Corporate governance

The Norwegian Corporate Governance Board (NUES) issues the recommendation on corporate governance for companies listed in Norway, with the latest update on the code of practice 14 October 2021. The recommendation is based on share, accounting and securities legislations, as well as the Issuer Rules for Oslo Børs. Compliance with the recommendation is based on a “comply or explain” principle.  

The Board of Borgestad continuously works with the company’s corporate governance, and has dedicated board meetings with corporate governance on the agenda.   

Item 1 – Statement of corporate governance  

The Board ensures that the company has good corporate governance. Borgestad follows all principles in the recommendation with the exception of item 6, independent meeting management of the General Meeting, and item 7, the General Meeting must establish guidelines for the Election Committee’s work. This statement is part of the company’s annual report and goes further than the Accounting Act in terms of the information that the company must provide. 

Item 2 – Business 

The company’s activities are defined in § 3 of the articles of association, where the company’s purpose is to carry out investment and management activities, including participation in other companies, acquisition of shares and other company shares, as well as acquisition and operation of real estate, as well as all associated activities. 

The Board prepares targets, strategies and risk profiles that support value creation for shareholders in a sustainable way. The company’s activities are defined in § 3 of the articles of association, where the company’s purpose is to carry out investment and management activities, including participation in other companies, acquisition of shares and other company shares, as well as acquisition and operation of real estate, as well as all associated activities.  
 
The Board prepares targets, strategies and risk profiles that support value creation for shareholders in a sustainable way. 

Item 3 – Company capital and dividend 

The Board must ensure that the company has a capital structure that is adapted to the company’s goals, strategy and risk profile. Borgestad strives to be financed with both equity and debt. The equity share in the parent company was 82.3 per cent as of 31 December 2023. The company’s equity appears in Note 12 in the parent company’s accounts. The Board has authorization from the General Meeting to acquire its own shares and authorization to increase the share capital in connection with the development of the Group’s investment areas and in the case of acquisitions of businesses and mergers. The authorizations apply until the ordinary general meeting in 2024, however no longer than until 30. June 2024. 

The Board has implemented guidelines for dividends which form the basis for proposals put forward to the General Meeting. It will be proposed not to pay dividends for the financial year

Item 4 – Equal treatment of shareholders 

The company has no restrictions regarding ownership, purchase, sale or voting rights. All shareholders have equal rights in connection with any capital increases, with the exception of those cases where the board makes use of the authority to increase the share capital granted by the general meeting.  

The company publishes all share price relevant information to the market via Oslo Børs’ message system and on the company’s website. The company’s transactions in its own shares are carried out on the stock exchange, and the company has guidelines for handling transactions with related parties and will exercise care in transactions between the company and shareholders. 

Item 5 – Shares and tradability 

The company has no restrictions on the right to own, trade or vote for shares in the company. 

Item 6 – General Meeting 

The Board makes arrangements for shareholders to participate in the company’s general meeting. In accordance with § 6 of the articles of association, the General Meeting is chaired by the Chairman of the Board or the person he appoints. The recommendation on independent meeting management of the General Meeting is therefore not relevant because it conflicts with the company’s articles of association. 

The Board ensures: 

1. The documents are detailed and precise enough for the shareholders to take a position on all matters to be processed. 

1. The registration deadline is set as close to the meeting as possible. 

1. The Board and Chairman of the Election Committee can participate in the General Meeting. 

Documents relating to matters to be dealt with at the General Meeting, including documents which according to law must be included in or attached to the notice, do not need to be sent to the shareholders if the documents are made available on the company’s website. A shareholder can still demand to be sent documents that relate to matters for the General Meeting.  

Shareholders who wish to attend the General Meeting must notify the company of this within a specific deadline which cannot expire earlier than two days before the General Meeting is held. 

Shareholders can cast their vote in writing during a period before the General Meeting. The Board can determine more detailed guidelines for such advance voting. It must be stated in the notice of the general meeting which guidelines have been laid down. 

The shareholders should be able to vote in each individual matter, including voting for individual candidates in elections. Shareholders who cannot be present at the General Meeting are given the opportunity to cast their vote via a proxy form. 

Item 7 – Election Committee 

The company has its own Election Committee, which is enshrined in the articles of association in § 8. This deviates from NUES’s recommendations in that the General Meeting does not set guidelines or limitations for the Election Committee’s work. 

