Most codes for good corporate governance are based on the so-called ’comply or explain principle’. This rule fits a gliding scale of obligations. At the bottom, this scale gives you full freedom whether or not to follow a rule from the Code. At the top it imposes a full obligation to comply with all provisions of the Code.

Like the Dutch Corporate Governance Code, The Curacao Code is approximately in the center of the scale: there is no full freedom, but no full obligation either. If the Code is not complied with in a certain case, you have to explain why not. This seems simple, but in practice it is an unmanageable problem. To whom and how do you explain that you do not comply with the Code? Is it permitted not to comply with the Code at all, as long as you properly explain why you don’t? And if this is not permitted, what are the limitations and how are these determined?

My experience is that these questions are (barely) not discussed in most management boards and supervisory boards of governmental entities, to which our Code Corporate Governance applies. This is risky. In recent years, the research into the management of state-owned companies increases, both in Curacao and in St. Maarten and Bonaire. Researchers also look at governance and how it is realized. Therefore, it is advisable to pay more attention to it.

In this perspective, the following guidelines could be taken into account. Deviation from the Code should be an exception rather than a rule. In other words: all provisions of the Code have to be followed, unless there are good reasons not to. In Europe and the Netherlands there are developments in which deviations are actually not permitted. Consequently, the Code becomes rather obligatory than normative.

The criterion to be used to justify deviation is found in the interest of the legal entity. One has to be able to argue that not following the Code leads to a more desirable result for the legal entity than following it. If there is no such reasoning, it is not permitted to deviate from the Code.

And to whom and in what reports should the deviation be explained? In any event to the shareholder in the annual report, but also in management reports and reports of the supervisory board. Good governance leads to transparency. Therefore, many organizations publish these complete reports on their websites. This makes the opinion on the justification of deviation from the Code Corporate Governance public. Everyone can then form an opinion on it. This is how it should also be with governmental entities.

Do you have a question about corporate governance yourself? Please e-mail it to and perhaps your question will be discussed in the next blogpost.

Related article