1 INTRODUCTION
1.1 Purpose
This policy includes the measures implemented for the efficient management of and control over Powel’s operations. The goal is to have systems for communication, monitoring and incentives that enhance and maximise corporate profit and shareholders’ return through the efficient use of the company’s resources. Improvement’s in the Groups Corporate Governance is a continuous process, and is a field that will have increased focus from the board and the management.
1.2 Regulatory framework
Powel ASA is a Norwegian public limited liability company listed on Oslo Børs (the Oslo Stock Exchange).
Powel is subject to the corporate governance requirements set out in the Norwegian Public Companies Act 1997 (the NCA), the Norwegian Securities Trading Act (the STA) and the Norwegian Stock Exchange Regulations (the SER).
Powel has also adopted the Norwegian guidelines on Corporate Governance (Norsk anbefaling for eierstyring og selskapsledelse). Any deviations from these guidelines will be explained in this policy document (“comply or explain”).
1.3 Management of the Powel Group
Management and control of the Group is shared between the shareholders, represented in the General Meeting, the Board of Directors and the President (Chief Executive Officer) according to applicable company law. The company has an external independent auditor.
2 THE BOARD OF DIRECTORS
2.1 Role
Powel shall be headed by an effective board with collective responsibility for the success of the company.
The board of directors duties shall include the strategic guidance of Powel, an effective monitoring of the senior management, the control and monitoring of the financial situation of the company and the company’s accountability towards and communication to its shareholders.
The Group has a management policy, which encourage local decision-making authority, with the corresponding responsibility for their own decisions and the consequences. To secure the risk, and secure uniform coordination and priority of scarce resources, there are established strict decision rules, and reporting tools throughout the Group. There are monthly Business Reviews from each reporting unit, which also is reported the Board of Directors.
The board shall ensure that the Company is well organised and that operations are carried out in accordance with applicable laws and regulations, in accordance with the objects of Powel as specified its Articles of Association and guidelines given by the shareholders through resolutions in a general meeting.
The board shall initiate such investigations as it finds necessary in order to carry out its responsibilities. The board shall also initiate such investigations as demanded by one or more board members.
The board has appointed a Remuneration Committee consisting of two board members with the responsibility to prepare any items to the Board of Directors related to CEO salary and compensation.
2.2 Financial control
2.2.1 Supervision
The Board shall ensure that it is updated on the financial situation of the Company and has a duty to ensure that the Company’s operations, accounting and asset management are subject to satisfactory control. The board shall ensure that the managing director reports monthly to the board on the financial situation of the company.
2.2.2 Adequate capitalisation
The Board shall evaluate whether the Company’s capital and liquidity are adequate in relation to the risks and scope of the Company’s operations at all times and whether it fulfils the minimum requirements established by law or regulation. The Board shall immediately take adequate steps should it be apparent at any time that the company’s capital or liquidity is less than adequate.
2.3 Composition
2.3.1 Number of directors
The board of directors shall have between 3 and 10 directors, including the employee representative(s).
Powel has two employee representative on its board of directors, which has been elected by its employees.
2.3.2 Independent directors
The Company shall have a majority of directors that are independent from its management and main business partners. Additionally, the board of directors shall include at least 2 directors that are independent of the Company’s major shareholders, i.e. shareholders holding more than 10% of the shares.
Independence shall for these purposes mean that there are no circumstances or relationships that are likely to affect or could appear to affect the director’s independent judgement. The test of independence includes whether the independent director:
• has been an employee of the company for the last 3 years
• has received or receives additional remuneration from the company apart from director’s fee or participates in the company’s share option or performance related pay scheme
• has for the last three years had a material business relationship with the company
• has close family ties with any of the company’s directors or senior employees
• has been on the board for more than 8 years from the date of first election
According to the NCA, the managing director cannot also be chairman of the company.
2.4 Appointment and termination – Nomination Committee
The directors are elected by the shareholders in a general meeting for a period of 2 years. The shareholders in a general meeting can remove directors. The employee representative is elected by and among the employees for a period of 2 years.
Powel operates a Nomination committee of three members, independent of the company (i.e. not be a director or employee and otherwise fulfil the criteria of independence set out in 2.3.2 above). The members of the committee are elected by the shareholders in a general meeting.
The committee makes recommendations to the general meeting on the appointment and termination of directors. The committee shall work towards a composition of the board where due consideration is taken to commitment to shareholders return, independence and experience in the relevant sectors (technology and business development, financing and accounting, disclosure and regulatory, etc).
The committee also make recommendation to the general meeting for rumination of the director.
2.5 Proceedings
More detailed provisions on the role, the proceedings and confidentiality obligations of the board of directors are set out in a separate document on board meeting proceedings.
The roles of the board and the chief executive/managing director of Powel has been separated and the division of responsibilities has been set out in writing and agreed by the board.
These provisions are set out in document adopted by the board on 3 May 2005.
2.6 Annual evaluation
The board will annually, in connection with the first board meeting in each calendar year, evaluate its performance in the previous year. The evaluation shall include its own performance, the performance of the sub-committees and the performance of the individual directors. In order for the evaluation to be effective the board shall set themselves objectives, on both a collective and individual level, against which their performance can be measured. The results of the evaluation shall be made available to the Nomination and Remuneration Committee.
3 REMUNERATION OF DIRECTORS
3.1 General
The remuneration of the directors shall be determined by the shareholders in a general meeting and be disclosed in the annual accounts of Powel.
The Nomination Committee make recommendations to the board and the shareholders meeting on the remuneration of all directors.
Directors may receive shares as part of their remuneration.
