Corporate Governance in NORBIT

NORBIT aims to maintain a high standard of corporate governance. Good corporate governance strengthens the confidence in the company and contributes to long-term value creation by regulating the division of roles and responsibilities between shareholders, the board of directors and executive management.

Corporate governance at NORBIT shall be based on the following main principles:

  • All shareholders shall be treated equally
  • NORBIT shall maintain open, relevant and reliable communication with its stakeholders, including its shareholders, governmental bodies and the public about the company’s activities
  • NORBIT’s board of directors shall be autonomous and independent of the company’s management
  • The majority of the members of the board shall be independent of major shareholders
  • NORBIT shall have a clear division of roles and responsibilities between shareholders, the board and management

1. Implementation and reporting on Corporate Governance

Compliance and regulations

The board of directors (the board) of NORBIT ASA (the company) has the overall responsibility for ensuring that the company has a high standard of corporate governance. The board has prepared a corporate governance policy document addressing the framework of guidelines and principles regulating the interaction between the shareholders, the board and the Chief Executive Officer (the CEO). The policy is based on the Norwegian Code of Practice (the Code) for Corporate Governance issued by the Norwegian Corporate Governance Board. The objective of the Code is that companies listed on regulated markets in Norway will practice corporate governance that regulates the division of roles between shareholders, the board of directors and executive management more comprehensively than is required by legislation. The board and executive management perform an annual assessment of its principles for corporate governance.

NORBIT ASA is a Norwegian public limited company listed on the Oslo Børs (Oslo Stock Exchange). The company is subject to section 3-3b of the Norwegian Accounting Act, which requires the company to disclose certain corporate governance related information annually. In addition, Oslo Stock Exchange’s Continuing Obligations requires listed companies to publish an annual statement of its principles and practices with respect to corporate governance, covering every section of the latest version of the Code. The Continuing Obligations also sets out an overview of information required to be included in the statement. The Norwegian Accounting Act is available at www.lovdata.no (in Norwegian), while the Continuing Obligations is available at www.oslobors.no.

NORBIT complies with the current code of practice, issued on 17 October 2018. The Code is available at www.nues.no. Application of the Code is based on the ‘comply or explain’ principle, which means that the company must provide an explanation if it has chosen an alternative approach to specific recommendations.

NORBIT provides an annual statement of its adherence to corporate governance in its annual report, and this information is also available from www.norbit.com. This statement describes how NORBIT has conducted itself with respect to the Code in 2019.

Deviations from the Code: None

2. Business Activity

NORBIT is a global provider of tailored technology solutions to carefully selected niches. The company’s business purpose is set out in its Articles of Association as:

“The company is the parent company of an internationally focused technology group which provides custom-made high-technology products in selected niche markets. This is done through acquisition, management and trading in shares, partnership interests and other securities.”

The board has defined clear objectives for the company, to ensure value creation for the shareholders. This includes the following long-term financial targets:

  • 3-year revenue CAGR of more than 25 per cent from 2017
  • A long-term ambition of an EBITDA margin of more than 20 per cent
  • Ambition to invest approximately 5 per cent of annual revenue to R&D

Purpose and values

Engaging in the activities described in the Articles of Association, the company has defined its core purpose as: “Explore More”.

The following corporate vision has been basis for annual board review:

“NORBIT is to be recognized as world class, enabling people to explore more.”

NORBIT gives each employee considerable scope in making decisions regarding his or her work. This implies a large degree of freedom, but it also places substantial responsibility on the employees. The company’s core values assure customer focus and in that matter function as general guidelines in the daily work.

