Corporate Governance in GC Rieber Shipping ASA
1. Report on Corporate Governance
The board of directors of GC Rieber Shipping has overall responsibility for ensuring that the company practices good corporate governance.
GC Rieber Shipping ASA is a Norwegian public limited liability company listed on Oslo Stock Exchange (Oslo Børs). Section 3-3b of the Norwegian Accounting Act relating to corporate governance requires the company to issue an annual report on its principles and practice for corporate governance. These provisions also state minimum requirements for the content of this report.
The Norwegian Corporate Governance Board (NCGB) has issued the Norwegian Code of Practice for Corporate Governance (the ”Code of Practice”). Adherence to the Code of Practice is based on the “comply or explain” principle, which means that a company must comply with all recommendations of the Code of Practice or explain why it has chosen an alternative approach to specific recommendations.
Oslo Børs requires listed companies to publish an annual statement of their policy on corporate governance in accordance with the current Code of Practice. The rules on Continuing Obligations of listed companies are available on www.oslobors.no.
GC Rieber Shipping complies with the current Code of Practice that was issued on 23 October 2012. The Code of Practice is available at www.nues.no. The company provides a report on its corporate governance principles in its annual report and the information is available at www.gcrieber-shipping.no. The company follows the Code of Practice and any deviations are explained in the report.
Basic corporate values, ethical guidelines and social responsibility
Ethical guidelines, basic corporate values and guidelines for corporate social responsibility have been established for the GC Rieber Group and GC Rieber Shipping follows the group’s guidelines in this connection. The guidelines provide general principles for business practice and personal behaviour and are intended to form a platform for the attitudes and basic vision that should permeate the culture in the GC Rieber Group.
In addition, in 2010, GC Rieber joined the UN Global Compact, the world’s largest corporate social responsibility initiative. UN Global Compact has developed ten universal principles that encourage and show how companies should pay attention to employee and human rights, protection of the environment and combating corruption. By joining the initiative, GC Rieber has committed itself to making the ten principles an integral part of its business strategy, to promoting the principles to business partners and to reporting activities and improvements associated with the ten principles.
GC Rieber Shipping works continuously with improvements in environment, anti-corruption and social responsibility in general. More detailed information relating to the company and the group’s vision, strategy, values and principles is available at www.gcrieber.no and www.gcrieber-shipping.no.
GC Rieber Shipping ASA’s business is defined in Article 1 of the company’s articles of association, which reads as follows:
“The company is a listed company, the object of which is to engage in shipping, investments, underwriting commission, trading and other business. The headquarters of the company are in the municipality of Bergen.”
3. Equity and dividends
As at 31 December 2013, the company’s book equity was MNOK 2,198, which is equivalent to 56.6 percent of the total assets. The board of directors considers this to be satisfactory, as the company has a policy to have around 50 percent equity at any time. The company’s need for financial soundness and liquidity should be adapted to its objectives, strategy and risk profile.
One of the aims of the company is to pay an annual dividend and to offer the shareholders a steady and competitive return on invested capital in through dividends and share price appreciation. In assessing proposed dividend, the board of directors will review the company’s dividend capacity, capital structure and financial strength for further growth.
A dividend of NOK 1.0 per share was paid for 2012. Due to the extraordinary gain from the sale of the «HMS Protector», the board of directors proposes a dividend payment of NOK 1.00 per share and an additional dividend of NOK 3.00 per share, in total NOK 4.00 per share for 2013 (NOK1.0). In total, this amounts to NOK 174.6 million.
Authorizations granted to the board of directors to increase the company’s share capital shall normally be restricted to specific purposes. As at 31 December 2012, there were no such authorizations.
Purchase of own shares
The general meeting may grant the board of directors a mandate to purchase up to 10 percent of own shares. As at 31 December 2013, there was no such mandate to the board of directors regarding purchase of own shares.
4. Equal treatment of shareholders and transactions with close associates
GC Rieber Shipping has only one class of shares and purchase and sale of the shares shall take place over the stock exchange.
The articles of association include no limitations relating to voting rights. All shares have equal right.
Transactions in own shares
The company’s transactions in own shares are carried out over the stock exchange or by other means at market price. Any services from the main shareholder are purchased at documented market price. Should there be an increase in capital which involves a waiver of the existing shareholders’ pre-emptive rights, and the board of directors resolves to carry out such an increase on the basis of a mandate granted by the general meeting, the board of directors will explain the justification for waiving the pre-emptive rights in the stock exchange announcement.
Transactions with close associates
The company’s board of directors and management are committed to promoting equal treatment of all shareholders.
The company has one main shareholder, GC Rieber AS, owning 70.44 percent of the shares as at 31 December 2013. The chairman of the board, Paul-Chr. Rieber, indirectly controls 1.8 percent of the shares in the company. In addition, GC Rieber Shipping owns 50 percent of the shares in Reef Subsea AS.
