Corporate Governance Policy

Corporate governance in Solstad Farstad ASA is based on the Norwegian Code of Practice for Corporate Governance of 30th October 2014 (the Code). The Company is listed on the Oslo Stock Exchange (OSEBX) and is subject to Norwegian corporate, accounting, exchange listing and securities trading legislation.

Implementation and reporting
It is of importance to the Company to regulate the division or roles between Shareholders, the Board of Directors and the Executive Management. Hence, the Company has adhered to the principles of the Code.

Solstad Farstad ASA maintains its guidelines for ethical conduct and social responsibility aimed at securing values and corporate culture in the organization, in order to provide a basis for value creation, safe and green operations, workplace satisfaction, positive reputation and innovation.

Business
Solstad Farstad ASA´s objective is to conduct integrated shipping operations with advanced vessels in its market segments, utilizing owned or chartered vessels. The operations are primarily the provision of maritime services to the oil and gas, renewable energy and aquaculture industries. More details about the Company´s objective and strategy are set out in Section 1 of the Annual Report.

Equity and dividends
At year end 2017, the Company’s equity amounted to MNOK 4,962, equivalent to 14 % of total assets (16% in 2016). In a longer perspective, the Company aims is to give the Shareholders an attractive return on invested capital, by increased share price and dividends.

Due to the current market situation and certain restrictions of the financial agreements with the Company´s lenders, it is not expected that the Company will pay dividends for 2017 or for the coming years.

The General Meeting, held on 10th May 2017 authorized the Board of Directors to:

- Resolve to increase the share capital of Solstad Farstad ASA by maximum NOK 16,000,000 by issuing of maximum 8,000,000 new shares, each of face value NOK 2,00. The authorization, which remains in force until the General Meeting in 2018, also covers a resolution to merge under the Public Companies Act, section 13-5.

- Resolve to acquire treasury shares at a total value of maximum NOK 400,000. The Directors are free to determine the means of acquisition and sale of treasury shares. The Company will pay a minimum NOK 1 and maximum NOK 250 per share acquired under this authorization. The authorization remains in force until the General Meeting in 2018.

- Resolve to acquire treasury shares at a total value of maximum NOK 400,000. The Directors are free to determine the means of acquisition and sale of treasury shares. The Company will pay a minimum NOK 1 and maximum NOK 250 per share acquired under this authorization. The authorization remains in force until the General Meeting in 2018.

Equal treatment of shareholders and transactions with close associates
Solstad Farstad ASA has one class of shares. All shares have equal rights.

The authorization of the Board of Directors to acquire treasury shares is contingent to take place at Oslo Stock Exchange.

During 2017 there were no transactions between the Company and its Shareholders, the Board of Directors or the Executive Management and their close associates, except as reported in relevant notes of the financial statements.

The Company maintains rules to ensure that the Board of Directors and Executive Management report to the Board in case of any direct or indirect material interest in any contract signed by the Company.

Freely negotiable shares
The shares in Solstad Farstad ASA are freely negotiable. The Articles of Association set no limitations on transactions 

General meeting and nomination committee
The Annual General Meeting is held in the month of May. According to the Articles of Association, the notice and related documents are posted on the Company’s website no later than three weeks in advance. The Company endeavors to ensure that the documents contain all necessary information to enable Shareholders to vote on all matters. The Chairman of the Board takes part in the General Meeting, as does the Company Auditor. The Board aims for as many Shareholders as possible to attend. Shareholders who cannot attend, may be represented by proxy and the procedures for voting by proxy are described in the notice. The proxy authorization form is designed to allow Shareholders to vote on individual items and individual candidates for election/re-election. The agenda is determined by the Board of Directors, according to the article 6 of the Articles of Association. The Chairman of the Board opens the General Meeting and a chairperson for the meeting is elected. The minutes of the General Meeting are published as a Stock Exchange notice, as well as on the Company’s website.

Nomination committee
The Articles of Association states that the Company shall have a Nomination Committee of 2-3 members, the final number to be decided by the General Meeting. The Nomination Committee shall propose candidates to the Board of Directors and to the nomination committee, and also propose remuneration of the Board of Directors and members of the nomination committee. The General Meeting will elect the members of the nomination committee, including the chairperson, and set their remuneration. The guidelines for the nomination committee and their contact details are published on the Company website.

