Guidelines for the Board of Directors
1.1 The purpose of these Rules of Procedures is to provide guidelines on the working methods and procedures for the Board of Directors of Eqology ASA (the “Company”). According to Norwegian Public Companies Act § 6-23 the Company is required to adopt Rules of Procedure when employees are represented on the board.
1.2 On occasion, the Board of Directors may decide to make exceptions to these instructions, provided it is permitted by the law and regulations that govern the Company.
2. Responsibilities of the Board of Directors
2.1 The Board of Directors shall, in accordance with the Norwegian Companies Act § 6-12 provide for proper organisation and management of its business. The Board has responsibility for the following:
- The Board shall ensure that the Company’s business is properly organised.
- The Board shall supervise the Company’s management.
- The Board shall establish the necessary plans and budgets for the Company’s business.
- The Board shall at all times keep abreast of the Company’s financial position, and is obliged to ensure the Company’s activities, accounts and assets are subject to adequate controls.
- The Board or one or more of its directors shall, from time to time and as it deems necessary, undertake any necessary investigations to ensure it is able to perform its duties as discussed herein.
- The Board shall appoint a CEO and for the duration of the CEO’s employment contract, approve his/her remuneration, terms and condition of employment.
- The Board shall review, on a monthly basis, the CEO’s report on the Company’s operations, financial position and financial performance.
- The Board shall consider the Company’s annual report and accounts, and ensure the annual report is produced and published in accordance with the Norwegian Accounting Act § 3-1.
- The Board shall monitor the company’s equity. If equity is less than satisfactory, the board will act immediately. Furthermore, within a reasonable timeframe, the Board shall convene a general meeting of shareholders to communicate and account for the Company’s financial situation and to propose suitable measures that could provide the Company with adequate capital levels. The same applies if it is assumed that the company’s equity is reduced to less than half of the share capital. In such a case, the Board shall convene a general meeting of shareholders within six months.
- The Board shall also consider all matters which are of an unusual nature or of great importance for the Company.
- The Board shall for each fiscal year prepare a statement regarding guidelines to determine the salary and other remuneration of the CEO and other senior executives. These guidelines shall be submitted to the AGM for an advisory vote. If the Board departs from the agreed guidelines, the reason for the deviation will be referred to in the minutes of the board meeting. In circumstances where these guidelines link remuneration to the share price of the Company (shares, options, etc.) these guidelines shall be approved by a general meeting of shareholders and approval is binding on the Board of Directors. Furthermore, this statement must contain an explanation of executive remuneration policy during the previous fiscal year – including how the guidelines for executive remuneration have been conducted, as well as the financial effects for the Company and its shareholders of the compensation agreements entered into or amended during the previous fiscal year.
- The Board shall establish guidelines for how it will act in the event of a takeover bid on the Company. The Board shall not prevent a takeover bid for the Company activities and shares unless there are special reasons for doing so.
- The Board must ensure that the Company has adequate internal controls and systems suitable to risk manage the activities and business of the Company. The Board shall carry out an annual review of the Company’s main risk exposure and its internal control procedures.
- In the annual report, the Board shall explain the main features of the Company’s internal control and risk management systems, as these are related to the Company’s financial reporting.
- The Board shall evaluate its own work and competence every year. Both the composition of the Board and how members work individually and as a group will be prepared in a report that shall be made available to the Nominating Committee.
3. Administrative Tasks
3.1 The Board shall twice a year to adopt a plan for the holding of board meetings for the ensuing six months.
3.2 The Chairman, or in his absence the Deputy Chairman or the CEO, shall convene the Board, according to plan, and as is otherwise necessary or desirable.
3.3 Both directors (individually) and the CEO may require the Board to convene in order to discuss specific issues.
3.4 The Board shall normally be convened with seven days’ written notice. The notice shall specify the agenda of the meeting and contain the necessary documents to fully and properly consider the topics to be discussed. The Chairman may, however, convene board meeting by telephone and / or with shorter periods of notice and/or distributing relevant documents after the notice has been sent.
3.5 Any director who is unable to attend a board meeting should notify the chairman or general manager as soon as possible. When such notification is received the chairman and/or chief executive shall summon a deputy to attend the meeting.
