Corporate Governance
1.1 Introduction
Global IP Solutions (“GIPS” or the “company”) is dedicated to maintaining high standards of corporate Governance. Corporate Governance addresses the interaction between the shareholders, the Board of Directors and the Executive Management. The purpose of this document is to summarise the key principles of corporate Governance of Global IP Solutions. The Board of Directors has also formulated a code of Ethics.
Global IP Solutions believes that maintaining high standards of corporate Governance will improve the quality of discussions and work to be carried out by the corporate bodies. A sound corporate Governance practice will strengthen confidence in the company among shareholders, the capital market and other interested parties and thus contribute to value creation for the shareholders.
1.2 Relevant codes of practice
Being incorporated in Norway and listed on the Oslo stock Exchange, Global IP Solutions is subject to the Norwegian code of Practice for corporate Governance of 8 December 2005. Adherence to the code of Practice is based on a “comply or explain” principle, whereby companies will be expected to either comply with the code of Practice or explain why they have chosen an alternative approach.
1.3 Relevant legislation
The Norwegian Public Limited companies Act of 13 June 1997 no. 45 governs the incorporation and management of Norwegian public limited companies. Further, Global IP Solutions is under numerous obligations provided for in relevant Norwegian and other jurisdictions’ laws in respect of the business operations carried out by the company and its subsidiaries.
2. Business
Global IP Solutions’ business is clearly defined in the company’s Articles of Association, as follows:
Global IP Solutions’ objective and principal strategies for its business is related to activities in the telecommunications markets.
3. Equity and dividends
Global IP Solutions shall have an equity capital at a level appropriate to the company’s objective, strategy and risk profile.
The Board of Directors’ principal policy as regards the payment of dividends is to maximize returns on equity primarily in terms of increase in the share price. Dividend payments will be dependent on Global IP Solutions’ earnings, financial situation and cash low; possibilities for further value creation through investments taken into account.
Authorizations granted to the Board of Directors to increase Global IP Solutions’ share capital or to purchase own shares shall as a general rule be restricted to defined purposes. At each Annual General Meeting, the shareholders shall have the opportunity to evaluate and consider the board authorizations granted. Thus, the authorizations should be limited in time to no later than the date of the next Annual General Meeting. All authorizations not in compliance with these guidelines should be accounted for in the Annual Report.
4. Equal treatment of shareholders, transactions with close associates
Global IP Solutions has one class of shares, and all shares are equal in all respects. Each share in the company carries one vote. All shares are freely transferable.
No shareholders shall be treated on unequally unless in the company’s and the shareholders’ common interests. Any decision to waive the pre-emption rights of existing shareholders to subscribe for shares in the event of an increase of Global IP Solutions’ share capital must be justified, and an explanation shall be appended to the agenda for the General Meeting.
Any transactions carried out by Global IP Solutions in its own shares shall be made either through the stock exchange or, if carried out in any other way, at prevailing stock exchange prices. If there is limited liquidity in the company’s shares, the company should consider other ways to ensure equal treatment of all shareholders.
In the event of any not immaterial transactions between the company and its shareholders, directors, members of the Executive Management or close associates of any such parties, the Board of Directors shall arrange for valuation to be obtained from an independent third party. The same shall apply to transactions between companies within the Global IP Solutions group where any of the companies involved have minority shareholders. All such transactions shall be reported by the Board of Directors in the Annual Report.
The company has established and operates guidelines to ensure that members of the Board of Directors and the Executive Management promptly notify the Board of Directors if they have any significant direct or indirect interest in any transaction entered into by the company.
5. Freely negotiable shares
No form of restriction on negotiability is or will be included in the Articles of Association of Global IP Solutions.
6. General meetings
Through the General Meeting the shareholders exercise the highest authority in Global IP Solutions. General Meetings are convened by written notice to all shareholders with known addresses with a minimum of 14 days notice. All shareholders are entitled to submit items to the agenda, meet, speak and vote at the General Meetings.
Proposed resolutions and supporting information shall be distributed to shareholders no later than the date of the notice. In order to ensure that the General Meeting is an effective forum for the views of the shareholders and the Board of Directors, the Board shall see that the information distributed is sufficiently detailed and comprehensive as to allow the shareholders to form a view on all matters to be considered.
The Board of Directors shall take steps to ensure that as many shareholders as possible can exercise their rights by participating in General Meetings in Global IP Solutions, for instance by setting deadlines for shareholders to give notice of their intention to attend the meeting (if any) close to the date of the meeting as possible and by giving shareholders who are not able to attend the option to vote by proxy. The Board of Directors shall make arrangements for shareholders voting by proxy to give voting instructions on each matter to be considered at the meeting.
