Jab regret (“prikspijt”) is the word of the year according to the ‘Dikke van Dale’ dictionary. To me, this word is the sad symbol of the (kindly put) curious way in which the Covid-19 problem has been handled in the Netherlands for almost two years now. Everyone with a slight feeling of unrest is allowed to ventilate it loudly on social media. All are taken into account (at least a little). Surely we should all be in agreement? In a society with more and more artificially created contradictions, this is an impossible task. So we are structurally too late in taking the right measures.
This is not typical of the Netherlands. We in the Dutch Caribbean are also good at it. All interests, visible and less visible, must be taken into account, even if they are not entirely worth defending. Decision-making is therefore difficult and often time-consuming, also here with us. This is disastrous for business. Directors and supervisory directors benefit from clear beacons and traffic lights. They need clear overviews of possible and necessary directions for their actions and alternatives to them.
In the area of corporate governance, direction can be given in a so-called rule-based way and in a principle-based way. The first is based on legislation. This must simply be followed. The second is based on general guidelines that have proven their value in practice. These are recommended but do not need to be followed. Corporate governance codes are a good example of a principle-based approach. They give direction, but it is possible to deviate from them, provided that reasons are given. Most countries have combinations of rule-based and principle-based governance rules.
Some codes are shifting from a principle-based approach more or less to a rule-based approach. You can observe this in various ways.
If it is exceptionally permissible to deviate, then each deviation must indicate what will be done internally to minimize the negative impact of the deviation. It must also be indicated when, in what timeframe and how full compliance will be achieved. Another way for a corporate governance code to move towards a rule-based system is through a large scope and level of detail. The draft corporate governance code for Financial Institutions and Service providers (“FISP”) is an example of this. This draft code has recently been issued by the Central Bank of Curacao and Sint Maarten. The code has 91 pages with no less than 231 clauses. In many cases these clauses are divided into various sub-clauses. In addition, the code has a number of annexes with many (additional) clauses.
It should be noted that it is highly commendable that the CBCS prepared such a comprehensive document for the corporate governance of the financial sector. The tragedies at several large financial institutions in our country have shown that such a guide function is strictly necessary. However, the effective application and operation of such a document would require greater thought as to how the code can be applied in a clear and practical manner. In its current form, effective application is hampered by a large number of provisions that fit better in Anglo-American legal systems than in the legal systems of Curacao and Sint Maarten.
It is good that the CBCS is engaging in dialogue with the financial sector to further improve this document. Otherwise, code bliss will become code regret.