Summary of the new Recommendations on Corporate Governance in Denmark
On 2 December 2020, the Danish Committee on Corporate Governance sent out the new recommendations for good Corporate Governance in Denmark.
The purpose of the changes is to ensure that the recommendations are principle-based, simple, up-to-date and in line with international trends.
In the new recommendations, special emphasis has been placed on the importance of long-term value creation, increased dialogue with a broad group of stakeholders, the companies‘ sustainability, considerations and transparency in relation to executive remuneration and the stance on the companies' overall purpose.
The revised recommendations replaces the Committee's Recommendations for Corporate Governance of 23 November 2017 and are applicable for financial years beginning on 1 January 2021 or later, i.e. for the 2021 annual reports for calendar year reporters.
The new elements focus on sustainability, social responsibility, overall purpose of the company, tax and diversity policies as well as board and management evaluations:
- Extended policy relating to corporate social responsibility (CSR), including sustainability and social responsibility, which should be disclosed in the management review of the annual report and/or on the Company´s website. The committee recommends that the Board of Directors ensure that the policy is complied with.
- New recommendation that the Board of Directors approves a tax policy and makes it available on the Company's website.
- New recommendation that the Board of Directors considers the Company's purpose, ensures and promotes a good culture and good values in the Company, which is also to be disclosed in the management review of the annual report and/or on the Company´s website.
- Policy on diversity in the Company to be disclosed in the management review of the annual report and/or on the Company´s website.
- Extended focus on importance of evaluation of the Board of Directors (including assessment of the time needed for the board work) and the Executive Management, and the value of involvement of external support.
The previous recommendations on remuneration policy and remuneration report are replaced by the legal requirements following the implementation of the Shareholder Rights Directive (SRD II) into the Danish Companies Act, already effective for 2020.
Compared to the draft recommendations, the Committee now also recommends that the Board of Directors
- ensures that the extended CSR policy is complied with
- ensures and promotes a good culture and good values in the Company
- assesses the time needed for the board work to avoid over-boarding as part of the annual board evaluation.