Corporate governance codes

FMO abides by two governance codes: the Dutch Corporate Governance Code and the Dutch Banking Code. We comply with the Banking Code or will otherwise explain where and how we diverge from this code, including concrete examples. This document can be found on our website. Monitoring of the Code and other operational risks are further described in the ‘Non-financial risk’ section in the ‘Risk management’ chapter.

The Dutch Corporate Governance Code (‘the Code’) only applies to organizations whose shares are listed on a regulated market. As a non-listed bank, FMO is not required to adhere to the Code, but we have chosen to do so, nonetheless. In December 2022, the Code was updated, which applies as of the fiscal year 2023. Changes related to such topics as sustainable long-term value creation, new requirements for the composition of the annual management report and diversity and inclusion. The Supervisory Board and the Management Board fully endorse the basic principle on which the Code is based, namely that the company has a long-term partnership with various stakeholders. FMO has a policy regarding bilateral contacts with our shareholders, which is provisioned by the Code and published on our website.

The relevant principles and best practice provisions of the new Corporate Governance Code have been implemented, with the exception of the following principles and best practice provisions, which can be explained as follows:

BPP 1.1.5: FMO engages with its stakeholders regarding sustainability aspects of the strategy in various forms, from day-to-day, business-as-usual engagement to more strategic and planned engagements, such as regular meetings, surveys, forums, events and stakeholder dialogues.

For example, in 2023 NGOs published assessments of FMO’s performance on transparency and FMO’s climate policy, on basis of which we engaged in dialogue meetings.

In 2024, we expect to publish an outline policy for effective dialogue with the relevant stakeholders.

BPP 1.3.6: This provision only applies if the company does not have an internal auditor. FMO does have an internal auditor.

BPP 2.1.5: The diversity and inclusion policies of the Supervisory Board and Management Board are included in the Supervisory Board profile and the Standing Rules of the Management Board. In practice they are well adhered to, given that the Supervisory Board consists of 40 percent female and 60 percent male members (after appointment of the new Supervisory Board member 50 percent / 50 percent) and in the five-member Management Board, the 40 percent female / 60 percent male composition. For FMO’s staff, FMO has several D&I practices, a statement, communities and reports on several elements, however, the aim is to include these in a D&I policy.

BPP 2.1.6: Reporting takes place via (amongst others) the annual report, SER portal and internal gender diversity reporting. FMO does not report yet according to a D&I policy document.

BPP 2.2.2: This provision refers to the reappointment of Supervisory Board members. The third term of four years, as meant in the previous version of the Corporate Governance Code, is split into two terms of two years in the current version of the Corporate Governance Code. Section 2.7 of the Supervisory Board Standing Rules, which deals with reappointments and the duration thereof, will be amended accordingly at the next revision. None of the Supervisory Board members exceeded the eight-year term in 2023.

BPP 2.2.4: This provision requires a written (separate) succession plan, which focuses on knowledge, experience and diversity. At FMO, knowledge, experience and diversity are included in the profiles of the Supervisory Board and the Management Board. Succession and knowledge are regularly discussed in meetings of among others the SARC. The Supervisory Board retirement schedule is placed on the website. The Supervisory Board uses this as a basis for succession planning in the coming years.

BPP 2.5.3: In practice, FMO complies with this principle. However, FMO has no integral D&I policy yet.

BPP 2.3.10: This provision states that the Supervisory Board is supported by the Corporate Secretary of FMO. Section 6.1 of the Standing Rules of the Supervisory Board states that the Supervisory Board secretary might also be one of its members. In practice, it is the Corporate Secretary of FMO. This will most likely be amended at the occasion of the next amendment.

BPP 2.8.1 - 2.8.3: Stipulations on takeover bids are not implemented, given our stable majority shareholder, the State of The Netherlands.

BPP 4.1.4: 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 4.1.10: The draft of the AGM minutes was published in time. However, the final version was accidentally published later then the Articles of Association require.

BPP 4.2.3: This provision relates to analysts’ meetings and presentations to institutional investors. This provision is of no practical significance to FMO and therefore does not apply.

BPP 4.2.6: This best practice provision requires the Management Board to provide a survey in the annual report of all anti-takeover measures to prevent control from being relinquished. FMO has not incorporated any anti-takeover measures in its articles of association, because it has a stable majority shareholder, namely the State of The Netherlands. Therefore, an overview as meant in this provision is not incorporated in this annual report.

BPP 4.3.3: This provision does not apply, as 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 4.3.4: This provision does not apply, as it refers to financing preferred shares, which FMO does not use in its share capital.

BPP 4.3.5 and 4.3.6: These provisions are most likely not applicable, as FMO most likely does not have shareholders which can be fully characterized as institutional investors with regard to FMO. Moreover, the provision is the responsibility of the institutional investor.

BPP 4.3.7 and 4.3.8: These provisions are not applicable, as FMO’s shares are not listed.

Principle 4.4. Shareholders recognizing the importance of a strategy focused on sustainable long-term value creation for the company and its affiliated enterprise, is the responsibility of the shareholder.

BPP 4.5.1 - 4.5.8: These provisions concern the issuing of depositary receipts for shares. FMO’s articles of association lay down that the company is not permitted to cooperate in issuing depositary receipts of shares.

BPP 5.1.1 - 5.1.5: These provisions do not apply, as FMO does not have a one-tier board.

A few minor textual changes will be included in the relevant Standing Rules and/or policies in the course of 2024.

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