The company has formulated the following core values as guidelines for the company’s business operations:

  • We deliver!
  • Safe under pressure
  • Refinement of talents

Ethical guidelines

NORBIT will maintain high ethical standards in its business concept and relations with customers, suppliers and employees. The following ethical guidelines will be practiced in the company and apply to all employees:

  1. Personal conduct: All employees and representatives of the company shall behave with respect and integrity towards business relations and partners, customers and colleagues. The executive management team has a particular responsibility to promote openness, loyalty and respect.
  2. Conflict of Interests: The company’s employees or representatives shall avoid situations in which a conflict between their own personal and/or financial interests and the company’s interests may occur.
  3. Confidential Information: Employees or representatives of the company possessing confidential information related to the company shall conduct themselves and safeguard such information with great care and loyalty and comply with any and all signed confidentiality statements.
  4. Influence: The company’s employees and representatives shall neither directly nor indirectly offer, promise, request, demand or accept illegal or unjust gifts of money or any other remuneration in order to achieve a commercial benefit.
  5. Competition: The company supports fair and open competition. The company’s employees and representatives shall never take part in any activities that may constitute a breach of competition legislation.

UN Global Compact

NORBIT has recently applied for membership in the UN Global Compact, the world’s largest sustainability initiative. Through participation, the group confirms that it supports the Ten Principles of the UN Global Compact on human rights, labour, environment and anti-corruption.

NORBIT is committed to making the UN Global Compact and its principles part of the group strategy, culture and day-to-day operations of the group, and to engage in collaborative projects advancing the broader development goals of the UN. As part of this commitment, NORBIT has committed to reporting on practical actions that the company has taken (or plans to undertake) to implement the UN Global Compact principles, as well as a measurement of outcomes of these actions.

Deviations from the Code: None

3. Equity and dividends

The board is committed to maintain a satisfactory capital structure for the company according to the company’s goals, strategy and risk profile, thereby ensuring that there is an appropriate balance between equity and other sources of financing. The board will continuously assess the company’s capital requirements related to the company’s strategy and risk profile.

Equity

As at 31 December 2019, the company’s equity totalled NOK 443.6 million, which corresponds to an equity ratio of 73.9 per cent. The board considers NORBIT’s capital structure to be appropriate to the company’s objectives, strategy and risk profile.

Dividends

The board of NORBIT has established a dividend policy. Long term, the policy is to pay out between 30 and 50 per cent of the company’s ordinary net profit after tax as dividends. When deciding on the annual dividend, the board will consider the company’s financial position, investment plans as well as the needed financial flexibility for strategic growth.

The company further intends for any new material investments to be subject to separate funding through equity, debt or otherwise.

Based on the financial results for 2019, the board proposes a dividend of NOK 0.6 per share, in line with the company’s dividend policy. The board considers NORBIT’s financial capacity for further growth to be strong. 

Board authorisations

Authorisations to the board to increase the share capital or to buy own shares will normally not be given for periods longer than until the next annual general meeting (AGM) of the company.

At the company’s extraordinary general meeting 3 May 2019, the board was granted three authorisations by the general meeting to increase the company’s share capital. In line with the Norwegian code of practice, each of the authorisations was considered separately.

The first authorisation was related to the listing of the company’s shares on Oslo Børs and allowed the board to increase the company’s share capital by up to NOK 1.5 million. The authorisation was only valid until 31 December 2019.

The second authorisation allowed the board to increase the company’s share capital by up to NOK 600,000, through one or more share issues. The authorisation may be used to finance the company’s investments or to finance mergers and/or acquisitions. The authorisation is valid until the next annual general meeting that will be held on 4 May 2020.

The third authorisation allowed the board to increase the company’s share capital by up to NOK 150,000 through one or more share issues. The authorisation may be used to issues shares to the NORBIT group’s employees, related to option- and incentive programmes.

It follows from the purpose of the authorisations that the board may need to waive existing shareholders’ preference rights, which is permitted under the terms of the authorisations concerned.  

Deviations from the Code: None

4. Equal treatment of shareholders and transactions with close associates

In the event of capital increases based on authorisations issued by the general meeting, where the existing shareholders’ rights will be waived, the reason for this will be provided in a public announcement in connection with the capital increase. 

Any transactions, agreements or arrangements between the company and its shareholders, members of the board, members of the executive management team or close associates of any such parties may only be entered into as part of the ordinary course of business and on arm’s length market terms. All such transactions shall comply with the procedures set out in the Norwegian Public Limited Liability Companies Act.

