Corporate governance

Corporate governance

The corporate governance principles of Comrod Communication ASA (Comrod) complying with the Norwegian Code of Practice.

 

Introduction

 

Comrod Communication ASA (Comrod) is a Norwegian Public Limited Company which shares are listed on the Oslo Stock Exchange. The company is therefore subject to the Corporate Governance requirements as set out in the Norwegian Code of Practise for Corporate Governance. The corporate governance principles of Comrod complying with the Norwegian Code of Practice dated 21.10.2010.

Business

Comrod is a technology group committed to developing and commercializing communication and composite products based on innovative technology.

Its goal is to rank among the leading international players in selected markets, and to gain market shares through innovative and competitive solutions in close cooperation with key customers.

Activities relating to communication products are defined as a priority area for the group in its articles of association.

 

The Company Policy is to promote equality, ensure equal opportunities and rights and prevent discrimination based on ethnicity, national origin, ancestry, language, or religion.

 
Equal treatment

Comrod has only one class of shares.

In the event of capital increases, all shareholders will normally be treated equally. If this is not the case, the other shareholders will, as far as possible and through the adoption of subsequent measures, be restored to the position they would have held had they participated in the capital increase.

Transactions by the group in its own shares will be conducted through the stock exchange.

Special care will be exercised in respect of transactions with other parties in which the group’s shareholders, directors, management or closely related parties have a financial or personal interest.

Not insignificant transactions with other parties in which the group’s shareholders, directors, management or closely related parties have a financial or personal interest will be evaluated by an independent third party.

 

A power of attorney to the Board of Directors to acquire own shares is to be approved by The General Meeting on a yearly basis.

 

Free marketability

All shares in Comrod are freely marketable.

Annual general meeting

The final deadline for registering to attend the annual general meeting is three days in advance.

Shareholders who are unable to attend may vote by proxy.

Invitation to attend the general meeting will be sent to shareholders no later than three weeks before the date of the AGM. All other relevant documentation will simultaneously be available to shareholders on the company’s website www.comrod.com.  


Composition and independence of the Board

The main emphasis in the Board’s composition will be to assemble sufficient expertise to make independent evaluations of the group’s operations and to act as a well-functioning collegial body.

At least half the shareholder-elected directors should be independent of the group’s management and principal business connections.

In this context, independent means:

- directors receive no remuneration other than their Director’s fees

- director’s fees are not bonus-linked

- directors have no close family ties to the chief executive officer

- directors do not have or represent any significant business relationships with the company.

At least two of the shareholder-elected directors should be independent of the company’s principal shareholder.

The chief executive officer will not have a seat on the Board.

The period of election for Directors is two years.

Nomination committee    

The group has a separate nomination committee elected by the AGM.

The nomination committee consists of three members, one of whom must be a Director.

The nomination committee proposes candidates for election as directors.

The nomination committee will in close co-operation with the Chairman of the Board propose the compensation to be paid to directors.


Remuneration to the Board will reflect its responsibilities, expertise and use of time, and the complexity of its activities.

Remuneration of the Board will not be bonus-linked.

Directors may be included in any share option schemes for senior executives in the group.

Directors, or companies with which they are connected, will not normally undertake special tasks for the company in addition to their board duties.

In special cases, a director may be asked to assist the Chairman of the Board, the CEO or the management team in particular matters. Such assignments must be approved by the Chairman of the Board and the board will also be informed. Remuneration will reflect normal competitive consultancy fees for the type of assignment involved. Such assignment and remuneration must be mentioned in the annual report.

The nomination committee’s recommendations and relevant information on the candidates will be available with other documentation for the AGM.


Work of the Board

Regulations have been drawn up to govern the work of the Board.

The Board organizes its work on the basis of an annual schedule.

Regulations for the chief executive officer have been drawn up.

The Board will work with the chief executive officer and the auditor to ensure that the group is run in accordance with its basic values, ethical guidelines and corporate social responsibility.

An evaluation by the Board of its own work will be conducted yearly.

A Board committee for remuneration of management has been established.

 





Remuneration of senior executives

Guidelines have been drawn up for the remuneration of senior executives as per Company Framework remuneration policy approved by the Board.

Remuneration will, in both form and size, encourage long-term value creation in the company. Prior authorization must be obtained from the AGM for option schemes and other agreements relating to the allocation of shares.

All components in the remuneration of the chief executive officer and all remuneration of other senior executives will be described in the annual report.

Senior executives and closely related parties who deal in the company’s shares must obtain prior authorization.

