Corporate governance codes

FMO abides by two governance codes: the Dutch Banking Code and the Dutch Corporate Governance Code. We comply with the Banking Code or will otherwise explain in a document the way in which the Banking Code was applied, including concrete examples. This document can be found on our website: https://www.fmo.nl/about-us/governance-codes-and-regulations

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 has chosen to do so. The Supervisory Board and the Management Board fully endorse the basic principle on which the Code is based, namely that the company is a long-term partnership of our various stakeholders. In 2014, FMO published a policy specifically regarding bilateral contacts with our shareholders, which is provisioned by the Code and is available on our website: https://www.fmo.nl/about-us/governance-codes-and-regulations

On December 8, 2016 a revised version of the Code was presented, since its role in society had developed over time. From this annual report covering 2017 onwards we will report on compliance using the revised Code (see below). The main modernization is the focus on long term value creation and the introduction of culture as part of good corporate governance.

FMO promotes diversity at all levels, including the Management and the Supervisory Boards. As principle 2.1.5 of the Code requires, FMO has diversity policies, which are included in the Profiles of the Supervisory Board and the Management Board. The aim is to have well-balanced boards, which are up to their task and can come to solutions, while considering the members’ different perspectives, backgrounds and experiences. The results of the efforts are that as of the upcoming AGM in May 2018, the SB will consist of 50% men and 50% women. In 2017, the MB consisted of 33% men and 67% women. In both boards, the ages of the members are well distributed and knowledge and experience comply with the applicable matrixes. In 2017, FMO proudly welcomed its first African Management Board member, Fatoumata Bouaré.

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

BPP 2.2.2 Section 2.7 of the SB Standing Rules needs amendment. However, in practice only the Chairman of the Supervisory Board, Pier Vellinga, exceeds the eight years as, in short, he was the best candidate to succeed the former Chairman, Jean Frijns, who retired October 1, 2017.

BPP 2.2.4 In 2017, several changes took place with regard to the Supervisory Board: a new Chairman of the Supervisory Board, a new Chairman of the Audit and Risk Committee (new member) and a new Chairman of the Selection, Appointment and Remuneration Committee were appointed. Furthermore, another new member was searched for, who will be appointed in 2018. Due to these changes, the Supervisory Board deemed it wise to discuss the succession plan again in the beginning of 2018. A preliminary schedule was published on the website at the beginning of 2018.

BPP 2.3.10 Section 6.1 of the Standing Rules of the Supervisory Board needs a slight amendment regarding the Company Secretary. This will be seen to in 2018.

BPP 2.4.2 Other positions of the SB members are reported on at least yearly. However, this should have been discussed in the SB meeting. This will be done in 2018.

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 3.4.2. No specific overview with the elements of the labor agreement with the new CRFO has been published on FMO’s website before her appointment. However, the MB remuneration policy is published on the website. Further, the compensation of all MB members is incorporated in the Annual Report.

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 4.1.8 Koos Timmermans was present at the EGM of September 27, 2017. Fatoumata Bouare was not, as she came from abroad and was travelling. The CEO read a statement on her behalf.

BPP 4.2.3 This provisions relates to analysts’ meetings and presentations to institutional investors. This provision is of no practical significance to FMO and therefore do 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, which has to do with the fact that FMO 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 this provision refers to financing preferred shares, which FMO does not use in its share capital.

BPP 4.3.5 and 4.3.6 These provisions do not apply, as FMO is not an institutional investor.

BPP 4.4.1 – 4.1.8 These provisions concern the issuing of depositary receipts for shares. There is no such requirement at FMO, apart from the articles of association, which 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.