The board shall arrange for a valuation to be obtained from an independent third party unless the transaction, agreement or arrangement in question is considered to be immaterial. Board members and members of the executive management team shall immediately notify the board if they have any material direct or indirect interest in any transaction entered into by the company.

Prétor Advokat, a Norwegian law firm, in which the board member Tom Solberg is a partner, renders legal services to the company. The services provided are mainly undertaken by Tom Solberg. The service fee to Prétor is disclosed in the notes to the financial statements.

NORBIT was listed on the Oslo Børs in June 2019. As per 31 December 2019, NORBIT does not own any own shares.

NORBIT’s financial statements provide further information about transactions with related parties.

Deviations from the Code: None

5. Shares and negotiability

NORBIT has only one class of shares and all shares have equal rights. Each share has a face value of NOK 0.10 and carries one vote.

The company emphasise equal treatment of its shareholders and the shares are freely transferable.

Deviations from the Code: None

6. General meetings

NORBIT’s highest decision-making body is the general meeting of shareholders. All shareholders have the right to participate in the general meetings of the company.

Pursuant to article 8 of the company’s articles of associations, shareholders who wish to participate in a general meeting, shall notify the company of this within a deadline which is set out in the notice of the general meeting, and which cannot expire earlier than five days prior to the meeting. The cut-off for confirmation of attendance shall be set as short as practically possible. The board will arrange matters so that shareholders who are unable to attend in person, will be able to vote by proxy.

Shareholders may send notification of their attendance, using the form provided, by post or email to the company’s account manager DNB, or via the company’s website, www.norbit.com. 

The full notice for general meetings shall be sent to the shareholders no later than 21 days prior to the meeting. The board will ensure that the notice includes information about resolutions and that supporting information is sufficiently detailed to allow shareholders to form a view on all matters to be considered at the meeting. Notices shall provide information on procedures that shareholders shall observe in order to participate in and vote at the general meeting. The notice should also set out: (i) the procedure for representation at the meeting through a proxy, including a form to appoint a proxy, and (ii) the right for shareholders to propose resolutions in respect of matters to be dealt with by the general meeting. The form for the appointment of a proxy should also be designed to make voting on each individual matter possible.

In accordance with article 8 of the company’s articles of association, documents relating to matters to be addressed at a general meeting of shareholders may be made available on NORBIT’s website. The same applies to documents which by law must be included in or attached to the invitation to attend the general meeting. If the documents are made available in this way, the statutory requirement with respect to distribution to shareholders is not applicable. A shareholder may nevertheless ask to be sent documents relating to matters to be discussed at a general meeting by post.

The annual general meeting (AGM) is held each year no later than six months after expiry of the preceding financial year. The 2020 AGM will be held on 4 May 2020 at the company’s head office in Trondheim, Norway. The board and the company’s auditor shall be present at general meetings.

Deviations from the Code: None

7. Nomination committee

Article 7 of the company’s articles of association stipulates the company shall have a nomination committee which is elected by the general meeting.

The nomination committee presents proposals to the general meeting regarding (i) election of the chair of the board, board members and any deputy members of the board, and (ii) election of members of the nomination committee. The nomination committee also presents to the general meeting proposals for remuneration to the board and to the nomination committee.

The members of the nomination committee should be selected to consider the interests of shareholders in general. The majority of the nomination committee must be independent of the board and the executive management team. Members of the executive management team must not be members of the nomination committee.

Instructions to the nomination committee was approved by the company’s extraordinary general meeting on 3 May 2019. At the same meeting, the general meeting voted to postpone the election of a nomination committee until the company’s first general meeting as a listed company. Therefore, as at 31 December 2019, NORBIT had not established a nomination committee. The board will propose members to the nomination committee to be elected by the company’s annual general meeting to be held on 4 May 2020.

Deviations from the Code: NORBIT was listed at the Oslo Børs in June 2019. The company will establish a nomination committee during 2020.

