Corporate governance

Introduction

Corporate governance was a frequent subject of debate again last year, on several occasions straining relations between the various stakeholders in listed companies. In many cases, the debate centred on the principles of good governance expounded in the Dutch Corporate Governance Code (the 'Code'). The end of the evolving corporate governance story is not yet in sight.

The Code has assumed the status of law, in the sense that all listed companies are now required to include in their annual reports a statement of compliance with the Code's principles and best-practice provisions as they apply to their management and supervisory boards. If they have not complied with those principles or best-practice provisions and/or do not intend to do so in the current or next financial year, they are required to state the reasons in their annual report (the 'comply or explain' principle).

The way in which Dutch listed companies implement an effective and transparent system of checks and balances is influenced by evolving social values and developments on the capital market. The Corporate Governance Code Monitoring Committee was set up in December 2004 to address this issue. In addition to monitoring compliance with the Code, its responsibilities include ensuring that the Code is kept up-to-date and operable and, where necessary, making suggestions and recommendations for improvement. The ultimate goal is to maintain a high standard of corporate governance.

The Corporate Governance Code Monitoring Committee has published several reports on compliance with the Code and made a number of recommendations, which resulted in a bill designed to help strengthen the Dutch corporate governance system. This bill changes the threshold for disclosure of controlling interests in listed companies (Financial Supervision Act or Wft), introduces compulsory disclosure of intentions when shareholdings reach 3% (Wft), enables companies to identify and communicate with shareholders (Securities Giro Transfer Act or Wge) and raises the threshold at which shareholders have a right to place items on the agenda (Civil Code).

On 10 December 2008, the Monitoring Committee drafted a final proposal for a revised Code. The most important changes relate to risk management, remuneration of Management Board members, responsibilities of shareholders, diversity in the composition of the Supervisory Board and corporate social responsibility. Since the revised Code takes effect as from the financial year commencing on or after 1 January 2009, the annual report for the 2009 financial year will include a report on compliance with the revised Code. To the extent that BinckBank does not already comply with the revised Code, it will either comply as soon as possible or explain in the annual report for the 2009 financial year why non-compliance is justified.

According to best-practice provision 1.1 of the Code, the broad outlines of the corporate governance structure of the company must be explained each year in a separate chapter of the annual report, partly by reference to the principles set forth in the Code. In this chapter, the company must also expressly state the extent to which it applies the best-practice provisions of the Code and, if it does not, why and to what extent it does not apply them. As mentioned above, the 'comply or explain' principle has been enshrined in law.

Best-practice provision 1.2 of the Code requires that each substantial change in the company's corporate governance structure or its compliance with the Code be submitted to the General Meeting of Shareholders for discussion under a separate agenda item.

As a modern and innovative company, BinckBank endorses in large measure the principles expounded in the Code, which have received broad support. The proposed procedure for adoption of the Code by BinckBank was discussed at the Annual General Meeting of Shareholders on 21 April 2005 and was implemented in the course of 2005, inter alia via amendment of the Articles of Association. There has been no substantial change in BinckBank's corporate governance structure or compliance with the Code since then. Best-practice provision 1.2 of the Code is therefore not applicable.

A detailed description of BinckBank's application of the Code is given in a separate annex. This has been posted on the company's website (www.binck.com), to give BinckBank's shareholders and other stakeholders access to information on how the company puts into practice the standards of good corporate governance embodied by the Code.

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