Updated Recommendations on Corporate Governance
On 2 December 2020, the Danish Committee on Corporate Governance issued updated Recommendations on Corporate Governance.
The aim of the update is to ensure that the recommendations are based on principles, up-to date and consistent with international trends. Among other things, the Committee has made a point of stressing the importance of long-term value creation, the companies’ sustainability, and considerations in relation to management remuneration.
On 2 December 2020, the Committee on Corporate Governance issued updated Recommendations on Corporate Governance. The aim of the update of the recommendations issued in 2017 is to ensure that the recommendations are up-to-date and consistent with international trends, which is important to maintain an attractive share market. Furthermore, dialogues with a wide range of stakeholders have also suggested a wish for a simplification of the recommendations.
In connection with the update, the Committee has:
- Added an introduction covering the overall principles applying to each of the five sections of the recommendations. The principles describe the general reflections which companies can benefit from considering when assessing which approach to take in respect of the individual recommendations under each section.
- Made a point of stressing the importance of companies’ long-term value creation, including more dialogue with a wide range of stakeholders, companies’ sustainability, deliberations on and transparency in management remuneration, and decisions on company purpose.
- Focused on relevance for which reason recommendations on remuneration policy and remuneration report have been replaced by statutory requirements after the implementation of Shareholder Rights Directive II.
- Specified the recommendation on evaluation of the Board of Directors.
- Designed new recommendations, consolidated, and transferred existing recommendations, made linguistic and editorial changes, and specified and designed new comments.
The updated recommendations replace the Committee’s Recommendations on Corporate Governance dated 23 November 2017 and will enter into force as of the financial year starting on or after 1 January 2021. Listed companies must relate to the updated recommendations for the first time in connection with the presentation of their annual report for 2021, however, two changes regarding remuneration require a decision making already at the general meeting held in 2021.
The updated recommendations appear from Komitéen for god Selskabsledelses hjemmeside.
The most significant changes have been summarised in the memo available to download.