8. Board of directors: composition and independence

According to article 5 of the NORBIT’s articles of associations, the board of directors shall consist of a minimum of three and a maximum of seven board members elected by the general meeting. The general meeting elects the chair of the board and the deputy chair of the board.

As of 31 December 2019, NORBIT’s board comprise five members, of which all were elected for a period of two years at the company’s extraordinary general meeting on 3 May 2019. Two of the members are women. The Public Limited Companies Act states that there should be at least three women on the board of directors when the board has between six and eight members.

In appointing members to the board, it is emphasised that the board shall have the requisite competency to independently evaluate the cases presented by the executive management team as well as the company’s operation. It is also considered important that the board can function well as a body of colleagues. Board members shall be elected for periods not exceeding two years at a time, with the possibility of re-election. Board members shall be encouraged to own shares in the company.

An overview of the board members competence and background is available from the company’s website. As of 31 December 2019, all the board members held shares in NORBIT.

Independence of the board

NORBIT’s board is composed such that it is able to act independently of any special interests. All the board members of NORBIT are deemed to be independent of senior executives, material business associates and the company’s largest shareholders, although, as mentioned under section 4, board member Tom Solberg also performs legal services for the company. 

Deviations from the Code: None

9. The work of the board of directors

The board shall ensure that the company has proper management with clear internal distribution of responsibilities and duties. A clear division of work has been established between the board and the executive management team. The CEO is responsible for the executive management of the company.

Instructions to the board of directors and the CEO were approved by the board on 16 May 2019.

The board has the overall responsibility for the management of the group and the supervision of its day-to-day management and business activities. The board shall prepare an annual plan for its work with special emphasis on goals, strategy and implementation. The board’s primary responsibility shall be (i) participating in the development and approval of the company’s strategy, (ii) performing necessary monitoring functions and (iii) acting as an advisory body for the executive management team. The board is also responsible for ensuring that the operation of the company is compliant with the company’s values and ethical guidelines. The chairperson of the board is responsible for ensuring that the board’s work is performed in an effective and correct manner.

All members of the board shall regularly receive information about the company’s operational and financial development. The company’s strategies shall regularly be subject to review and evaluation by the board.

The regulations governing the board’s working practices includes guidelines for how individual directors and the CEO should conduct themselves with respect to matters in which they may have a personal interest. Among them is the stipulation that each director must make a conscious assessment of his/her own impartiality and inform the board of any possible conflict of interest.

The board meets as often as necessary to perform its duties. The board held a total of 15 meetings in 2019. 12 meetings were held following election of the new board on 3 May 2019, of which the attendance rate was 98 per cent.

The board shall prepare an annual evaluation of its work.

Sub-committees of the board

Audit committee

Pursuant to the Norwegian Public Limited Liability Companies Act and the listing rules of the Oslo Stock Exchange, the company shall have an audit committee. The audit committee is appointed by the board.

The committee’s main tasks are to prepare the board’s follow-up of the financial reporting process, monitor the group’s internal control and risk management systems, and maintain an ongoing dialogue with the auditor. The audit committee held three meetings in 2019, two of them related to the interim results for the second half and the third quarter of the year. The attendance rate was 100 per cent.

As of 31 December 2019, the audit committee comprised the following:

  • Trond Tuvstein, Chairperson
  • Bente Avnung Landsnes

Remuneration committee

The company shall have a remuneration committee appointed by the board. The remuneration committee shall evaluate and propose the compensation of NORBIT’s CEO and other members of the executive management team and provide general compensation related advice to the board.

The board approved instructions to the remuneration committee on 16 May 2019.

As of 31 December 2019, the remuneration committee comprised the following:

  • Finn Haugan, Chariperson
  • Tom Solberg
  • Marit Collin

Deviations from the Code: None

10. Risk management and internal control

The board shall ensure that NORBIT has sound internal control and systems for risk management that are appropriate in relation to the extent and nature of the company’s activities. The internal control and the systems shall also encompass the company’s corporate values and ethical guidelines.

