Corporate governance codes
FMO abides by two governance codes: the Dutch Banking Code and Corporate Governance Code. The Banking Code was drawn up in the wake of the financial crisis to help the financial sector improve its performance and thereby increase public trust in banks. Its principles are based on the Corporate Governance Code.
The Banking Code works according to the 'comply or explain' principle. FMO believes that complying with the Banking Code is not just a case of 'ticking boxes'. Because we invest in sustainable, entrepreneurial development in high-risk economies, we regard this code in the context of how it applies to our specific organization. FMO has implemented the Banking Code and has drawn up an extensive document, in which we explain per article how we comply.
The Corporate Governance Code applies to listed companies having their registered seat in the Netherlands. As a non-listed bank, FMO is not required to adhere to the Code, but has chosen to do so. The Supervisory Board and the Management Board fully endorse the basic principle on which the Code is based, namely that the company is a long-term partnership of various stakeholders, such as clients, shareholders and other capital providers, employees, the Government and groups in civil society.
The relevant principles and best practice provisions of the Corporate Governance Code (2009 version) have been implemented, with the exception of the following principles and best practice provisions:
- BPP II.1.9 - II.1.11: stipulations on the response time of the Management Board in case of shareholder activism and the hostile takeover stipulations are not implemented, given our stable majority shareholder, the State of the Netherlands.
- BPP II.2.3: FMO complies with this article, except for the fact that the share price is not taken into account when determining the remuneration of the Management Board, as FMO is non-listed.
- BPP II.2.4 - II.2.7 and II.2.13 c. and d.: these provisions relate to the granting of options and shares that are awarded to Management Board members. No options and shares are granted at FMO.
- BPP III.8.1 - III.8.4: these do not apply, since FMO does not have a one tier board.
- BPP IV.1.1: this does not apply, since this provision refers to a legal entity that does not apply a so called ‘structuurregime’. FMO is a so called ’structuur’ legal entity as defined in paragraph 2.4.6 of the Dutch Civil Code.
- BPP IV.1.2: this does not apply, since this provision refers to financing preferred shares, which FMO does not use in its share capital.
- BPP IV.1.7: FMO does not comply with the provision that the company determines a registering date to exercise voting rights and rights to attend the AGM. Since FMO has registered shares only and the identity of all shareholders is known, there is no need for separate registration.
- BPP IV.2.1 - IV.2.8: these concern the issuing of depositary receipts for shares. There is no such requirement at FMO, apart from the Articles of Association which lay down that the company is not permitted to cooperate in issuing depositary receipts of shares.
- BPP IV.3.1 - IV.3.4:.these provisions relate to analysts' meetings and presentations to institutional investors. These provisions are of no practical significance for FMO and therefore do not apply.
- BPP IV.3.8: the explanation of the agenda of the AGM is not published on FMO's website, since this document is sent to all shareholders of FMO.
- BPP IV.3.11: this Best Practice Provision requires the Management Board to provide a survey in the annual report of all the anti-takeover measures to prevent control from being relinquished. FMO did not incorporate any anti-takeover measures in its Articles of Association, which has to do with the fact that FMO has a stable majority shareholder, the State of the Netherlands. Therefore, an overview as meant in this provision is not incorporated in this Annual Report.
- BPP IV.4.1 - IV.4.3: institutional investors annually publish their policy with respect to the exercise of voting rights on shares in listed companies, report annually on the implementation of the aforementioned policy and report at least once a quarter on the voting behavior at general meetings of shareholders. The vast majority of companies FMO invests in are non-listed companies and the few exceptions concern very small stakes listed on stock exchanges abroad. FMO’s mission states that FMO behaves as an active investor with regard to environmental, social and corporate governance issues, among other things. Where FMO has voting rights (with regard to its equity investments), FMO will always exercise these rights to ensure FMO’s mission and interests are carried out and protected in the best possible way.
- BPP V3.3: this provision only applies when the company does not have an internal auditor. FMO does have an internal auditor.