Board of Directors, composition and independence
The nomination committee’s primary goal is to propose candidates who will ensure that the Company has a Board of Directors with the most relevant expertise, capacity and diversity. The Board should be composed of Directors to act independently of special interests, and the majority of the Directors should be independent of any major Shareholder. The composition should also reflect gender equality, with at least 40% of the Directors being female. Directors are elected for a two-year term of office. Employees are not represented in the Board of Directors.

Work of the Board of Directors
The Directors make an annual plan for the Board’s work. Normally there will be six to eight scheduled Board Meetings, augmented by telephone conferences as needed. Instructions for the Board and Executive Management are in place. Procedures for internal control is exercised according to the adopted guidelines and reviewed with the auditor and Board on an annual basis. The Board receives a monthly financial report. The Board elects one of the directors to chair the meeting in the absence of the Chairman. An audit committee consists of two independent directors, elected by the Board of Directors. The Board conducts a self-assessment of its work and qualifications on an annual basis.

Risk management and internal control
The Board seeks through its work to ensure that the Company maintains good standards of internal control and appropriate systems of risk management, in light of the scope and nature of the Company’s business, and the provisions that govern the business. The Company has established a system of operation and administration that relies on work procedures and job descriptions. The system also covers social responsibility and ethical guidelines. There is a commitment to quality assurance. The Board receives information about operational, administrative and financial developments in monthly reports. Each year the Board reviews corporate strategy and the business plan, including analysis of the Company’s risk exposure. Exposure is monitored monthly through the reports from the Administration.

Remuneration of directors
The remuneration of the Board of Directors reflects the Board’s responsibilities, expertise, time commitment and complexity of the business, and is not linked to performance. The amounts involved are reported in the financial statements. The Directors do not have share options. In cases where members of the Board should undertake significant additional work for the Company, all Directors are informed and the fees are approved by the Board. The fees are reported in the financial statements. All transactions between Directors or employees (or companies that they represent or are associated with) on the one hand, and the Company on the other, are implemented in accordance with the arm’s length doctrine.

Apart from the details included in the notes regarding remuneration of the Directors (or companies that they represent or are associated with) the Company has no other obligations. Remuneration of the Directors is considered to reflect market conditions.

Remuneration to Executive Management
The remuneration of the Managing Director is determined by the Board. Other elements of the remuneration are reported in the notes to the financial statements. The guidelines for remuneration of the Executive Management are presented to the General Meeting for information purposes.

Apart from the details included in the notes regarding remuneration of the Executive Management (or companies that they represent or are associated with) the Company has no other obligations. Remuneration to the Managing Director is considered to reflect market conditions. There is no share option program for employees.

Information and communications
The Company has a policy of treating all its shareholders and other market participants equally, and communicates relevant information on significant developments of the Company´s business and standing in a timely manner.

Presentation of the financial reports is made according to the financial calendar posted on the Company website, and filed as a notice with the OSE. Furthermore, frequent briefings and discussions are held with analysts and investors. Information is disclosed through stock exchange notices, discussions with analysts, and general briefings for investors, as well as special briefings for stockbrokers and investors. The Company adheres to the recommendations of the OSE regarding Investor Relations reporting.

Take-overs
The shares in the Company are freely tradable, and the Articles of Association does not hold specific defence mechanisms against take-over situations. In a potential bid-situation, the Board will work to inform Shareholders and allow time to decide on the offer. Furthermore, the Board will issue a statement to the Shareholders with an assessment of the bid and a recommendation of whether to accept it or not.

Auditor
The Auditor of the Company is elected at the Annual General Meeting, which also approves its remuneration. Each year the Auditor sets out the highlights of the audit plan to the audit committee. The auditor also presents a report about his views and observations regarding the accounting principles, risk areas, internal control routines, and other aspects. Furthermore, the Auditor will each year deliver a written report to affirm his compliance with certain impartiality and objectivity standards. The Auditor attends Board Meetings to discuss the financial statements for the year, and the Annual General Meeting.

Important consultancy work performed by the Auditor requires prior approval by the Directors. The remuneration to the auditor is reported in the financial statements. Once a year, the Board of Directors meets with the Auditor for discussions without the Managing Director or other representatives from the administration present.