and a periodical review by an external evaluator should be required as well. The DCGC should therefore require external evaluations as well. The SCCG should broaden its scope by considering board committees and members, and should require disclosure in the annual report.

Strong enforcement regarding independence should be in place. The Netherlands might consider offering an authority measures to issue warnings or fines in situations of serious non-compliance, as is the case in the United Kingdom and Sweden.