3.2 Share options
The Company may operate a share option incentive program or a direct share program for its employees. The general terms of the share option program shall be approved by the shareholders in a general meeting.
Any share options to the directors shall be approved by the shareholders in a general meeting.
3.3 Severance payments
No employees of Powel shall have employment contracts granting notice periods of more than 12 months.
4 DISCLOSURE AND TRANSPARENCY
4.1 General
Powel shall provide its shareholders, Oslo Børs and the financial markets generally (through Oslo Børs’ information system) with timely and accurate information at all times. Such information will take the form of annual reports, quarterly interim reports, press releases, stock exchange notifications and investor presentations, as applicable. It shall seek to clarify its long-term potential, including its strategy, value drivers and risk factors. The company shall maintain an open and proactive investor relations policy, a best-practice website and shall give presentations regularly in connection with annual and interim results.
Generally, Powel shall disclose all insider information. Powel will under all circumstances disclose certain events including, without limitation, board and shareholder resolutions regarding dividends, mergers/de-mergers or changes in share capital, issue of warrants, convertible loans and all agreements of material importance that are entered into between group companies or connected parties.
4.2 Communication with Shareholders
The chairman shall make him self available for discussions with the major shareholders to develop a balanced understanding of the issues and concerns of such shareholders, subject always to the provisions of the NCA, the STA and the SER. The chairman shall ensure that the views of shareholders are communicated to the board as a whole.
5 FAIR TREATMENT OF SHAREHOLDERS
5.1 General
The board shall take into account the interest of all the shareholders of the company and treat all shareholders fairly.
5.2 Approval of agreements with shareholders and other related parties
All transactions that are not immaterial between the Company and a shareholder, a director or senior manager of the company (or related parties to such persons) will be subject to a valuation from an independent third party. If the consideration exceeds 5 % of Powel’s share capital such transactions shall be approved by the shareholders in a general meeting, to the extent required by the NCA section 3-8.
The directors and senior management shall notify the board if they have any material direct of indirect interest in any transaction entered into by Powel.
6 AUDIT
Under Norwegian law the auditor is elected by the shareholders in a general meeting.
The board shall make recommendations to the general meeting on the auditor’s appointment, removal and remuneration and shall also monitor the auditor’s independence, including the performance by the auditor of non-audit services.
7 DIVIDEND POLICY
7.1.1 Dividend Policy
Powel's objective is to yield a competitive return of invested capital to the shareholders through a combination of dividends and share price development. In evaluating the dividend amount, the Board of Directors emphasises stable development, the Company's dividend capacity, and the requirements for sound equity capital as well as for adequate financial resources to enable future growth.
Powel expects to pay limited or no dividends for the next few years because of the Company's acquisitive and organic growth strategy.
7.1.2 Information on Dividends
Powel has not made any dividends payments for the last three financial years.
8 SHAREHOLDER MEETINGS
The shareholders exercise the highest authority in Powel through the general meetings.
The annual general meeting of Powel will be held each year prior to the end of May. The AGM shall approve the annual accounts and report and the distribution of dividend, and otherwise make such resolutions as required under applicable law.
The board of directors may convene an extraordinary general meeting whenever it deems necessary or when otherwise legally required. Powel’s auditor and any shareholder or group of shareholder representing more than 5 % of the current issued and outstanding share capital of Powel may require that the board of directors convene an EGM.
The board will send notices of general meetings no later than two weeks prior to the meeting and will observe that the notice and any supporting material be sufficiently detailed and comprehensive. The shareholders may be asked to notify their attendance prior to the meeting. Shareholders who are unable to attend may vote by proxy. A proxy form will be attached to the notification and it will also be possible to give proxy to the chairman of the board or the company’s managing director. Powel will publish the minutes from general meetings on its web-site as well as keeping them available for inspection in the company’s offices.
9 CHANGE IN CONTROL, TAKEOVERS
9.1 No poison pills
Powel shall not establish any mechanisms that may hinder a takeover, except if this has been resolved in a general meeting by a two-third majority (of votes cast and share capital represented).
Powel has according to its articles of association a mandatory offer requirement which is triggered at 30%, cf section 9.2.2, below.
9.2 Overview of Norwegian statutory provisions on takeovers
9.2.1 Voluntary offer
An offer to acquire shares in Powel which, if accepted, will give the acquirer more than 40 % of the shares must be made in an offer document. The acquiror will in such event be obliged to treat all shareholders equally.
9.2.2 Mandatory offer
A mandatory offer has to be made in the event an acquiror (together with any concert parties) acquires more than 40 % of the shares having right to vote in Powel. Powel has according to its articles of association lowered the threshold to 30 %.
The requirement to make a voluntary offer is triggered when a purchaser becomes the owner of such percentage of the shares. A mandatory offer must be made within 4 weeks after the threshold was passed. The only alternative to a mandatory offer at this stage is to sell a sufficient number of shares to fall below the 30% threshold.
All shareholders must be treated equally and the price to be paid is the higher of (i) the highest price paid by the purchaser during the last 6 months, and (ii) the market price when the 30% threshold was passed. The offer must be made in cash or contain a cash alternative at least equal in value to any non-cash offer.
9.2.3 Compulsory Acquisition (“Squeeze out”)
Compulsory acquisition of the remaining shares may be initiated by a purchaser who has acquired more than 90 % of the shares (and corresponding voting rights). It is initiated through a Board decision of the 90 % owner and payment of the price offered. Failing agreement between the parties, the price shall be determined through a valuation by the court, but the acquiror will obtain title to the shares immediately.