General Meeting
Employee influence
Corporate governance at the local
Rabobanks
Management and supervision
Partnership model
Executive model
Transparency
52 Rabobank Group Annual Report 2005
Organisation and risk management: Rabobank Group Corporate Governance
The General Meeting is the body through which all local Rabobanks, as
members of Rabobank Nederland, can exercise direct control. The
General Meeting deals with important issues, such as the adoption of the
financial statements, granting discharge, amendments to the Articles of
Association and regulations, and the appointment of members of the
Supervisory Board. The Central Delegates Assembly issues advice prior
to the General Meeting on all the items on the agenda, by which time
the local Rabobanks and Rabobank Nederland have already discussed
these subjects in detail. The local Rabobanks have voting rights in the
General Meeting in proportion to their balance sheet total. Because of
the special relationship between Rabobank Nederland and its members,
the General Meeting also enjoys virtually full attendance.
In 2005, a new employee representative body was created: the Group
Staff Council of Member Banks (GOR AB), which acts as a discussion
partner to the Manager on collective influence issues that concern all
local Rabobanks. The creation of the GOR AB does not affect the position
of Rabobank Nederland's Works Council or the existing Works Councils of
the local Rabobanks. As a result, they continue to act in full as employee
representative bodies within the meaning of the Works Councils Act.
Only banks that have a cooperative structure and whose Articles of
Association have been approved by Rabobank Nederland can be mem
bers of Rabobank Nederland. In turn, the local Rabobanks have members
as well, who are local clients. The local Rabobanks have strictly defined
rights and obligations towards Rabobank Nederland and each other.
On behalf of the Dutch Central Bank, Rabobank Nederland supervises
the local Rabobanks on solvency, liquidity and accounting information
systems.
Since June 2004, two governance models are possible for the local
Rabobanks. The introduction of a second governance model - the
executive model - besides the existing partnership model was prompted
at the time by the wish to respond to internal and external changes, for
example, the local scaling up, which was well on the way by then, a
changing market, and increasing legislation and regulations. Both
governance models focus on ensuring effective management as well as
professional and independent supervision. They will continue to exist
alongside each other in the coming years as equally valid alternatives.
In this context, adequate assurance of effective member influence and
control is likewise essential in order to ensure that the governance of
the local Rabobanks continues to be carried out both adequately and
professionally in the future, but also in a way that benefits their coope
rative character. The members of all the local Rabobanks have important
powers, for instance to adopt the financial statements, to amend the
Articles of Association, to appoint members of the Supervisory Board
and to grant discharge from liability. In addition, account is rendered to
the members in respect of the bank's management and supervision.
In the partnership model, the Board of each local Rabobank consists of
persons elected by the members from their ranks, plus a managing
director who is appointed by the Supervisory Board (formerly the Board
of Supervisors). The managing director is primarily concerned with the
day-to-day management of the bank's operations. The Supervisory Board
supervises the management. This model was refocused in 2004, as part
of which the roles and responsibilities of the appointed and elected
managers were redefined, the provision of information was improved
and the supervisory role of the Supervisory Board was strengthened.
Banks using the partnership model may install a members' council if
they wish.
In the executive model, each local Rabobank has a Board of Directors
comprising several persons appointed by the Supervisory Board, which
operates under the supervision of the Supervisory Board. In this model,
no managers are elected by the members from their ranks, as is the
case in the partnership model. In order to firmly and permanently
embed member influence and control in the structure, banks using the
executive model institute a members' council, which is a delegation of
all members elected by the members from their ranks. The members'
council assumes the bulk of the powers of the General Meeting and
furthermore promotes and structures member control and engagement.
The General Meeting continues to exist, but decides only on major
issues that impact the bank's continued existence.
An important precondition for good corporate governance at Rabobank
Group is an open culture with clear accountability for the management
and supervision. Without proper transparency, Rabobank Nederland
cannot render account to the local Rabobanks on its management and
supervision, nor can this be assessed.