The General Meetings shall be organized in such a way as to facilitate dialogue between shareholders and the officers of the company. Thus, the Board of Directors must ensure that the members of the Board and the auditor (and, if any, the nomination committee) are present at all General Meetings. Also, the Board of Directors shall make arrangements to ensure an independent chairman for each General Meeting, for instance by arranging for the person who opens the General Meeting to put forward a specific proposal for a chairman.
The Minutes of the General Meetings shall be made available on Global IP Solutions’ web site.
7. Nomination committee
Due to the size of the company, Global IP Solutions has chosen not to elect a nomination committee. However, a continuous evaluation is carried out of whether or not a nomination committee should be laid down in the Articles of Association and elected.
8. The board of directors
The Board of Directors has the overall responsibility for the management of the company, including responsibility to supervise and exercise control of the company’s activities.
The Board of Directors of Global IP Solutions shall consist of 5 - 7 directors elected by the General Meeting.
In order to give shareholders an opportunity to re-evaluate the members of the Board, term of office for members of the Board of Directors of Global IP Solutions is two years. Directors may and should be re-elected so that the entire Board of Directors is not replaced at the same time (save for in extraordinary situations). However, when re-electing members of the Board, the value of continuity should be balanced against the need for renewal, the Board’s independence of the Executive Management taken into consideration. The existing directors shall be presented in the Annual Report and on the company’s web site. All proposed directors will be introduced in detail minimum two weeks prior to the General Meeting.
The chairman of the Board of Directors shall always be elected by the General Meeting. The composition of the Board of Directors shall always ensure that the Board can attend to the common interests of all shareholders and meet the company’s need for expertise capacity and diversity.
Attention should be paid that the Board of Directors can function effectively as a collegiate body. The Board shall consist of individuals who are willing and able to work as a team. Each member shall have sufficient time available to devote to his or her appointment as a director.
The composition of the Board of Directors shall ensure that it can operate independently of any special interests. At least half of the members of the Board shall be independent of the company’s Executive Management and material business contacts. At least two of the directors shall be independent of the company’s main shareholder(s).
Members of the Board of Directors, or persons closely connected with them, shall not be consultants for any company in the Global IP Solutions group, not be employed by or have any other agreements of economic significance with any such companies. The Global IP Solutions group cannot without the approval of the Board of Directors of Global IP Solutions buy consultancy services from companies in which any director is an owner, employee or otherwise has an interest. This extends to any company that according to the Public Limited companies Act § 1-3 is in the same group of companies.
All the directors are encouraged to hold shares in Global IP Solutions, however not to an extent which can encourage a short-term approach which is not in the best interest of Global IP Solutions and its shareholders over the longer term.
Global IP Solutions does not have more than 200 employees, and therefore, no corporate assembly has been elected.
9. The work of the board of directors
The proceedings and responsibilities of the Board of Directors have been laid down in written guidelines adopted by the Board of Directors on
DATE.
The main responsibilities of the Board of Directors are to:
Lead Global IP Solutions’ strategic planning and make decisions that form the basis for the Executive Management to prepare for and implement investments and structural measures. The company’s strategy shall be reviewed on a regular basis;
Ensure that all instructions given by the Board of Directors are complied with;
Ensure that the Board of Directors are well informed about the company’s and the group’s financial position,
Produce an annual plan for its work, with particular emphasis on objectives, strategy and implementation;
Ensure the adequacy of the company’s Executive Management and issue instructions for its work in which the areas of responsibilities and duties are clearly defined, also with respect to the relationship between the Executive Management and the Board of Directors, Agree on dividend policy;
Annually evaluate its work, performance, composition and expertise and that of the Chief Executive Officer (the “CEO”). The evaluation of the Board’s work should, in case a nomination committee is being established, be made available to such committee; and
Ensure that a system of direction and internal control is established and maintained as to ensure that the company group activities are conducted in accordance with all rules and regulations applicable to the group, Global IP Solutions’ Articles of Association, its corporate values and its ethical guidelines, as well as authorizations and instructions approved by the General Meeting. The internal control arrangements must address the organization and implementation of the company’s financial reporting. The Board must provide information in the Annual Report on how the company’s internal control procedures are organized.
The chairman of the Board of Directors carries a particular responsibility for ensuring that the Board of Directors performs its duties in a satisfactory manner and that the Board is well organized.
The Board of Directors has elected a deputy chairman who takes chair in the event that the chairman of the Board cannot or should not lead the work of the Board, including in matters of a material nature in which the chairman has an active involvement.
The Board of Directors may appoint board committees, for instance in order to help ensure thorough and independent preparation of matters relating to financial reporting and compensation paid to the members of the Executive Management. The Board of Directors of Global IP Solutions has currently not appointed any committees. If the Board of Directors should choose to appoint board committees, the Board of Directors shall adopt guidelines for the activities and responsibilities of such Board committees and account for details in the Annual Report on all committees appointed. Membership of board committees should be restricted to directors who are independent of the Executive Management.
