CORPORATE GOVERNANCE

 


Holland Colours is a publicly listed, limited liability company with common shares listed on Euronext Amsterdam.

The company’s management and supervision are organized under Dutch law in a two-tier structure comprising a Board of Management, supported by an Executive Committee, and a Supervisory Board.

Holland Colours promotes responsible behavior in relation to society and the environment, while at the same time taking account of the interests of its various stakeholders: employees, shareholders, other capital providers, customers, and suppliers. The Board of Management and Supervisory Board are ultimately accountable for giving due consideration to the interests of all those involved, focusing on the continuity of the company and long-term value creation for relevant stakeholders, both at present and in the longer term, and are held accountable by the Annual General Meeting of Shareholders for the performance of their duties. The risk management approach and the internal control framework play an important role in this. For a description of these systems, please refer to the section on Risk Management.


CORPORATE GOVERNANCE FRAMEWORK

Our Corporate Governance framework is based on the company’s Articles of Association, the requirements of the Dutch Civil Code, the Dutch Corporate Governance Code (the “Code”) and all applicable laws and regulations. The Code was revised in 2016 and applies to financial years starting on or after January 1, 2017. The Code can be found on www.mccg.nl. The revised Code provides for a more thematically oriented code, with greater focus on culture and long-term value creation.

In view of the revised Code, the Board of Management and the Supervisory Board carefully reviewed and discussed the existing rules and regulations. The Code is reflected in the regulations of the Board of Management, the Executive Committee and the Supervisory Board. In addition, the diversity policy and a policy on bilateral contacts with shareholders were updated and the Articles of Association of Holland Colours were aligned with the Code. The updated Articles of Association are to be adopted in the next Annual General Meeting of Shareholders.

In 2013, the management structure was strengthened by installing an Executive Management Team (Executive Committee), in order to achieve alignment with and between the divisions on strategic direction, product development, central policies and procedures, and functional coordination.

The Executive Committee consists of the members of the Board of Management, the Division Directors, the Director Global Marketing and the Director Innovation and Technology. The statutory responsibilities remain unchanged and the Board of Management is held accountable by the Supervisory Board for the definition and execution of the company’s strategy as well as the day-to-day operational management. The members of the Board of Management attend the periodic meetings of the Supervisory Board as well as the monthly update calls while the other members of the Executive Committee only attend when topics relevant to their area of responsibility are discussed.
The CEO is the chair of the Executive Committee and is the main contact person to the Supervisory Board.

Annual General Meeting of Shareholders
The Annual General Meeting of Shareholders (AGM) is an integral part of the governance of the company and its system of checks and balances. The AGM reviews the annual report and decides on the adoption of the financial statements, the dividend proposal and the discharge of the members of the Supervisory Board and the Board of Management of their duties performed.
The AGM is convened by public notice. The the agenda, notes to the agenda and the procedure for attendance and voting at the meeting are published in advance and posted on the corporate website. Matters proposed for consideration, approval or adoption are dealt with as separate agenda items and explained in writing in advance of the meeting.

These proposals include, where applicable -

  • The adoption of the financial statements;
  • The dividend proposal;
  • The discharge of the members of the Supervisory Board and the Board of Management of their duties performed;
  • The appointment and reappointment of members of the Board of Management and the Supervisory Board;
  • The remuneration of the members of the Supervisory Board;
  • Material changes to the remuneration policy of the Board of Management;
  • Other important matters, such as major acquisitions or the sale or demerger of a substantial part of the company, as required by law or Articles of Association
  • The authorization of the Board of Management to issue new shares;
  • Amendments to the Articles of Association.

The company provides possibilities for voting by proxy to its shareholders. Holding shares in the company on the registration date determines the right to exercise voting rights and other rights relating to the AGM. All resolutions are made on the basis of the ‘one share, one vote’ principle. All resolutions are adopted by absolute majority, unless the law or the company’s Articles of Association stipulate otherwise.

Holders of common shares in aggregate representing at least 1% of the total issued capital may submit proposals for the AGM agenda. Such proposals must be adequately substantiated and must be submitted in writing, or electronically, to the company at least 60 calendar days in advance of the meeting. The draft minutes of the AGM (in Dutch) are made available on the company’s corporate website within three months of the meeting date. The final minutes will be made available on the corporate website within six months after the meeting date.

Diversity Policy
Holland Colours strongly values diversity and endeavors to reflect this in the composition of its Board of Management, Executive Committee and Supervisory Board. The objective of the Diversity Policy is to enrich the Board of Management’s perspective, improve performance, increase member value and enhance the probability of achievement of Holland Colours’ goals and objectives. The aim of the policy is to achieve diversity, including nationality, age, gender, education and work background. Diversity will be taken into account in succession planning.. The Board of Management consists of a female CFO and a male CEO and reflects a balanced composition of men and women. Further information about the composition of the Board of Management can be found in the report of the Board of Management. The Executive Committee currently consists of two women and three men.