The objective of the risk management and internal control is to be to manage exposure to risks in order to ensure successful conduct of the company’s business and to support the quality of its financial reporting.

The board shall carry out an annual review of the company’s most important areas of exposure to risk and its internal control arrangements.

The board shall provide an account in the annual report of the main features of the company’s internal control and risk management systems as they relate to the company’s financial reporting.

Internal control of financial reporting is achieved through day-to-day follow-up by management, and supervision by the company’s audit committee.

Deviations from the Code: None

11. Board remuneration

The general meeting shall determine the board’s remuneration annually. Remuneration of board members shall be reasonable and based on the board’s responsibilities, work, time invested and the complexity of the enterprise. The remuneration to the board members shall not be performance-related nor include share option elements.

The board shall be informed if individual board members perform tasks for the company other than exercising their role as board members. Work in sub-committees may be compensated in addition to the remuneration received for board membership.

As mentioned above, board member Tom Solberg performs legal services for the company. Details about the fees paid are disclosed in the notes to the financial statements.  

NORBIT will establish a nomination committee during 2020, and the nomination will present proposals for remuneration to the board to the general meeting.

At the company’s extraordinary general meeting on 3 May 2019, the general meeting approved the board’s remuneration until the company’s AGM in 2020. The company’s financial statements provide information regarding the board’s remuneration.

Deviations from the Code: None

12. Remuneration of executive management

Pursuant to Section 6-16a of the Public Limited Companies Act, the board prepares a statement relating to the determination of salaries and other benefits payable to senior executives. This statement will, in line with the said statutory provision, be laid before the company’s annual general meeting each year.

The company’s senior executive remuneration policy is based primarily on the principle that executive pay should be competitive and motivating, in order to attract and retain key personnel with the necessary competence.

The statement refers to the fact that the board of directors shall determine the salary and other benefits payable to the CEO. The salary and benefits payable to other senior executives are determined by the CEO in accordance with the guidelines laid down in the statement. The CEO will normally propose the remuneration to senior executives in consultation with members of the remuneration committee.

As NORBIT’s shares was listed at the Oslo Børs in June 2019, the statement included in NORBIT’s annual report for 2019 is the company’s first statement on remuneration.

The board’s statement is included in the 2019 annual report and further details relating to the salary and benefits payable to the CEO and other senior executives is available in notes to the financial statements.

Deviations from the Code: None

13. Information and communication

Investor relations

Communication with shareholders, investors and analysts is a high priority for NORBIT. The objective is to ensure that the financial markets and shareholders receive correct and timely information, thus providing a sound foundation for a valuation of the company. All market players shall have access to the same information, and all information is published in English. All notices sent to the stock exchange are made available on the company’s website and at www.newsweb.no.

NORBIT’s ambition is to comply with the Oslo Børs Code of Practice for IR (“the IR Code”), including recommendations on the reporting of information to investors on the company’s websites, last updated on 1 July 2019. The company has, in line with the IR Code, also adopted an IR Policy. The CEO and CFO are responsible for communications with shareholders in the period between general meetings.

Financial information

The company holds investor presentations in association with the publication of its quarterly results. These presentations are open to all and provide an overview of the group’s operational and financial performance in the previous quarter, as well as an overview of the general market outlook and company’s own future prospects. These presentations are also made available on the company’s website.

Quiet period

NORBIT will minimise its contacts with analysts, investors and journalists in the 30 days period prior to publication of its results. During this period, the company will minimise meetings with investors, analysts, media or other parties about the group’s results and future outlook. This is to ensure that all interested parties in the market are treated equally.

Deviations from the Code: None

14. Take-over situations

In a take-over process, should it occur, the board and the executive management team each have an individual responsibility to ensure that the company’s shareholders are treated equally and that there are no unnecessary interruptions to the company’s business activities. The board has a particular responsibility in ensuring that the shareholders have sufficient information and time to assess the offer.

