Instructions for the Board of Directors of Borregaard ASA
1 THE BOARD’S RESPONSIBILITIES AND DUTIES
1.1 General duties
1.1.1 The administration of the Company is the Board’s responsibility. The administration is to be conducted in a manner that can be justified towards shareholders, employees, creditors, and other third parties. The Board is to ensure that the business is organised in a reassuring manner. This includes ensuring that the business is run in accordance with the law.
1.1.2 The Board will draw up plans and budgets for the Company’s business activity.
1.1.3 The Board will keep itself up-to-date on the Company’s financial status, and is obliged to ensure that its business, accounts, and asset management will be subject to satisfactory checking procedures.
1.1.4 The Board will carry out whatever investigations it deems necessary for being able to carry out its tasks. The Board will implement such investigations if one Board member or several Board members require it.
1.1.5 Board will supervise the day-to-day management of the Company and its operation as such.
2 THE GENERAL MANAGER’S DUTY TO INFORM THE BOARD ABOUT IMPORTANT MATTERS ETC.
2.1 Periodic reports to the Board
2.1.1 The General Manager will brief the Board at least once a month – in a meeting or in writing – on the Company’s business, status and profit performance. The Board may demand at any time that the General Manager give the Board a detailed report on specific matters.
2.1.2 The General Manager will inform the Board when the premise for a previous decision which is of significance to the operation, is significantly changed.
2.2 Following up the decision
2.2.1 The General Manager will ensure that the Board’s decision is implemented. The General Manager will also ensure that the Company’s employees and other parties involved get sufficient information about the Board’s decision.
2.2.2 The General Manager will ensure that the guidelines for the preparation of Board matters are observed.
3 THE BOARD’S HANDLING OF A MATTER
3.1 Notice of Board meetings
3.1.1 The General Manager, in consultation with the Board Chairman, calls Board meetings. Board members and the General Manager may demand that the Board be convened.
3.1.2 Board meetings are called in an appropriate manner, with the necessary notice. The Notice of the meeting will indicate the agenda for the meeting.
3.2 Holding of Board meetings
3.2.1 The Board will consider matters at meetings, unless the Chairman of the Board finds that the matter can be submitted in writing or be dealt with in some other reassuring manner. Annual accounts and reports will be considered at meetings.
3.2.2 The Board can make decisions when more than half of the members are present or taking part in a Board consideration. However, the Board cannot make decisions without all the Board members as far as possible having been given the opportunity to take part in the consideration of the case.
3.2.3 A decision taken by the Board requires that a majority of the Board members taking part in the consideration of a case have voted in favour of it. In the event of a tie in the voting, that which the chairman has voted in favour of, will apply.
3.3 Board matters
3.3.1 The Board will deal with matters that require consideration by law, are of great significance or of an unusual nature relative to the Company situation.
3.3.2 The Chairman of the Board is to ensure that relevant matters are considered. Board members and the General Manager may demand that the Board consider specific matters.
3.3.3 In an individual case the Board may authorise the General Manager to make decisions in matters that belong under the Board.
3.4 Board Committees
3.4.1 The Board of Directors will establish special Board Committees to the extent that the Board finds this expedient for its administrative procedures. The responsibility of the Board Committees is to prepare matters for consideration.
The Board of Directors has established the following committee:
3.4.2 The Compensation Committee
The Compensation Committee will:
(i) prepare for consideration matters relating to the salary and terms of employment of the Group CEO to enable the entire Board, once a year, to participate in the evaluation of the Group CEO and in decisions concerning the CEO’s terms of employment.
(ii) prepare for consideration by the Board matters of principle relating to levels of pay, bonus systems, pension terms, employment contracts and the like for senior Borregaard staff.
The Compensation Committee will consist of the Chairman of the Board of Directors and two Board members. Borregaard’s Chairman of the Board will appoint the Committee secretary. The Committee will meet at least once every six months. The Committee will prepare for consideration by the Board the terms of employment of the Group CEO in the first half of each year, and other questions relating to terms of employment and special conditions in the second half of each year.
The Committee will otherwise deal with special questions relating to compensation for Group employees insofar as the Committee finds that these questions concern matters of particular importance for the Group’s competitive position, image, recruitment ability, etc.
The Group administration will assist the Committee with information, expert assessments and proposals where it is natural to do so.
3.4.3 Audit Committee
The Audit Committee will act as a preparatory body in respect of the Board’s administrative and supervisory tasks of checking, financial control, and reporting, and in the follow-up of internal and external audits.
Among its responsibilities, the Audit Committee will:
(i) Make sure that internal and external reporting of accounts is properly organised, conducted efficiently, and that professional quality is maintained.
(ii) Monitor the effectiveness and relevance of the internal auditor’s work, and of the Company’s arrangements for risk management.
(iii) Follow up and assess the quality of the statutory auditing of the group companies and group accounts.
