1.5.1.1

The Executive Board and the Supervisory Board are responsible for the Company’s corporate governance structure. The corporate governance of ForFarmers N.V. (‘the Company’) is determined by the law, the Articles of Association and the pertinent regulations. The regulations are established on the basis of the current Dutch Corporate Governance Code 2008 (the ‘Code’)¹. The Executive Board and the Supervisory Board are of the opinion that, partly for historical reasons, deviations from or qualifications of some individual provisions of the Code by ForFarmers are justified. These deviations or qualifications are explained below.

ForFarmers has published its Corporate Governance Statement² as part of the Report of the Executive Board and as a separate document on its website. The Corporate Governance Statement explains how the Code is applied by ForFarmers N.V. and provides information in accordance with the provisions of Article 10 of the Takeover Directive and Article 3 on disclosure of non-financial information. This Statement also contains information regarding the main points of the internal risk management and control systems related to ForFarmers’ financial reporting process, how the Annual General Meeting of Shareholders (AGM) works, and the composition and functioning of the Executive Board and - Executive Committee, and the Supervisory Board.

Deviations / qualifications from the Code

Deviations and/or qualifications from the Code and the main points of the corporate governance of ForFarmers N.V. are explained below.

1.5.1.2

1.5.1.3

Main points of Corporate Governance

Executive Board and Executive Committee

Externally, the Executive Board, together with the other Directors, acts under the name of the ‘Executive Committee of ForFarmers’. The Executive Board is responsible for achieving the Company’s objectives, for strategy with the associated risk profile, for developing results and for undertaking relevant corporate social responsibility aspects. The Executive Committee also steers the operational management. The Executive Board Regulations are published on the Company’s website.

The number of members of the Executive Board is determined by the Supervisory Board. In the period under review, the Executive Board consisted of three members and the Executive Committee (including the Executive Board) of eight members. As of 1 January 2017, the Executive Committee will consist of seven members as a result of the retirement of one of its members and the distribution of his tasks to another member of the Executive Committee. As of the General Meeting of Shareholders of 15 April 2016, the following retirement schedule applies for the members of the Executive Board.

Appointment of members of the Executive Board can be renewed for an unlimited amount of times, each time for a maximum of four years.

In the period under review, the Executive Board has assessed the operation of the internal risk management and control systems. The findings, recommendations and measures that came out of this assessment were discussed with the Audit committee, the Supervisory Board and the external auditor. ForFarmers has appointed an internal auditor from 1 January 2017. The internal auditor oversees whether the internal risk management and control systems work properly.

Supervisory Board

The Supervisory Board supervises the policy of the Executive Board as well as the general affairs of the Company and its affiliated enterprise. The Supervisory Board advises the Executive Board. The Supervisory Board is composed of six natural persons, all of whom are presented on the website of the Company. The Supervisory Board has three key committees, i.e. an Audit Committee, a Remuneration Committee, and a Selection and Appointment Committee. The Supervisory Board Regulations and those of its committees as well as the Profile of the Supervisory Board are published on the Company’s website.

Shareholders

The Company’s share capital is composed of ordinary shares, preference shares and one priority share. The ordinary shares of ForFarmers N.V. are listed on Euronext Amsterdam since 24 May 2016. Furthermore, depositary receipts of ordinary shares are issued with the cooperation of the Company. No preferential shares are issued. Coöperatie FromFarmers U.A. is the holder of the priority share as is further explained below.

The Company has drawn up a Policy on bilateral contacts with company shareholders, pursuant to best practice provision IV.3.13, which is published on its website. As stated in the aforementioned policy, the relationship between the Company and Coöperatie FromFarmers U.A., is such that, partly for historical reasons, additional agreements are authorised in this relationship. These agreements are laid down in the Relationship Agreement which can be found on the Company’s website.

Trust Office Foundation

The management of the ForFarmers Trust Office Foundation operates independently of the Company. The ForFarmers Trust Office Foundation holds ordinary capital shares in the Company and is intended, inter alia, for (i) the acquisition of ordinary shares for management purposes (ii) the issue of depositary receipts, (iii) where applicable, the acquisition, disposal and encumbrance of shares for its own account, (iv) the exercise of rights associated with the ordinary shares it holds and (v) the granting of proxies for the exercise of voting rights as well as the acceptance of voting instructions as regards the exercise of the voting right, all in accordance with the Trust terms & conditions. The Articles of Association, Trust terms & conditions and the Report of the ForFarmers Trust Office Foundation (in Dutch: “Stichting Beheer- en Administratiekantoor ForFarmers”) are on the Company’s website. As aforementioned, only Coöperatie FromFarmers U.A. may issue binding voting instructions for the shares held by the aforementioned foundation (and for which voting rights have not been requested).

