3.5.1 The Frijns Code on institutional investors

Compared to the Tabaksblat Code, Principle IV.4 of the Frijns Code on the responsibility of shareholders no longer focuses exclusively on institutional investors (i.e. pension funds, insurers, investment institutions and asset managers). The principle is subdivided into responsibility of institutional investors' and responsibility of shareholders'. The Monitoring Committee explains this by defining institutional investors as a special category of shareholders who act primarily in the interests of the ultimate beneficiary owners or investors.1 As such, Principle IV.4 makes it explicit:

Owing to this special position, provisions IV.4.1 to IV.4.3 instruct institutional investors to publish annually, in any event on their website, their policy on the exercise of the voting rights for shares which they hold in listed companies, the implementation of their policy in the year under review, and at least once a quarter whether and, if so, how they have voted as shareholders at the general meeting.

CSR does not play a role in these provisions. The Burgmans Report had suggested to add the following CSR-related phrase to the above-cited Principe IV.4: and whether and to which extent they take into account ESG factors.2If this text had been included, it would have meant that institutional investors were to disclose to what extent and in what manner they consider extra-financial information regarding environmental, social and governance aspects in their decision-making process. However, the Monitoring Committee decided that this matter was beyond the scope of the Code. The author regrets this as will be explained below.

Still, as shareholders are considered important players in a Dutch company's decision-making, it seems relevant to assess in this chapter 3 what the Frijns Code asserts about shareholder responsibilities. Referring to the Tabaksblat Code, the Monitoring Committee commented that the increase in the general meeting's powers in the Tabaksblat Code was prompted by the need to strengthen the checks and balances within the company and to improve the quality of corporate governance. However, the Committee admitted that the increase in shareholder rights had also resulted in greater emphasis being placed on the interests of shareholders both individually and collectively. To stop the power pendant from swinging too far to the shareholders' side,3 the Frijns Code requires shareholders to act in accordance with the principle of 'reasonableness and fairness'. Principle IV.4 expresses this. The same phrasing can be found in a key-provision of the DCC, article 2:8, stipulating that a company and those who, pursuant to the law or the articles of association, are involved with its organisation must behave towards each other in accordance with the principle of reasonableness and fairness. The Monitoring Committee explained that in the event of conflicts shareholders should demonstrate their willingness to enter into a dialogue with the company and fellow shareholders. If the dialogue fails to produce results, shareholders are entitled to exercise their statutory rights in order to express the views they have on the strategy, including the right to put items on the agenda and the right to call an extraordinary meeting of shareholders.4

As regards the powers of the general meeting, Principle IV.1 states:

The last sentence concurs with article 2:107a DCC, as referred to above in section 3. 2. Professor Geert Raaijmakers (corporate and securities law at the Vrije Universiteit of Amsterdam) regrets that the Monitoring Committee has not provided more guidance' as to how a constructive dialogue between the shareholders and the company be conducted: how should the media and other means of pressure be dealt with, and how should parties organise their normal exchange of views?5