Corporate governance can be summed up as policies, practices, and procedures that control and guide a company. It is corporate governance that balances the interests of the many stakeholders in a corporation, such as shareholders, corporate executives, customers, suppliers, financial institutions, government agencies, and others.
The term comes to encompass more than just a framework for achieving a company’s goals, as corporate governance also includes internal controls, action plans, and corporate disclosure.
We provide a brief overview of five hot topics on the agenda for corporate governance in 2021.
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The Purpose Of The Corporation Is To Focus On Stakeholder Needs Rather Than Shareholder Interests
Management boards and supervisory boards have a legal obligation to participate in social and economic life, according to professors. Aside from diversity, tax ethics, pay ratios in the business, and climate change were discussed. Also, your articles of incorporation can specify the purpose of the corporation. Will the business have an impact on the environment or society?
An Increasing Number of AGMs are Taking Place Online
Since the COVID-19 pandemic, AGMs are becoming more digital. Virtual AGMs had an especially significant impact in 2020. Despite their best efforts, management, supervisory board, and auditor have difficulty engaging shareholders in live dialogue. In the Netherlands, the temporary COVID-19 Justice and Security Act has been extended until 1 August 2021, which may lead to many AGMs being held in hybrid or entirely virtual form in 2021.
Relationships with Diversity Strengthened
Probably in 2021, the Dutch government will mandate a minimum of one-third women on supervisory boards or one-tier boards of Dutch listed companies, and a target figure of one-third women and one-third men for supervisory boards, management boards, and junior managers in all large companies. These companies will be reported on by SER annually, in addition to reporting on their progress.
A Stronger Emphasis Should Be Placed On Accountability And Transparency
The ESG sector has also seen a number of developments in addition to the diversity sector. European legislators are working on amending the Directive to make nonfinancial and diversity data more accessible. In addition to improving their standards, the IFRS are looking into ways of improving sustainability reporting. By 10 March 2021, financial services providers will need to disclose information about investment decisions or advice that negatively impacts sustainability factors under the new ESG (Social, Economic, and Governance) Regulation (SFDR). In the UBO register, entities are required to list their ultimate beneficial owners (UBO) who are not ESG subjects. Newly established companies are required to enter the commercial register upon their first entry.
More Regulations Should Be In Place To Protect Companies
Listed companies can invoke a cooling-off period from shareholder activism or hostile takeover in the event of a new law coming into force soon. Similarly, a bill regarding the assessment of investments and takeovers based on national security risks will be introduced in 2020. Also, in 2020, a proposal will be made to assess the security risks associated with investments and takeovers. After 2 June 2020, the reference date for the bill, it will be possible to retrospectively assess the bill.