3.6 The Board shall normally consider matters in ordinary board meetings. However, the Chairman may decide that a board meeting be held in the form of telephone or video conference or by circulation of documentary materials. Any director or manager has the right to demand that a particular case shall be dealt with in ordinary meeting. Annual report and accounts should always be treated in ordinary meeting.
3.7 Board meetings should always be guided by the Chairman or, in his/her absence, by vice chairman. In the absence of both the Chairman and Vice Chairman the board will elect a temporary replacement to oversee the board meeting.
3.8 The Board shall continuously assess whether it is in the interest of the Company to appoint a Committee of the Board to prepare Board matters related to financial reporting, auditing or compensation for managers. Details regarding the appointment of such Committees of the Board shall be included in the annual report.
4. Quorum: Claim of Majority
4.1 The Board has a quorum – the minimum number of members of an assembly – when more than half of its members are present or participating in consideration of issues to be discussed.
4.2 A board resolution requires a majority vote by the directors who participated in the discussion. In circumstances where the board’s vote is tied the Chair’s vote will be decisive. More than one third of all board members must vote for a proposal that entails changes.
4.3 In connection with the election or appointment of company officials, the person who obtains the most votes is considered elected or appointed. The Board may decide in advance that a new election must be held if no candidate obtains a majority of the votes cast.
4.4 In the event of equal votes in connection with the election of the chairman, deputy chairman or chairperson the vote will be reconciled by drawing lots. In other circumstances where the vote is tied, the Chairman shall have the decisive vote.
5.1 A Director shall not participate either in discussions or decisions on issues of particular relevance to his/her own benefit or any related issues (Public Limited Company Act § 1-5) in circumstances where it may be deemed that they have a prominent personal or financial interest in the outcome of the issue.
5.2 A Director shall not participate in discussions concerning (i) a loan or other credit to himself/herself (ii) a loan or other credit to someone related to himself/herself or (iii) collateral for their own or related parties’ debt.
6. Minutes of Board of Director Meetings
6.1 The Board is responsible for delivering the company’s annual accounts and directors’ report as well as for the contents thereof.
6.2 Board minutes shall be as a minimum the time and place for the meeting, the number of participants, the discussions and decisions made by the Board. If a decision is not unanimous it should give the name of who voted for and against the motion.
6.3 Board members who disagree with a proposal may request that their opinion is recorded in the minutes.
6.4 Board minutes shall be sent to all board members. Unless otherwise determined by the Board, the minutes shall be approved and signed at the next board meeting. The minutes shall be signed by all the members who attended the meeting. If a decision is made at a meeting the board shall appoint two members to sign the protocol and distribute a copy to be sent to all members with a deadline for comments.
7. Board Duties to the General Meetinf of Shareholders
7.1 The Board shall convene an ordinary general meeting of shareholders of the Company no later than six months after the accounting year end.
7.2 The Board may at any time decide to call an extraordinary general meeting.
7.3 The Board shall convene an extraordinary general meeting if the auditor or shareholders that represent at least five percent of the share capital so require. In such circumstances, the Board shall ensure that a request for a general meeting of shareholders will be convened no later than one month after the request was made.
7.4 The Board shall prepare matters to be taken up at the meeting.
7.5 The Chairman shall be present at the meeting. The other board members have the right to be present and to speak at the general meeting.
7.6 The Board shall organise and convene general meetings of shareholders in such a way that all shareholders may exercise their rights and participate in the general meeting without undue difficulties. This means that the Board must provide sufficient information in advance of such meetings.
8. Chief Executive Officer
8.1 The CEO’s obligations to the board of directors shall be set out in Appendix 3: Guidelines for the CEO & Subsidiary Company Management
9.1 Directors must act with due care and diligence to ensure that all confidential information and documents provided to them by the Company, by virtue of their position with the Company, remains confidential – this includes confidential information regarding the Board’s procedures. Directors shall do their utmost to ensure that no outside parties can access such information. The Board may decide to make exceptions to this confidentiality.
9.2 Board members shall also keep secret the results of any company-related financial reconciliations, as well as statements, viewpoints and opinions of the other directors, that have emerged during any proceedings, and which are not publicly known.
9.3 Upon retirement a Director shall destroy (according to the Board’s instructions) all confidential documents he/she has received from the Company.