Code Corporate Governance Curacao

On January 1, 2010, the National Ordinance regarding corporate governance came into effect. Based on this the Code Corporate Governance Curacao came into being, that also came into effect on January 1, 2010. In it, reference is still made to the Executive Council and the island territory of Curacao, but as from October 10, 2010 these are understood to mean the government of Curacao and the Country Curacao.

The National Ordinance does not only undertake to establish a corporate governance code, but also to implement the Code in the government-owned companies. In 2011, this implementation obligation led to the drafting of model articles of association, more about that later.

In addition, the law obligates the establishment of an independent advisory and supervisory body: the Foundation Office Supervision and Standards Government Entities [Stichting Bureau Toezicht en Normering Overheidsentiteiten] (SBTNO). It has been reported that the SBTNO is operational as of May 1, 2012. Prior to that date, the duties of the SBTNO were performed by SOAB [Stichting Overheids-Accountants Bureau] as temporary Corporate Governance Adviser.

The law also obligates to seek advice from the SBTNO in certain cases (e.g. in the case of the appointment or dismissal of directors and supervisory directors, and in establishing the appointment procedures and profiles) and prior to the decision-making process. This advice is published by the SBTNO on a website. Any serious objections against the intention are indicated by SBTNO in the advice. If that is the case, the government may still deviate from the advice, but the government must then immediately notify the SBTNO thereof in writing and motivated.

If the government (as representative of the shareholder), has, e.g., the intention to dismiss a director of a government-owned company, this motivated intention, will be send to the SBTNO, that will then send an advice to the government that is to be published. If the SBTNO does not see any serious objections against that intention the dismissals decision can be taken. If such objections do exist, the government must indicate in writing and motivated why it deviates from the advice, however, the dismissals decision may still be taken.

In addition, it must not be forgotten that the rules of corporate governance leave Book 2 Civil Code Curacao (CC) intact. The basic principle is that a director under the articles of association can be dismissed ‘at all times’. The rules of corporate governance do not bring about any chances to that basic principle of the CC. It cannot be excluded that in coloring the standards of Book 2 CC Curacao, e.g. reasonableness and fairness, the rules and basic principles of corporate governance may indeed play a role.

The rules of corporate governance instruct the government to ensure that the articles of association of government-owned companies (and government-owned foundations) are brought into line with the provisions thereof. The term set thereto has expired for a good while already. With regard to the companies, it is not very difficult to amend the articles of association, because in most cases the government holds all shares either directly or indirectly. The government has drafted model articles of association.

Reviewing the model articles of association can take place in twofold: against Book 2 CC of Curacao and against the rules and principles of corporate governance.

Reviewing against Book 2 CC Curacao, which code of law was amended effective from January 1, 2012, is more technical by nature.

Reviewing against the rules and principles of corporate governance is in part technical by nature, but goes further. The following has been laid down in article 4, paragraph 1 of the National Ordinance regarding corporate governance:

The government lays down by order a Code Corporate Governance, regulating according to internationally accepted standards a good and transparent management of companies and foundations and the supervision thereon in conjunction with each other.

The law assumes that every two years after its adoption, it is reviewed whether the Code Corporate Governance needs adjustment, of course after the SBTNO has been heard in the matter. If any changed internationally accepted standards so demand, the Code is in any case adjusted. These standards include, in my opinion, in any case the ‘Guidelines on Corporate Governance of State owned Enterprises’ of the OECD from 2005. Such international standards are also important for the interpretation of the Code Corporate Governance. (To be continued)

Karel Frielink
Attorney (Lawyer) / Partner

(14 June 2012)


Jun 2012


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