| Corporate Governance |
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Adopted by the Board of Directors on the 6th of September 2006
1. Principles for corporate governance Marine Farms believes that maintaining high standards of Corporate Governance will improve the quality of discussions and work to be carried out by the corporate bodies. A sound Corporate Governance practice will strengthen confidence in the Company among shareholders, the capital market and other interested parties and thus contribute to value creation for the shareholders.
1.2 Relevant codes of practice
1.3 Relevant legislation
2. Business and object "The object and purpose of Marine Farms ASA is to carry out farming, sale and processing of aquatic animals, consultancy services, research and development within the same areas as well as to participate in other companies with similar objects and purposes." (office translation) Marine Farms' objective and principal strategies for its business is to invest in regions/segments where it may become one of the top 25% producers earnings wise. Focus is on large and efficient clusters, controlling the entire value chain from broodfish to customer. Its activity shall be diversified in terms of species and markets, leveraging on established species and investing in new ones. The company will seek market leadership in selected niches by being an innovative and trustworthy supplier of high quality seafood products.
3. Equity and dividends The Board of Directors' principal policy as regards the payment of dividends is to maximise returns on equity primarily in terms of increase in the share price. Dividend payments will be dependent on Marine Farms' earnings, financial situation and cash flow; possibilities for further value creation through investments taken into account. Mandates granted to the Board of Directors to increase Marine Farms' share capital or to purchase own shares shall as a general rule be restricted to defined purposes. At each Annual General Meeting, the shareholders shall have the opportunity to evaluate and consider the board mandates granted. Thus, the mandates should be limited in time to no later than the date of the next Annual General Meeting. All mandates not in compliance with these guidelines should be accounted for in the Annual Report.
4. Equal treatment of shareholders, transactions with close associates
No shareholders shall be treated on unequally unless in the Company's and the shareholders' common interests. Any decision to waive the pre-emption rights of existing shareholders to subscribe for shares in the event of an increase of Marine Farms' share capital must be justified, and an explanation shall be appended to the agenda for the General Meeting. Any transactions carried out by Marine Farms in its own shares shall be made either through the stock exchange or, if carried out in any other way, at prevailing stock exchange prices. If there is limited liquidity in the Company's shares, the Company should consider other ways to ensure equal treatment of all shareholders. In the event of any not immaterial transactions between the Company and its shareholders, directors, members of the Executive Management or close associates of any such parties, the Board of Directors shall arrange for valuation to be obtained from an independent third party. The same shall apply to transactions between companies within the Marine Farms group where any of the companies involved have minority shareholders. All such transactions shall be reported by the Board of Directors in the Annual Report. The Company has established and operates guidelines to ensure that members of the Board of Directors and the Executive Management promptly notify the Board of Directors if they have any significant direct or indirect interest in any transaction entered into by the Company
5. Freely negotiable shares
6. General Meetings General Meetings are convened by written notice to all shareholders with known addresses with a minimum of 14 days notice. All shareholders are entitled to submit items to the agenda, meet, speak and vote at the General Meetings. Proposed resolutions and supporting information shall be distributed to shareholders no later than the date of the notice. In order to ensure that the General Meeting is an effective forum for the views of the shareholders and the Board of Directors, the Board shall see that the information distributed is sufficiently detailed and comprehensive as to allow the shareholders to form a view on all matters to be considered. The Board of Directors shall take steps to ensure that as many shareholders as possible can exercise their rights by participating in General Meetings in Marine Farms, for instance by setting deadlines for shareholders to give notice of their intention to attend the meeting (if any) close to the date of the meeting as possible and by giving shareholders who are not able to attend the option to vote by proxy. The Board of Directors shall make arrangements for shareholders voting by proxy to give voting instructions on each matter to be considered at the meeting. The General Meetings shall be organised in such a way as to facilitate dialogue between shareholders and the officers of the Company. Thus, the Board of Directors must ensure that the members of the Board and the auditor (and, if any, the nomination committee) are present at all General Meetings. Also, the Board of Directors shall make arrangements to ensure an independent Chairman for each General Meeting, for instance by arranging for the person who opens the General Meeting to put forward a specific proposal for a Chairman. The Minutes of the General Meetings shall be made available on Marine Farms' web site.
