Corporate Governance in GC Rieber Shipping ASA
GC Rieber Shipping (the “Company“) aims to exercise good, prudent corporate governance. Good corporate governance is mainly about clarifying the division of roles between the owners, Board of Directors and management beyond the statutory requirements. Furthermore, it is about treating the shareholders equally, taking care of other stakeholders through ensuring the best possible value creation and reducing business risk. Good corporate governance should also contribute to the most efficient and proper use of the Company’s resources.
1. REPORT ON CORPORATE GOVERNANCE
The Board of Directors of GC Rieber Shipping has the overall responsibility for ensuring good corporate governance of the Company.
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 17 October 2018. 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.com. The Company follows the Code of Practice and any deviations are explained in the report.
GC Rieber Shipping’s business is defined in Article 1 of the Company’s articles of association, which reads as follows:
“The name of the company is GC Rieber Shipping ASA. The company is a public limited liability company whose object is to engage in shipping, investment, provision of guarantees, trade and other business. The company's registered office is located in the municipality of Bergen.”
The Board of Directors has established strategies, objectives and a risk profile within the defined scope of its business to create value for its shareholders. The strategies, objectives and risk profile are subject to annual review of the Board and described in the annual report and on www.gcrieber-shipping.com.
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.
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, and how these relate to the value creation by the Company.
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 promote the principles to business partners and to reporting activities and improvements associated with the ten principles. As an integrated part of these activities, a sustainability analysis to support several of the UN sustainability goals has been carried out in 2018.
GC Rieber Shipping works continuously with improvements in environment, anti-corruption and social responsibility in general. More detailed information relating to the Company’s and the GC Rieber group’s vision, strategy, values and principles is available at www.gcrieber-shipping.com and www.gcrieber.no.
3. EQUITY AND DIVIDENDS
As at 31 December 2018, the Company’s book equity was NOK 1,711.1 million, which is equivalent to 57.5% of the total assets. The Board of Directors has a policy to have above 35% equity at any time, but the actual equity ratio will vary from time to time due to market circumstances. The Board of Directors considers the equity ratio as at 31 December 2018 to be acceptable. The Company’s need for financial soundness and liquidity should be adapted to its objectives, strategy and risk profile.
The Company's objective is to provide a competitive return on the shareholders' invested capital through payment of a dividend and appreciation of the share price. In considering the scope of the dividend, the Board of Directors emphasises the Company's capacity to pay dividends, the need to have a healthy level of equity and to have adequate financial resources for future growth and investments, while allowing for extraordinary dividends when capitalising on investments.
Following the financial restructuring of the Company in March 2018, no dividend payments or other distributions from the Company may be made without the prior consent of the lenders. However, the Company`s lenders have consented to the following: 24% of potential dividends from the shares of Shearwater Holding or 24% of potential proceeds from the sale of such shares in whole or in part, may be distributed to the shareholders of the Company by way of dividends, a share capital reduction or any other manner deemed appropriate by the Company.
No dividend was paid for 2017, and the Board of Directors proposes to the general meeting that no dividend will be paid for 2018. This is based on the challenging market conditions and the need to preserve the Company’s equity.
Authorisations granted to the Board of Directors to increase the Company’s share capital shall normally be restricted to specific purposes. In 2018 the Company conducted two share capital increases, see note 12 to the consolidated accounts for further details. As at 31.12.2018 there were no such authorisations granted to the Board of Directors.
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 2018, 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 rights.
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 76.8% of the shares as at 31 December 2018. The Chairman of the Board and CEO in GC Rieber AS, Paul-Christian Rieber, indirectly controls 3.1% of the shares in the Company.
The Company carries out purchase and sales transactions with close associates as part of the normal business operations. All agreements entered into between the Company and its main shareholders (including related companies), and also other business agreements are, and must be, entered into on arm’s length terms.
Reference is made to note 16 in the Company’s 2018 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 in 2019 will be held on 11 April.
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 notice of the general meeting 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 or e-mail. 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 will 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 general meeting is able to elect an independent person to chair the meeting.
The minutes of the general meeting are published via a stock exchange announcement and are available at www.gcrieber-shipping.com.
In 2018, the general meeting was held on 25 April and 91.10% of the total share capital was represented. A total of 43 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 – COMPOSITION 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 Chairman 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. An overview of Board members’ competence, background and shareholding in the Company is available on the Company’s website www.gcrieber-shipping.com.
The Board of Directors’ independence
Executive management shall not be members of the Board of Directors.
The Chairman of the Board, Paul-Christian Rieber, indirectly controls 3.1% of the Company through AS Javipa and Pelicahn AS. Paul-Christian Rieber is also CEO of GC Rieber AS, which is the largest shareholder in the Company with 76.8% of the shares. Cosimo AS, a company owned by Board member Trygve Bruland, holds 100,000 shares in the Company. Board member Bodil Valland Steinhaug holds 10,000 shares in the Company. No other Board members have direct or indirect ownership interests in the Company.
The Board members, apart from the Chairman, 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 GC Rieber Shipping and also for supervising the day-to-day management and the Company’s operations.
This involves developing the Company’s strategy and making sure that it is implemented. The Board of Directors is also responsible for control functions to ensure that the Company has proper operations as well as a responsible 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.
The Board of Directors shall ensure that members of the Board of Directors and executive personnel make the Company aware of any material interests that they may have in items to be considered by the Board of Directors.
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 ordinary 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 organised the work in a separate auditing committee. In 2018, 15 meetings were held, compared with 12 meetings in 2017. In 2018, attendance at the board meetings was 99 percent, compared with 92 percent in 2017.
The main purpose of the audit committee is to monitor the Company’s internal control systems, quality assurance of the financial reporting and ensuring that the auditor is independent. The auditing committee has two members of which one 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 Company’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 conducts an annual appraisal of the CEO in accordance with his 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. Risk management and internal control also incorporates considerations related to integrating stakeholders in relation to the Company’s long-term value creation, including factors such as 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 report of the Board of Directors.
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 reporting to the Board of Directors on the status and progress of the Company’s social responsibility and sustainability 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. The remuneration shall reflect the Board of Directors' responsibility, expertise, time commitment and the complexity of the Company's activities. Board members who participate in Board committees receive separate compensation for this.
In 2018, the Company’s Board received a total remuneration of NOK 942,000. The remuneration to each Board member in 2018 is given in note 3 of the parent company’s annual accounts. Remuneration to the Board of Directors is not dependent on performance and do not contain any share options.
Members of the Board of Directors and/or companies with which they are associated should not take on specific assignments for the Company in addition to their appointment as a member of the Board, but if they do, this shall be disclosed to the full Board.
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 Company 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.
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.com.
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 authorisations 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.
If 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 Company.
Choice of auditor
The Company’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.
The Company has not established guidelines in respect of the use of the auditor by the executive management for services other than the audit. This is a deviation from NUES’ recommendation. The Company is currently working with establishing such guidelines.