In the event of a take-over process, the board shall ensure that:

  1. the board will not seek to hinder or obstruct any takeover bid for the company’s operations or shares unless there are particular reasons for doing so;
  2. the board shall not undertake any actions intended to give shareholders or others an unreasonable advantage at the expense of other shareholders or the company;
  3. the board shall not institute measures with the intention of protecting the personal interests of its members at the expense of the interests of the shareholders; and
  4. the board shall be aware of the particular duty it has for ensuring that the values and interests of the shareholders are protected.

In the event of a take-over bid, the board will, in addition to complying with relevant legislation and regulations, seek to comply with the recommendations in the Code. This could include obtaining a valuation and fairness opinion from an independent expert. On this basis, the board shall draw up a statement containing a well-grounded evaluation of the bid and make a recommendation as to whether or not the shareholders should accept the bid. The evaluation shall specify how, for example, a take-over would affect long-term value creation of NORBIT.

Deviations from the Code: None

15. Auditor

The General Meeting shall determine the Board’s remuneration annually. Remuneration of Board Members shall be reasonable and based on the Board’s responsibilities, work, time invested and the complexity of the enterprise. The Board shall be informed if individual Board Members perform tasks for the Company other than exercising their role as Board Members. Work in sub-committees may be compensated in addition to the remuneration received for Board membership.

The Company’s financial statements shall provide information regarding the Board’s remuneration.

16. REMUNERATION TO THE MANAGEMENT

The Board decides the salary and other compensation to the CEO. The CEO’s salary and bonus shall be determined on the basis of an evaluation by the board, with emphasis on the the CEO’s and the Company’s over all performance. Any fringe benefits shall be in line with market practice and should not be substantial in relation to the CEO’s basic salary. The Board shall annually carry out an assessment of the salary and other remuneration to the CEO.

The Company’s financial statements shall provide further information about salary and other compensation to the CEO and the executive management team.

The CEO determines the remuneration of executive employees. The Board shall based on proposal from the remuneration committee issue guidelines for the remuneration of the executive management team. The guidelines shall lay down the main principles for the Company’s management remuneration policy. The salary level should not be of a size that could harm the Company’s reputation or above the norm in comparable companies. The salary level should, however, ensure that the Company is able to attract and retain executive employees with the desired expertise and experience.

17. INFORMATION AND COMMUNICATION

The Board and the executive management team assign considerable importance to giving the shareholders quick, relevant and current information about the Company and its activity areas. Emphasis is placed on ensuring that the shareholders receive identical and simultaneous information.

Sensitive information will be handled internally in a manner that minimizes the risk of leaks. ll contracts to which the Company becomes a party shall contain confidentiality clauses.

The Company shall have clear routines for who is allowed to speak on behalf of the Company on different subjects and who shall be responsible for submitting information to the market and investor community. The CEO and CFO will be the main contact persons of the Company in such respects.

The Board should ensure that the shareholders are given the opportunity to make known their points of view at and outside the General Meeting.

18. AUDITOR

The auditor is appointed by the AGM and is independent of NORBIT ASA. Each year the board shall receive written confirmation from the auditor that the requirements with respect to independence and objectivity have been met.

Each year, the auditor shall draw up a plan for the execution of their auditing activities, and the plan shall be made known to the board of directors and the audit committee. The board should specifically consider if the auditor to a satisfactory degree also carries out a control function and the auditor shall meet with the audit committee annually to review and evaluate the company’s internal control activities.

The auditor shall be present at board meetings where the annual accounts are on the agenda. Whenever necessary, the board shall meet with the auditor to review the auditor’s view on the company’s accounting principles, risk areas, internal control routines, etc.

The auditor may only be used as a financial advisor to the company provided that such use of the auditor does not have the ability to affect or question the auditors’ independence and objectiveness as auditor for the company. Only the company’s CEO and/or CFO shall have the authority to enter into agreements in respect of such counselling assignments.

At the annual general meeting the board shall present a review of the auditor’s compensation as paid for auditory work required by law and remuneration associated with other specific assignments. The board shall arrange for the auditor to attend all general meetings. 

Deviations from the Code: None