7. Nomination committee
8. The board of directors The Board of Directors of Marine Farms shall consist of 5 - 7 directors elected by the General Meeting. In order to give shareholders an opportunity to re-evaluate the members of the Board, term of office for members of the Board of Directors of Marine Farms is two years. Directors may and should be re-elected so that the entire Board of Directors is not replaced at the same time (save for in extraordinary situations). However, when re-electing members of the Board, the value of continuity should be balanced against the need for renewal, the Board's independence of the Executive Management taken into consideration. The existing directors shall be presented in the Annual Report and on the Company's web site. All proposed directors will be introduced in detail minimum two weeks prior to the General Meeting. The Chairman of the Board of Directors shall always be elected by the General Meeting. The composition of the Board of Directors shall always ensure that the Board can attend to the common interests of all shareholders and meet the Company's need for expertise, capacity and diversity. Attention should be paid that the Board of Directors can function effectively as a collegiate body. The Board shall consist of individuals who are willing and able to work as a team. Each member shall have sufficient time available to devote to his or her appointment as a director. The composition of the Board of Directors shall ensure that it can operate independently of any special interests. At least half of the members of the Board shall be independent of the Company's Executive Management and material business contacts. At least two of the directors shall be independent of the Company's main shareholder(s). Members of the Board of Directors, or persons closely connected with them, shall not be consultants for any Company in the Marine Farms group, not be employed by or have any other agreements of economic significance with any such companies. The Marine Farms group cannot without the approval of the Board of Directors of Marine Farms buy consultancy services from companies in which any director is an owner, employee or otherwise has an interest. This extends to any Company that according to the Public Limited Companies Act § 1-3 is in the same group of companies. All the directors are encouraged to hold shares in Marine Farms, however not to an extent which can encourage a short-term approach which is not in the best interest of Marine Farms and its shareholders over the longer term. Marine Farms does not have more than 200 employees, and therefore, no corporate assembly has been elected.
9. The work of the Board of Directors The main responsibilities of the Board of Directors are to: Lead Marine Farms' strategic planning and make decisions that form the basis for the Executive Management to prepare for and implement investments and structural measures. The Company's strategy shall be reviewed on a regular basis; Ensure that all instructions given by the Board of Directors are complied with; Ensure that the Board of Directors are well informed about the Company's and the group's financial position, Produce an annual plan for its work, with particular emphasis on objectives, strategy and implementation; Ensure the adequacy of the Company's Executive Management and issue instructions for its work in which the areas of responsibilities and duties are clearly defined, also with respect to the relationship between the Executive Management and the Board of Directors; Agree on dividend policy; Annually evaluate its work, performance, composition and expertise and that of the Chief Executive Officer (the "CEO"). The evaluation of the Board's work should, in case a nomination committee is being established, be made available to such committee; and Ensure that a system of direction and internal control is established and maintained as to ensure that the Company group activities are conducted in accordance with all rules and regulations applicable to the group, Marine Farms' Articles of Association, its corporate values and its ethical guidelines, as well as authorisations and instructions approved by the General Meeting. The internal control arrangements must address the organisation and implementation of the Company's financial reporting. The Board must provide information in the Annual Report on how the Company's internal control procedures are organised. The Chairman of the Board of Directors carries a particular responsibility for ensuring that the Board of Directors performs its duties in a satisfactory manner and that the Board is well organised. The Board of Directors has elected a deputy chairman who takes chair in the event that the Chairman of the Board cannot or should not lead the work of the Board, including in matters of a material nature in which the Chairman has an active involvement. The Board of Directors may appoint board committees, for instance in order to help ensure thorough and independent preparation of matters relating to financial reporting and compensation paid to the members of the Executive Management. The Board of Directors of Marine Farms has currently not appointed any committees. If the Board of Directors should choose to appoint board committees, the Board of Directors shall adopt guidelines for the activities and responsibilities of such Board committees and account for details in the Annual Report on all committees appointed. Membership of board committees should be restricted to directors who are independent of the Executive Management. The CEO is responsible for the day-to-day management of the Company. Further, the CEO is responsible for ensuring that the Company's accounts are in accordance with all applicable legislation, and that the assets of the Company are monthly managed. The CEO is appointed by the Board of Directors and reports to the Board of Directors. His or her powers and responsibilities are defined in more detailed instructions adopted by the Board of Directors.