Senior executives and closely related parties are not permitted to engage in short-term dealing in the company’s shares.

Comrod’s Information Policy

The Group’s Information Policy is based on openness and equal treatment of all shareholders.

All shareholders will receive correct, clear, relevant and up-to-date information.

The emphasis will be on information about central value drivers and risk factors.

While the chief executive officer will be the Group’s spokesperson in normal matters, the chairman of the Board will also be involved in providing information on matters of a special character.

The Group will comply with the Oslo Stock Exchange’s requirements concerning the availability of information.

Takeover bids

In the event of a potential takeover or in restructuring processes, the holdings and interests of all shareholders will be safeguarded.

Unless special grounds exist for so doing, no attempt will be made to obstruct or impede the submission of a takeover bid.

If a takeover bid is submitted, the board will not use its authority or take other measures designed to impede the bid without the prior approval of the general meeting after the bid has been made known. The board will still be bound by resolutions adopted by previous general meetings.

Transactions which would in reality involve disposal of the entire company’s operations will be submitted to the general meeting if this is deemed necessary.


Auditor

The auditor will provide annual written confirmation of his or her impartiality and objectivity.


The auditor will attend board meetings that deal with the annual accounts.

The auditor will also present a report giving his/her view of such items as accounting principles, risk areas, internal control procedures, etc, and plans for implementing their own work.

All important correspondence from the auditor will be presented to the board.

In principle the auditor will not  be used for assignments other than audit work and matters naturally associated with auditing, such as clarification of accounting regulations, normal tax matters, etc.

The AGM will receive a report on the auditor’s fee, broken down into legally required auditing and remuneration relating to other assignments.

 

Internal control and risk management routines

 

Introduction

The Board of Directors shall ensure that the Company has sound internal control and systems for risk management that are appropriate in relation to the extent and nature of the Company's activities. This documents sets out the routines for such internal control and risk management.

Objective of the risk management and internal control

The objective for the Company's risk management and internal control is to manage, rather than eliminate, exposure to risks related to the successful conduct of the Company's business and to support the quality of its financial reporting. Effective risk management and good internal control contribute to securing shareholders' investment in the Company and the Company's assets.

The Board’s responsibility for risk management and internal control

The Board shall ensure that the Company's internal control comprises guidelines, processes, duties, conduct and other matters that:

(i)         facilitate targeted and effective operational arrangements for the Company and also make it possible to manage commercial risk, operational risk, the risk of breaching legislation and regulations as well as all other forms of risk that may be material for achieving the Company's commercial objectives;

(ii)        contribute to ensuring the quality of internal and external reporting; and

(iii)      contribute to ensuring that the Company operates in accordance with the relevant legislation and regulations as well as with its internal guidelines for its activities, including the company's ethical guidelines and corporate values.

The Board shall form its own opinion on the Company's internal controls, based on the information presented to the Board. Reporting by the management to the Board shall be prepared in a format which gives a balanced presentation of all risks of material significance, and of how the internal control system handles these risks.

Internal control and risk management system

The Board shall develop and assess the need for internal control systems which address the organisation and execution of the Company's financial reporting. These systems shall be continuously developed in light of the Company's growth and situation.


 

 

The Board shall also focus on the need for developing ethical guidelines ensuring that employees can safely communicate to the Board matters related to illegal or unethical conduct by the Company.

The Board shall ensure that the Company has the necessary routines and hired personnel to ensure that any outsourced functions are handled in a satisfactory manner.

Annual review by the Board of Directors

The Board shall annually carry out a review of the Company's most important areas of exposure to risk and of the Company's internal control systems. The Board's review shall cover all matters included in reports to the Board during the course of the year, together with any additional information that may be necessary to ensure that the Board has taken into account all matters related to the Company's internal control.

When conducting their review, the Board shall pay attention to:

(i)         changes relative to previous years' reports in respect of the nature and extent of material risks and the Company's ability to cope with changes in its business and external changes;

(ii)        the extent and quality of management's routine monitoring of risks and the internal control system;

(iii)      the extent and frequency of management's reporting to the Board on the results of such monitoring, and whether this reporting makes it possible for the Board to carry out an overall evaluation of the internal control situation in the Company and how risks are being managed;

(iv)      instances of material shortcomings or weaknesses in internal control that come to light during the course of the year which have had, could have had or may have had a significant effect on the Company's financial results or financial standing; and

(v)       how well the Company's external reporting process functions.

The Board shall provide an account in the annual report of the main features of the Company's internal control and risk management systems as they relate to the Company's financial reporting.