The company also aims to adhere to this provision with respect to the Supervisory Board, which currently consists of one woman and four men. Further details about the composition of the Supervisory Board and its committees can be found in the report of the Supervisory Board and its profile.

Anti-takeover provisions and control
The company has no specific anti-takeover provisions in place. The fact that the company has a majority shareholder, Holland Pigments BV, in which the collective employees have a shareholding of approximately 25%, guarantees that in such a case the voice of the employees is heard.

Code of Conduct
The Code of Conduct of Holland Colours is a reflection of our core principles on doing business in a fair and ethical way, complying with the local rules and regulations and treating our employees and business partners with respect. It provides guidelines to avoid unfair competition and corruption or bribery. It states the conditions for a safe and healthy work environment. Partly through our HP Officials, as appointed by Holland Pigments BV, we maintain our unique employee participation model and culture. Holland Colours has a global whistleblower policy in place.


CORPORATE GOVERNANCE CODE

The Supervisory Board and the Board of Management endorse the principles of Corporate Governance as established in the principles and best practice provisions that currently apply to internationally operating listed Dutch companies.

The full version of the Corporate Governance rules of Holland Colours, along with explanatory notes, can be found on the Holland Colours website: www.hollandcolours.com. Certain provisions in the Dutch Corporate Governance Code have not been adopted as outlined below.

Board of Management
The Code states that the main elements in the contracts of managing directors of the company must be published without delay after the contract is concluded. As we do not want to single out this type of information, Holland Colours has chosen to continue the practice of publishing this in the annual report. The remuneration policy for the Board of Management for the reporting year was formulated by the Remuneration Committee and is further described in Note 26 to the financial statements (page 73). Since Holland Colours does not offer remuneration in the form of options, the provisions governing options do not apply.

Supervisory Board Members
As long as Holland Pigments BV holds an interest of at least one-third of the company’s issued capital, it is entitled to nominate one member of the Supervisory Board.
The Supervisory Board has established a Remuneration Committee and an Audit Committee. In deviation from Article 2.3.4, the chairman of the Supervisory Board is also chairman of the Audit Committee, because of his expertise.

The duties of the selection and appointment committee are performed by the full Supervisory Board. The remuneration of the members of the Supervisory Board is determined by the General Meeting of Shareholders.

Internal Audit function
The internal audit function assesses the design and the operation of the internal controls and risk management tools. Due to the size of the company this function is fulfilled, in deviation from Article 1.3, by the Group Controller.
The Supervisory Board will evaluate annually if it is necessary to establish an internal audit department and will include the conclusions in the report of the Supervisory Board.

Company Secretary
The size of Holland Colours does not justify the allocation of duties to and appointment of a Company Secretary as formulated in the Code.

Conflicts of Interest
As Holland Pigments BV is a majority shareholder in Holland Colours, with all employees of Holland Colours having shares in Holland Pigments, transactions between Holland Pigments and the company that are of material significance are subject to approval by the Supervisory Board.

Shareholder Powers
For practical reasons and because of the costs involved, the provision stipulating the possibility for shareholders to follow meetings with investors, analysts, presentations and press conferences in real time is not observed. All relevant information is, of course, immediately published on the company’s website. There have been no substantial changes to the corporate governance structure. The alignment with the Dutch Corporate Governance Code will be published along with the meeting invites for the Annual General Meeting of Shareholders (AGM). Future substantial changes will be submitted to the AGM.

The General Meeting of Shareholders of July 11, 2017 authorized the Board of Management to acquire shares in the company for a period of 18 months, up to January 11, 2019 subject to the approval of the Supervisory Board. The acquisition price must be between the amount equal to the nominal value of the shares and the amount equal to 110% of the share price, whereby the share price will be: the highest average share price on each of the five trading days prior to the acquisition date in accordance with the Daily Official List of Euronext Amsterdam.

All documents related to the implementation of the Dutch Corporate Governance Code can be found in the Investor Relations paragraph under Corporate Governance on our website. This includes the profile, regulation and schedule of retirement by rotation for the Supervisory Board, regulations of the Audit Committee and the Remuneration Committee, the diversity policy and the policy on bilateral contacts with shareholders, the company’s Articles of Association, the whistleblower policy, the regulation on ownership and transactions in shares and other financial instruments, and the minutes of the General Meeting of Shareholders.


PREVENTION OF INSIDER TRADING

In compliance with the Dutch Financial Supervision Act, Holland Colours has adopted internal regulations relating to investments in the company’s shares, share ownership and preventing the abuse of insider information. Moreover, the duty of disclosure and the relevant best practice provisions of the Corporate Governance Code have been incorporated in these internal regulations as far as applicable.

These internal regulations apply to the Supervisory Board, the Board of Management, the Executive Committee and local managers and a circle of employees, as well as to a number of advisors. The Central Officer maintains a register, supervises compliance with the internal regulations, and maintains contact with the Netherlands Authority for the Financial Markets (AFM).

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Pascal Weulen Kranenbarg |Holland Colours Europe | Planning and Logistics Manager