10. Risk management and internal controls 10.1 Risk Management The risks can be divided into 4 groups:
From 2008 the board of directors is making an annual evaluation of the group risk assessment. All substantial risks and adherent internal controls are included in the assessment. Improvement plans to reduce residual risks are made when necessary. 10.2 Internal controls Marine Farms applies the Coso-ERM framework (Committee of sponsoring organisations of the Treadway Commission - Enterprise Risk Management). The three main objectives of the internal control system are:
The group is multinational with business units in UK, Spain, Belize and Vietnam. Significant responsibility and authority is delegated to the local business entities. Consequently the local management has a substantial impact on the quality of the risk management and internal control systems of the group. The group management carries out monitoring activities to ensure that risk management and internal controls are operating effectively.
The internal controls with regard to the financial reporting system comprises of a number of procedures wich can be classified as follows:
Reliable reporting is ensured by
At every meeting the board of directors is presented updated financial statements and management accounts. The group's auditor is present at the review of the annual report.
The group has no internal auditor.
11. Remuneration of the Board of Directors The remuneration is not linked to the Company's performance. No directors have been granted or will be granted share options and no directors are parts in incentive programmes available for the Executive Management and/or other employees. As a general rule, no members of the Board of Directors (or companies with which they are associated) shall take on specific assignments for the Company in addition to their appointment as director. If such assignments are made, it shall be disclosed to the full Board and the remuneration shall be approved by the Board. Further, all remuneration paid to each of the directors shall be described in the Annual Report. Such description shall include details of all elements of the remuneration and benefits of each member of the Board, any remuneration paid in addition to normal director's fees included.
12. Remuneration of the Executive Management Remuneration for the other members of the Executive Management is determined by the CEO in accordance with guidelines provided by the Board of Directors. The guidelines are annually communicated to the General Meeting and included in the Annual Report together with it detailed information on all elements of the remuneration. The information to the General Meeting shall pay particular attention to any changes made during the last year. Marine Farms does not have share option schemes or other arrangements to award shares to employees, as other kinds of bonus schemes or incentives are being preferred. Any incentives provided to members of the Executive Management shall be in accordance with the principles set out in the Guidelines for Remuneration of Executive Management.
13. Information and communication Each year, Marine Farms publishes an overview of the dates for major events. All information distributed to Marine Farms' shareholders is published on www.marinefarms.no at the same time as it is sent to shareholders. When publishing annual and interim reports, the Company holds public presentations which will be available on www.marinefarms.no at the same time as the presentation starts. All information is available in English. The Board of Directors has adopted guidelines for the Company's reporting of financial and other information based on openness, equal treatment of all shareholders and participants in the securities market, and restrictions imposed by law.The guidelines also include information requirements to the internal treatment of important information and insider trading instructions and for the Company group's contact with shareholders other than through General Meetings.
14. Take-Overs
15. Guidelines for the auditors and associated persons' non-auditing work Too much non-auditing work being assigned to the auditor may jeopardise this position and diminish the public confidence in the auditor's integrity and independence of Marine Farms. The primary task of the auditor shall be to perform the audit work required by law and professional standards with the care, competence and integrity prescribed by law or said standards. The auditor will submit the main features of the plan for the audit to the Board of Directors annually. Further, the Board of Directors will receive an annual written confirmation from the auditor that the requirements of independence and objectivity have been met. The auditor shall also at least once a year present to the Board of Directors a review of the Company's internal control procedures, including identified weaknesses and proposals for improvement. The auditor will participate in any meetings of the Board of Directors which deal with the Annual Accounts. At these meetings, the auditor shall review material changes in the Company's accounting principles, comment on any material estimated accounting figures and report all material matters on which there has been disagreement between the auditor and the Executive Management of the Company. At least once a year, the Board of Directors shall have a meeting with the auditor in which no member of the Executive Management is present. The Board of Directors of Marine Farms has adopted guidelines in respect of the use of the auditor by the Company's Executive Management for services other than audit. Each year, the auditor shall provide the Board with a summary of all services in addition to audit work which have been undertaken for the Company. The Board of Directors must report the remuneration paid to the auditor at the Annual General Meeting, including details of the fee paid for audit work and any fees paid for other specific assignments. * * * * * |