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New recommendations for good corporate governance

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Legal news
calendar 5 April 2021
globus Denmark

New recommendations for good corporate governance have recently been published. The new recommendations mainly focus on companies’ long-term value creation, sustainability, and the overall purpose of companies. The recommendations are aimed at listed companies, but companies that are not listed can also use the recommendations as inspiration for their day-to-day management and operation of their company.

The updated recommendations for good corporate governance replace the committee's recommendations from 2017 and enter into force for the financial year beginning on 1 January 2021 or later. According to the Danish Financial Statements Act and Nasdaq's set of rules for issuers (the so-called Main Market Rulebook), listed companies must prepare a statement of good corporate governance, which the company must make publicly available.

The update introduces several new concepts, such as the company's sustainability and the company's overall purpose.

Updated recommendations

The updated recommendations include several important changes, for example:

  • The company's long-term value creation - including increased dialogue with the stakeholders in the company.
  • Transparency in relation to the management's payroll.
  • The company's sustainability in terms of both the internal sustainability (for example the financial) and the external sustainability (for example the environmental).
  • The company's overall purpose, which means the company's long-term purpose, and the value that the company delivers to its stakeholders and society.

How to follow the recommendations

The committee's recommendations are addressed to companies that have shares admitted to trading on the regulated market in Denmark. However, other companies, including private limited companies and non-listed public limited companies, can benefit from drawing inspiration from the recommendations, in order to exercise responsible management. The recommendations have been prepared by collecting several views and experiences of best practice for corporate governance.

IUNO’s opinion

IUNO’s opinion is, that all companies - including companies that are not listed - should review the new corporate governance recommendations. The recommendations can be used to strengthen companies' reputation externally and at the same time have a beneficial effect on the company in the long run.

Especially the recommendation on sustainability is already a large part of many companies' strategy, and the new recommendations can be used as another push in a sustainable direction - both internally and externally.

[Danish Committee on Corporate Governance, ″Danish Recommendations on Corporate Governance″, December 2020]

The updated recommendations for good corporate governance replace the committee's recommendations from 2017 and enter into force for the financial year beginning on 1 January 2021 or later. According to the Danish Financial Statements Act and Nasdaq's set of rules for issuers (the so-called Main Market Rulebook), listed companies must prepare a statement of good corporate governance, which the company must make publicly available.

The update introduces several new concepts, such as the company's sustainability and the company's overall purpose.

Updated recommendations

The updated recommendations include several important changes, for example:

  • The company's long-term value creation - including increased dialogue with the stakeholders in the company.
  • Transparency in relation to the management's payroll.
  • The company's sustainability in terms of both the internal sustainability (for example the financial) and the external sustainability (for example the environmental).
  • The company's overall purpose, which means the company's long-term purpose, and the value that the company delivers to its stakeholders and society.

How to follow the recommendations

The committee's recommendations are addressed to companies that have shares admitted to trading on the regulated market in Denmark. However, other companies, including private limited companies and non-listed public limited companies, can benefit from drawing inspiration from the recommendations, in order to exercise responsible management. The recommendations have been prepared by collecting several views and experiences of best practice for corporate governance.

IUNO’s opinion

IUNO’s opinion is, that all companies - including companies that are not listed - should review the new corporate governance recommendations. The recommendations can be used to strengthen companies' reputation externally and at the same time have a beneficial effect on the company in the long run.

Especially the recommendation on sustainability is already a large part of many companies' strategy, and the new recommendations can be used as another push in a sustainable direction - both internally and externally.

[Danish Committee on Corporate Governance, ″Danish Recommendations on Corporate Governance″, December 2020]

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Aage

Krogh

Partner

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Grønlund Jakobsen

Associate

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Senior legal assistant

Matilde

Grønlund Jakobsen

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Senior legal assistant

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Valentin Olsen

Junior legal assistant