The CEO is responsible for the day-to-day management of the company. Further, the CEO is responsible for ensuring that the company’s accounts are in accordance with all applicable legislation, and that the assets of the company are monthly managed.
The CEO is appointed by the Board of Directors and reports to the Board of Directors. His or her powers and responsibilities are defined in more detailed instructions adopted by the Board of Directors.
10. Remuneration of the board of directors
The remuneration of the members of the Board of Directors is determined annually by the General Meeting, on the basis of the Board’s responsibility, expertise, time commitment and the complexity of the operations of Global IP Solutions. As the directors are encouraged to own shares in the company, consideration should be given in this respect to arrange for members to invest part of their remuneration in such shares at market price.
The remuneration is not linked to the company’s performance. No directors will be granted share options and no directors are parts in incentive programs available for the Executive Management and/or other employees.
As a general rule, no members of the Board of Directors (or companies with which they are associated) shall take on specific assignments for the company in addition to their appointment as director. If such assignments are made, it shall be disclosed to the full Board and the remuneration shall be approved by the Board. Further, all remuneration paid to each of the directors shall be described in the Annual Report. Such description shall include details of all elements of the remuneration and benefits of each member of the Board, any remuneration paid in addition to normal director’s fees included.
11. Remuneration of the executive management
The CEO’s remuneration shall be determined by a convened meeting of the Board of Directors.
Remuneration for the other members of the Executive Management is determined by the CEO in accordance with guidelines provided by the Board of Directors. The guidelines are annually communicated to the General Meeting and included in the Annual Report together with i.e. detailed information on all elements of the remuneration. The information to the General Meeting shall pay particular attention to any changes made during the last year.
Global IP Solutions does have share option schemes to award shares to employees. Any incentives provided to members of the Executive Management shall be in accordance with the principles set out in the Guidelines for Remuneration of Executive Management.
12. Information and communication
Global IP Solutions will ensure that the shareholders receive accurate, clear, relevant and timely information related to all matters of significance to shareholders. The medium used for publication will be selected to ensure simultaneous and equal access for all equity shareholders to the information:
Each year, Global IP Solutions publishes an overview of the dates for major events.
All information distributed to Global IP Solutions’ shareholders is published on http://www.gipscorp.com at the same time as it is sent to shareholders.
When publishing annual and interim reports, the company holds public presentations that are simultaneously broadcast over the World Wide Web.
All information is available in English.
The Board of Directors has adopted guidelines for the company’s reporting of financial and other information based on openness, equal treatment of all shareholders and participants in the securities market, and restrictions imposed by law.
The guidelines also include information requirements to the internal treatment of important information and insider trading instructions and for the company group’s contact with shareholders other than through General Meetings.
13. Take-overs
The Board of Directors and the Executive Management will not seek to hinder or obstruct take-over bids for the company’s shares or activities unless there are good reasons for this. In the event of any possible take-over or restructuring situation the Board of Directors will take particular care to protect shareholder value and the common interests of the shareholders. The Board of Directors will not exercise mandates or pass any resolutions to obstruct the take-over bid unless approved by the General Meeting following announcement of the bid. Any transaction which is in fact a disposal of the company’s activities should be decided by a General Meeting.
14. Guidelines for the auditors and associated persons’ non-auditing work
The auditor is elected by the General Meeting and shall report to the General Meeting.
Too much non-auditing work being assigned to the auditor may jeopardize this position and diminish the public confidence in the auditor’s integrity and independence of Global IP Solutions. The primary task of the auditor shall be to perform the audit work required by law and professional standards with the care, competence and integrity prescribed by law or said standards.
The auditor will submit the main features of the plan for the audit to the Board of Directors annually. Further, the Board of Directors will receive an annual written confirmation from the auditor that the requirements of independence and objectivity have been met. The auditor shall also at least once a year present to the Board of Directors a review of the company’s internal control procedures, including identified weaknesses and proposals for improvement.
The auditor will participate in any meetings of the Board of Directors which deal with the Annual Accounts. At these meetings, the auditor shall review material changes in the company’s accounting principles, comment on any material estimated accounting figures and report all material matters on which there has been disagreement between the auditor and the Executive Management of the company. At least once a year, the Board of Directors shall have a meeting with the auditor in which no member of the Executive Management is present.
The Board of Directors of Global IP Solutions has adopted guidelines in respect of the use of the auditor by the company’s Executive Management for services other than audit. Each year, the auditor shall provide the Board with a summary of all services in addition to audit work which have been undertaken for the company.
The Board of Directors must report the remuneration paid to the auditor at the Annual General Meeting, including details of the fee paid for audit work and any fees paid for other specific assignments.