Corporate Governance Policy

Corporate governance in SolstadFarstad ASA is based on the company’s vision and strategy. The company is listed on the Oslo Stock Exchange and subject to Norwegian companies, accounting, exchange listing and securities trading legislation. SolstadFarstad ASA adheres to the Norwegian Code of Practice for Corporate Governance of 30th October 2014.

Implementation and reporting

The company believes that it is important to clarify the division or roles between shareholders, the board of directors, and executive management, and has therefore chosen to report on the company’s corporate governance as recommended in the Code of Practice. SolstadFarstad ASA maintains guidelines for ethical conduct and social responsibility aimed at securing values and corporate culture in the organization to provide a basis for value creation, safe and green operation, workplace satisfaction, positive reputation and innovation.

 

Business

The objects of the company are set out in the articles of association as “to operate shipping operations and everything connected therewith…» Within these objects the company’s business concept is to run an integrated shipping business with highly specified vessels in chosen segments on our own or chartered vessels. The core operations are primarily the provision of services to oil-related offshore activities. The company articles are available in full online at  www.solstadfarstad.com. More details of the goals and strategy of the company are set out in Section 1 of the Annual Report.

 

Equity and dividends

The company’s posted equity amounted to 15% of total assets at year’s end 2016, which is a reduction from 23% for 2015. The company goal over time is give the shareholders an attractive  return. This return is taken to mean the total of share price increase and paid dividend.

The company aims each year to pay dividend to shareholders. The amount will in average correspond to 20% - 40% of company profits after tax, adjusted as necessary for major currency variances and non-controlling interests. Dividend will nonetheless always take account of forecast future earnings and cash flows, as well as demand for financing and other matters affecting company standing. SolstadFarstad ASA did not pay dividend in 2016. Based on current market situation, the Board will propose to the Annual General Meeting no dividends to be paid for the fiscal year 2016.

The General Meeting held on 10. May 2017 authorized the directors to make the following payments:

  • Expand share capital in SolstadFarstad ASA by maximum  NOK 16.000.000 by the issuance of maximum 8.000.000 new shares, each of face value NOK 2,-. The authorization, which remain in force until the General Meeting in 2018, also covers a decision to merge under the Public Companies Act, section 13-5.
  • Acquire treasury shares to 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 expand the shareholder capital by maximum NOK 280.000,- by the new subscription of maximum 140.000 shares each of face value NOK 2,-. Within these limits the directors will determine whether to offer one or several issues and their size. The capital expansion will be reserved for company personnel, and shareholders waive all preemptive rights to these shares. The directors will determine the subscription price and other condition of sale. The authorization remains in force until the General Meeting in 2018. 

 

Equal treatment of shareholders and transactions with close associates

SolstadFarstad ASA has two classes of shares. Share Class A has all the rights, while Class B Shares is restricted to 1/10 vote. Other rights are equal for the two share classes.

 

The rights of the directors to acquire treasury shares are contingent upon such acquisition taking place in the marketplace.

 

During 2016 there were no transactions between the company and the shareholders, the board of directors and the executive management and their close associates, expect as reported in the financial statements, see Note 15.

 

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 SolstadFarstad ASA are freely negotiable. The articles set no limits on sale / negotiability.

 

General meeting and nomination committee

The annual general meeting is normally held in the month of May. According to the articles of association, documents up for consideration at the general meeting are posted on the company webpage. Efforts are made to ensure they contain all necessary information to enable shareholders to take a stand on all matters to be dealt with. The board chairman takes part in the general meeting, as does the company auditor. The meeting invitation and briefing documents for the general meeting are also published on the webpage (www.solstad.no) no later than three weeks before the meeting. The board is keen to enable as many shareholder as possible to take part. The deadline for attendance is put as close as possible to the meeting date. Shareholders who cannot attend, are urged to attend by proxy. The invitation sets out the information about procedures that shareholders must follow in order to take part and cast votes at the general meeting. They also describe how to appoint a proxy. Two people should be named who can vote on behalf of the shareholder by proxy. The proxy authorization form is designed as far as possible to allow shareholders to vote on individual issues 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 opens the general meeting and a meeting chair is elected. The minutes of the general meeting are published as a stock exchange notice, as well as on the company website. The Articles of Association states that the company shall have a nomination committee of 2-3 members as further decided by the general meeting. The nomination committee shall propose candidates for the board of directors and for the nomination committee itself, and propose remuneration for the board and the committee members. The general meeting will elect the members of the nomination committee, including the chairperson, and lays down their remuneration. The guidelines for the nomination committee and their contact details are published on the company webpage (www.solstadfarstad.com).

 

Board 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 maximum relevant expertise, capacity and diversity. The board should also be composed so that directors can act independently of special interests and have a minimum of two directors who are independent of the major shareholder. In connection with new directorship candidates the focus is on gender equality, in addition to looking for appropriate expertise and capacity. Directors are elected for a two-year term of office. Representatives from the executive personnel in the administration are not members of the board.     

 

Board work

The directors draw up an annual plan for the board’s work. Normally there will be six to eight regular board meetings, augmented by telephone conferences as needed. Instructions for the board and executive personnel have been drawn up. Company internal control is exercised according to the adopted guidelines and reviewed with the auditor and board each year. The board receives monthly financial report where economic standing and financial status are reviewed. The elected vice-chairman chairs the work of the board in the absence of the chairman. An audit committee consists of two members who are independent of the business and elected by and from the directors. Each year the board conducts a self-assessment of its work and qualifications if necessary.

 

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 also an analysis of the company’s risk exposure. Exposure is monitored monthly through the reports from the administration. 

 

Remuneration of directors

The remuneration paid to the board of directors reflects the board’s responsibilities, expertise, time commitments 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 stock options. In cases where members of the board undertakes significant work for the company, all the directors are informed and the fees are approved by the board. These fees are reported in the financial statements. All transactions between directors or personnel (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 and contracts with directors (or companies that they represent or are associated with) the company has no other obligations. Remuneration to directors is considered to reflect market conditions. 

 

Remuneration to executive personnel

The remuneration to the managing director is determined by the board meeting. Other elements of the remuneration are reported in the Notes to the financial statements. The guidelines for remuneration of executive personnel are presented to the general meeting for information purposes.

  

Apart from the details included in the Notes regarding remuneration and contracts with the managing director and deputy managing director (or companies that they represent or are associated with) the company has no other obligation. Remuneration to the managing director is considered to reflect market conditions. There are no stock option programs for personnel.

 

Information and communications

To be confident of equal treatment of shareholders the company is committed at all times to ensure that the stock market has correct, clear and timely details about the company’s business and standing. Presentation of the quarterly and annual accounts is made according to a schedule displayed in the financial calendar on the company webpage at www.solstadfarstad.com and filed as a Notice with the Oslo Stock Exchange. Beyond that, 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 stock brokers and investors. The company adheres to the recommendations of the OSE regarding Investor Relations reporting.

 

Take-overs

SolstadFarstad ASA has no defense mechanisms to prevent stock buy-ups in the Articles, nor have we implemented other measures to limit acquisition of shares in the company. If an offer is presented for company shares the board will work to inform shareholders and allow time to decide on the offer, and issue a statement that assesses the offer, and a recommendation to shareholders whether to accept it or not.

 

Auditor

Each year the auditor sets out the highlights of the audit plan to the audit committee. The auditor will also go through a report about his views and observations regarding accounting principles, risk areas, internal control routines, and other aspects. The auditor will also deliver a written report each year 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. The board of directors meet once a year without the managing director or other representatives from the administration present.