The Trust Office Foundation shall only accept ordinary shares for management purposes against issue of depositary receipts to (i) a holder of depositary receipts within the context of exercising a share claim, (ii) someone entitled to the balance of a participation account held with Coöperatie FromFarmers U.A. within the context of a conversion, (iii) an employee as part of an participation plan, (iv) Coöperatie FromFarmers U.A. or (v) a party designated by the aforementioned Cooperative.

Priority shareholder

The priority share is held by Coöperatie FromFarmers U.A. Given that Coöperatie FromFarmers U.A., on the latest reference date of 1 January 2017, could exercise the voting right for more than fifty per cent (50%) of votes to be cast on the total of ordinary shares on the shares it holds and/or could give voting instructions with regard to the shares held by the Trust Office Foundation, Coöperatie FromFarmers U.A. as priority share holder:
(i)        has a recommendation right for four of the six members of the Supervisory Board;

(ii)       may appoint a member of the Supervisory Board as Chairman after consultation with the Supervisory Board;

(iii)     has an approval right as regards the decisions of the Executive Board regarding:

1. moving the Company’s head office outside the east of the Netherlands (Gelderland and Overijssel);
2. an important change in the identity of nature of the Company or its enterprise as a result of (1) transfer of the enterprise or practically all of the enterprise to a third party or (2) entering into or breaking off a long-term partnership of the Company or a subsidiary thereof with another legal entity or company, or as fully liable partner in a limited partnership or general partnership, if such partnership or its termination represents a fundamental change to the Company;
3. taking or disposing of a participating interest in the capital of a company to a value of at least a third of the amount of the Company’s equity according to the balance sheet with explanatory notes or, in the event the Company draws up consolidated balance sheets, according to the consolidated balance sheet with explanatory notes, according to the most recently adopted annual accounts of the Company, or any of its subsidiaries;
4. changes to the Company’s articles of association;
5. affecting a merger or division.

Please refer to the Corporate Governance Statement for the conditions for holding the priority share and the special control rights associated thereto if that voting right and/or voting instruction can be exercised or given for 50% or less.

Protective measures

The Company has entered into a call-option agreement with regard to preference shares with Stichting Continuïteit ForFarmers (ForFarmers Continuity Foundation). This Continuity Foundation was established to safeguard the identity, strategy, independence and continuity of the enterprise affiliated with the Company. Stichting Continuïteit ForFarmers is fully independent and has independent management.

Furthermore, Coöperatie FromFarmers U.A. holds a priority share to which rights are associated as provided for in the Company’s Articles of Association.

Code of Conduct and Whistle-blower Policy

ForFarmers expects its employees to act ethically and follow the local rules and procedures in place. Sustainability and its associated corporate social responsibility, forms one of the three key values of ForFarmers, along with ambition and partnership. ForFarmers has a Code of Conduct and a Whistle-blower Policy. The Code of Conduct and the Whistle-blower policy are published on the Company’s website. ForFarmers’ core values and the Code of Conduct are proactively communicated within the organisation. New members of staff follow an e-learning course in which all the aspects of the Code of Conduct are explained. This includes, inter alia, aspects such as anti-bribery and anti-corruption, preventing conflicts of interest, how to handle gifts and hospitality, fair competition and how to handle confidential information. In the period under review, nine incidents or suspected incidents have been reported. In these cases, a high level of confidentiality was in all cases observed and the procedure as described in the Whistle-Blower Policy was followed. Given the nature and/or impact of the alerts, it was not necessary to communicate these to the public. The overview of alerts to incidents and the follow-up thereof is periodically discussed with the Audit committee and the Supervisory Board.

¹This Code can be consulted (in English) through the following link http://www.commissiecorporategovernance.nl. An overview of ForFarmers N.V. as regards the implementation of the Code can be found on the website www.forfarmersgroup.eu.

²Pursuant to the provisions of the Decree of 23 December 2004 adopting further rules on the contents of the annual report, this Corporate Governance Declaration is deemed to form part of the report of the Executive Board.