The group carries out purchase and sales transactions with close associates as part of the normal business operations. In the view of the board of directors and management, all agreements entered into between the company and its main shareholders (including related companies), and also other business agreements, must be entered into on arm’s length terms.
Reference is made to note 20 in the company’s 2013 annual accounts, where transactions with close associates are outlined.
5. Freely negotiable shares
The company has only one class of shares. All shares in the company are freely negotiable.
6. General meeting
About the general meeting
The general meeting is the company’s supreme authority and the board of directors aims to ensure that the general meeting is an efficient meeting place.
Notice of meeting
The general meeting will usually be held by 30 April each year at the company’s offices. The general meeting for 2013 will be held on 10 April 2014.
Notice of the general meeting is usually sent with 21 days’ notice. At the same time, the agenda papers will be published on the company’s website, cf. Article 5-g of the Articles of Association.
The agenda papers must contain all necessary information so that the shareholders can decide on the issues to be addressed. The registration deadline for the general meeting will be as close to the general meeting as practically possible. All shareholders registered in the Norwegian Registry of Securities (VPS) will receive a notice of meeting and are entitled to submit proposals and vote directly or via proxy. The financial calendar will be available on the company’s website.
Registration and proxy
Registration should be made in writing, either via mail, e-mail or fax. The board of directors wants to facilitate so that as many shareholders as possible are able to participate. Shareholders who are unable to attend in person, are encouraged to appoint a proxy. A special proxy form is available which facilitates separate voting instructions for each issue to be considered by the general meeting and for each of the candidates nominated for election. The company will nominate one or more persons to vote as proxy for shareholders. Representatives from the board of directors and the auditor participate in the general meeting. The CEO and CFO participate on behalf of the company.
Agenda and implementation
The agenda is determined by the board of directors. The main items are pursuant to the requirements in the Public Limited Liability Companies Act and Article 7 of the Articles of Association.
The minutes of the general meeting are published via a stock exchange announcement and are available at www.gcrieber-shipping.no.
In 2013, the general meeting was held on 12 April and 89.6 percent of the total share capital was represented. A total of 30 shareholders were present or represented by proxy.
7. Nomination committee
Nomination of board members up for election at the general meeting shall take place through an open dialogue between the largest shareholders. Based on the company’s good experience with such a process and an assessment of the composition of the owners, the company has decided not to use a nomination committee. This is a deviation from NUES’ recommendation.
8. The board of Directors – compisition and independence
Composition of the board of directors
Pursuant to the company’s articles of association, the board of directors shall consist of 5-7 members who are elected by the general meeting for two years at a time. The chairman of the board and the deputy chairmen are elected by the general meeting. The board of directors currently comprises 5 members, of which 2 are women.
The board of directors has been elected on the basis of an overall assessment in which competence, experience and integrity are important criteria and the composition of the board of directors represents the company’s ownership situation. An overview of board members’ competence, background and shareholding in the company is available on the company’s website www.gcrieber-shipping.no.
The board of directors’ independence
Executive management shall not be members of the board of directors.
The chairman of the board, Paul-Chr. Rieber, is CEO of GC Rieber AS, which is the largest shareholder in the company with a 70.44 percent stake.
Board member Georg Nygaard has 5,000 shares in the company. Other board members do not have direct or indirect ownership interests in the company. The board members are regarded as independent of the company’s main shareholder and significant business relations.
9. The work of the board of directors
The board of directors’ duties
The board of directors has overall responsibility for management of the group and also for supervising the day-to-day management and the group’s operations. This involves developing the company’s strategy and also following-up that the strategy is implemented. The board of directors is also responsible for control functions to ensure that the company has proper operations as well as asset and risk management.
Instructions for the board of directors
Pursuant to the provisions of the Norwegian Public Limited Liability Companies Act, the board of directors has established instructions for the board of directors that provide detailed regulations and guidelines for the board of directors’ work and executive work.
Instructions for the CEO
A clear division of responsibilities and tasks has been established between the board of directors and executive management.
The board of directors receives periodic reports with comments on the company’s financial status. As far as interim reports are concerned, the company follows the deadlines for Oslo Stock Exchange.
The board of directors usually holds eight board meetings a year, evenly distributed over the year. Quarterly and annual accounts, and also salary and other remuneration to the CEO are dealt with at the board meetings. In addition, a separate strategy meeting is held. Extraordinary board meetings to deal with matters that cannot wait until the next ordinary board meeting are held when required. In addition, the board of directors has organized the work in a separate auditing committee. In 2013, 15 meetings were held, compared with 10 meetings in 2012. In 2013, attendance at the board meetings was 95 percent, compared with 96 percent in 2012.
The main purpose of the audit committee is to monitor the group’s internal control systems, quality assurance of the financial reporting and ensuring that the auditor is independent. The auditing committee has one member who is independent of the company’s business activities and main shareholders. The committee has evaluated the procedures for financial control in the core areas of the group’s business activities. The committee has been informed of the external auditor’s work and the results of this work.