(iv) Help preserve the independence of the external auditors and see that current rules and policies regarding any additional services performed by the auditors for the group or group companies, are observed.
(v) Where necessary, initiate enquiries and propose measures in relation to (i)-(iv).
(vi) Annually review, and where necessary update, its mandate, and submit its mandate recommendations to the Board.
The Audit Committee will not take decisions on behalf of the Board but will present its assessments and recommendations to the Board. The Audit Committee will report regularly to the Board, and not less than twice a year.
The Audit Committee will comprise at least three Board members. At least one member should if possible, have experience in accounting practice, from financial management or auditing. The Company’s internal auditor will provide any necessary assistance to the Audit Committee, and the internal auditor will act as secretary to the Committee.
The Committee itself will decide which company representatives will attend the Committee’s meetings, and, not less than once a year, will request the participation of the external auditor as necessary.
On their own initiative, external and internal auditors will report to the Committee on matters they consider should be brought to the Committee’s attention, see also current instructions to the internal auditor.
3.5.1 Board members are obliged to observe confidentiality in connection with information they have acquired regarding the Group and its business or regarding business matters
relating to other people or other operations. Board members’ duty to observe confidentiality does not apply if in specific cases they have access to or are obliged – in accordance with agreements, laws or regulations – to provide information to or consult with third parties. Third parties that are given such information are to be instructed to observe confidentiality.
3.5.2 The Board’s considerations and assessments are confidential unless otherwise agreed in a specific matter. There is confidentiality surrounding dissenting votes if it could harm the Company if the dissent came to the attention of third parties.
If a dissenting vote is to be made known to third parties, the dissenting Board member is to inform the Chairman of the Board in advance in matters of importance, if this is practicable.
Board members will ensure that Board documents do not fall into the hands of parties not directly involved in the matter.
3.6.1 A Board member must not take part in the consideration of or decision on issues of such special importance to him or herself or to anyone close to him or her for the member to be considered as having a markedly personal or financial special interest in the matter.
3.6.2 Nor must a Board member or General Manager take part in any matter concerning a loan or other form of credit for him or herself or concerning putting up surety for his or her own debts.
3.6.3 It is incumbent on each Board member to consider on an ongoing basis whether there are matters which objectively speaking might weaken the general confidence in that Board member’s competency, or which could open up for conflicts of interest in relation to the Board’s consideration of the matter. Matters mentioned shall without undue delay be discussed with the Chairman of the Board. Where a Board member’s terms of employment or other tasks indicate that conflicts of interest may arise on a regular basis, and in other specific cases, concrete guidelines are to be drawn up and as far as possible are to prevent such conflicting interests from arising.
3.7 Joint and parallel investments
To avoid any harm to the Company’s reputation, it is important to exercise transparency and caution in connection with investments involving factors that may be interpreted as entailing unfortunately close involvement/an unfortunately close relationship between the Company and a member of the Board of Directors.
The management will inform the Chairman of the Board of Directors before any transactions are carried out to which the Company is aware, or it is highly probable, that a member of the Board and/or anyone close to him or her is a party/interested party, even though the transaction is within the powers granted to the management. The Chairman of the Board will determine how the matter will be dealt with. If the matter concerns the Chairman of the Board, the management will inform the Deputy Chairman of the Board who, together with another member of the Board, will determine how the matter will be dealt with.
Similarly, each member of the Board will inform the Chairman of the Board if he or she is aware, or if it is highly probable, that Borregaard is a party/interested party to a transaction/investment in which the member of the Board and/or anyone close to him or her wishes to invest. The Chairman of the Board will determine how the matter will be dealt with. If the matter concerns the Chairman
of the Board and/or anyone close to him or her, he or she will notify the Deputy Chairman of the Board who, together with another member of the Board, will determine how the matter will be dealt with.
However, these rules do not apply to trading in listed shares unless, following an overall assessment, special circumstances may indicate otherwise pursuant to the purpose of this provision (such as, for example, the size of the shareholding, limited liquidity in the share, representatives on the Board, expressed interest in the share).
3.8 Minutes of the Board of Directors
3.8.1 Minutes shall be kept of the Board of Directors’ proceedings. It shall as a minimum provide the time and place, name the participants, the mode of procedure and the Board of Directors’ resolutions. The minutes should also provide the basis upon which the Board of Directors has made its resolutions.
3.8.2 If the Board of Directors’ resolution is not unanimous, the names of those having voted for and against shall be stated. Directors and general managers who do not agree on a resolution may require their opinion to be entered into the minutes.
3.8.3 The minutes shall be signed by all the members of the Board of Directors who have participated in the proceedings.
3.8.4 A transcript of the minutes shall be sent to the Board members following the proceedings. Any comments must be reported to the General Manager prior to the next meeting of the Board of Directors. To the extent possible, the minutes shall be approved and signed on the first meeting of the Board of Directors following the meeting in question.
3.8.5 Board members not participating in the proceedings shall be made aware of the resolutions passed.