Shareholders should have a more active role to ensure better long-term value creation in organisations, according to the Dutch government’s monitoring committee.
In its report on the implementation of the Netherlands’ 2016 corporate governance code, the committee, which has just completed its four-year term, says implementation of the code is going well but points to several questions that the incoming commission should give further attention.
“Now that listed companies are well on their way with the 2016 code, the committee believes it’s time to pay more attention to the role and involvement of shareholders, particularly with regard to long-term value creation.”
The code, a revised version of existing law, was introduced in December 2016 with the aim of giving a central role to long-term value creation and the introduction of culture as a component of effective corporate governance.
A study commissioned by the committee from the Erasmus University of Rotterdam found that asset managers do not always act in line with their engagement policy and that this can lead to disinvestments.
Furthermore, the committee said that there needs to be constructive dialogue between companies and their shareholders, for example, in the case of takeovers. In the case of hostile takeovers, dialogues are also important between the bidder and the target.
“This requires an active attitude on the part of the shareholder and an open attitude on the part of the company,” said the committee.
Outgoing head of the committee, Jaap van Manen, said: “When it comes to long-term value creation, the importance of shareholder involvement should not be forgotten.
“It would be also good then if there was a broader discussion about the role of shareholders and how they can make it easier for listed companies in their quest for long-term value creation.”