The board of directors’ self-evaluation
The board of directors conducts an annual evaluation of its work, way of working and expertise. The chairman of the board of directors conducts an annual appraisal of the management in accordance with each person’s job description.
10. Risk management and internal control
The board of directors’ responsibilities and the object of internal control
GC Rieber Shipping’s risk management and internal control seeks to ensure that the company has comprehensive control thinking that includes the company’s operations, financial reporting and compliance with applicable laws and regulations. The internal control also includes the company’s basic values, ethical guidelines and guidelines for social corporate responsibility.
The board of directors’ annual review and reporting
The annual strategy meeting helps lay the foundation for the board of directors’ discussions and decisions through the year. Review and revision of important governing documents is considered on an on-going basis.
The administration prepares monthly finance reports, which are reviewed by the board members. Quarterly financial reports are also prepared and reviewed by the board of directors before the quarterly reporting. The auditor attends meetings with the auditing committee and the board meeting that includes presentation of the annual accounts. The company’s risk aspects and management have been thoroughly described in the directors’ report.
Overall responsibility for internal control related to the company’s financial reporting is assigned to the board of directors’ auditing committee. The auditing committee has regular meetings with the administration and the company’s auditor at which discussion of accounting principles, use of estimates and other relevant topics are discussed.
Regular reports are submitted to the board of directors regarding defined KPIs related to quality, health, environment and safety. In addition, the GC Rieber Group has prepared guidelines on business ethics and social responsibility, with which all employees in all the subsidiaries should be acquainted, including GC Rieber Shipping. GC Rieber Shipping has its own coordinator who ensures quarterly reporting to the board of directors on the status and progress of the company’s social responsibility work and who represents the company in the GC Rieber Group’s UN Global Compact group.
11. Remuneration to the board of directors
The general meeting determines annually the remuneration to the board of directors. The proposed remuneration is put forward by the company’s largest shareholder.
In 2013, the company’s board received a total remuneration of NOK 1 010 000. The remuneration to each board member in 2013 is given in note 3 of the parent company’s accounts. Remuneration to the board of directors is not dependent on profit.
12. Remuneration to executive management
The board of directors has adopted guidelines for remuneration of the CEO and other executive management. In accordance with the Public Limited Liability Companies Act, the main features of this remuneration shall be subject to an advisory vote at the general meeting, cf. note 3 of the parent company’s annual accounts. There are no option schemes in GC Rieber Shipping, but the company has a scheme for sale of the company’s own shares to employees where a statutory tax discount is used.Bonus schemes shall be linked to group or individual performance targets.
13. Information and communication
GC Rieber Shipping seeks to treat all participants in the securities market equally through publishing all relevant information to the market in a timely, efficient and non-discriminating manner. All stock exchange reports will be available on the company’s website and on Oslo Børs’ news site, www.newsweb.no, and also through new agencies (via NASDAQ OMX).
The company presents preliminary financial statements by the end of February. Complete accounts, together with directors’ report and annual report are available to the shareholders no later than three weeks before the general meeting. Interim results are posted within 60 days of the end of the quarter.
The company’s financial calendar is published for one year at a time before 31 December in accordance with the rules of Oslo Børs. The financial calendar is available on the company’s website and also on the website of Oslo Børs.
Other market information
Open presentations via webcast will be arranged in connection with the presentation of interim results. The interim results, business developments and also comments on the market and future outlook are reviewed here. Both the CEO and CFO usually attend the presentations. Interim reports, presentation material and webcasts are available at www.gcrieber-shipping.no.
The company exercises caution in its contact with shareholders and financial analysts, cf. the Norwegian Securities Trading Act, Norwegian Accounting Act and the stock exchange regulations.
The board will not seek to hinder or obstruct any takeover bids for the company’s business activities or shares. Should there be a bid for the company’s shares, the company’s board of directors will not exercise authorizations to issue new shares or pass other resolutions in an attempt to obstruct the bid without the approval of the general meeting. Any transaction that in effect is a disposal of the company’s business activities will be decided on by the general meeting.
When a takeover bid has been received, the board of directors will initiate an external valuation by an independent adviser and thereafter the board of directors will recommend shareholders to either accept or reject the offer. The valuation must also take into account how a possible takeover will affect the long-term value creation in the group.
Choice of auditor
The group’s auditor will be chosen by the general meeting. PwC has been the company’s auditor since the ordinary general meeting in 2013.
The auditor’s relationship to the board of directors and the auditing committee. The board of directors will at least once a year arrange a meeting with the auditor without the presence of the executive management in the company. The auditor will present the summary of an annual plan for carrying out the audit work, and the company’s internal control procedures, including identified weaknesses and proposed improvements, will be reviewed with the board of directors.
The auditor also participates in board meetings which discuss the annual accounts. At such meetings, the auditor reviews any material changes in the company’s accounting principles, comments on any material estimated accounting figures and any significant matters where there may have been disagreement between the auditor and the administration.
The board of directors will inform about the remuneration paid to the auditor, divided between remuneration for audit work and other services, at the annual general meeting.