The General Meeting elects the committee’s chairman and member, as well as determines the committee’s remuneration. Neither the members of the Board nor the management are part of the Election Committee. 

Item 8 – The Board, composition and independence 

The Board currently consists of five shareholder-elected board members . The Board is elected for a period of one or two years. According to § 5 of the articles of association, the number of board members can vary between three and six, in addition up to two deputy members can be elected. The board chooses its own leader. The Board’s composition and shareholdings appear in Note 4. It is a goal that the Board should have a balanced composition that takes into account competence, experience and relevant background for the company’s operations. It is also desirable that the composition of the Board reflects both the company’s ownership structure and the need for neutral, independent representatives without specific ownership affiliations. 

All board members are independent of the day-to-day management. Chairman Glen Ole Rødland, through the company Corona Maritime AS, has a consultancy agreement with the company for ongoing assistance and as discussion partner for the CEO. None of the other board members have business relations with the company. 

Item 9 – The Board’s work 

The instructions for the Board and the day-to-day management have a particular emphasis on a clear internal distribution of responsibilities and tasks, as well to outline how the Board and the day-to-day management shall process agreements with related parties. In 2023, there were no transactions with related parties, apart from the payment of salaries, consultancy fees and board fees. 

The Board evaluates its work and expertise annually. The Board ensures that the board members and senior employees make the company aware of any significant interests they may have in matters that the Board must deal with. An Audit Committee consisting of three  board members and CEO has been established. It has been assessed and concluded that the audit committee fulfils recommendations and legal requirements regarding the independence of the company. Due to the company’s size, the Board has decided not to establish a compensation committee. 

The Board receives ongoing reports that describe developments in the company, such as rental and monthly reports for Agora Bytom, as well as accounting and profit reports with an overview of the short-term and long-term order backlog for the refractory segment. In 2023, 11 board meetings have been held in the company, corresponding to 10 meetings in 2022. Information about the various board members’ attendance at meetings can be found in the minutes from each board meeting. 

Item 10 – Risk management and internal control 

The company has incorporated internal control and appropriate systems for risk management in relation to the scope and nature of the company’s operations. The Board regularly reviews the company’s most important risk areas and internal control. Reference is made to the Board of directors report and Note 19 in the consolidated accounts on financial risk and mention of risk in the annual report. 

Item 11 – Remuneration to the Board 

The remuneration to the Board reflects the board’s responsibility, expertise, time spent and the complexity of the business. The Board fees and shareholdings appear in Note 4 in the consolidated accounts. Performance-based remuneration is not used. The board members have no option schemes and also do not carry out special tasks for the company unless otherwise separately agreed. Such remuneration will be approved by the general meeting. Board members are encouraged to own shares in the company. 

Item 12 – Salary and other remuneration to leading persons 

The Board prepares guidelines for remuneration to senior staff in accordance with the law. The Board’s statement on executive pay is a separate document for the General Meeting and is available on the company’s website. The board determines the CEO’s salary in a board meeting. Historically, salary development has been based on the general salary development in Norway and the company’s development. The CEO has no option schemes, but can receive a bonus. In the case of bonus schemes, there must be a clear connection between the criteria for the performance-based remuneration and the company’s goals and strategies. In principle, the bonus is limited to a maximum of six months’ salary. Reference is made to Note 4 in the consolidated accounts.  

Item 13 – Information and communication 

The Board establishes guidelines for the company’s reporting of financial and other information based on transparency and taking into account the requirement for equal treatment of the participants in the securities market. The company reports information and financial figures in accordance with the Oslo Børs regulations. Responsibility for Investor Relations and reporting of regulatory information is assigned to the managing director, who has the opportunity to delegate this responsibility. The Board has established guidelines for the company’s contact with shareholders outside the General Meeting. 

Item 14 – Takeover 

The Board has a pragmatic attitude in relation to a possible take-over situation. The Board’s main responsibility in such a case will be to maximize shareholder value for all shareholders and at the same time look after the interests of the employees, and other stakeholders. 

Item 15 – Auditor 

The Board ensures that each year the auditor presents the main features for carrying out the audit work, reviews any significant changes in the company’s accounting principles, key aspects of the audit, assessment of significant accounting estimates and all significant matters where there has been disagreement between the auditor and the administration. Deloitte AS, through partner and auditor Kenneth Karlsen, receives a copy of all board documents. The auditor’s remuneration divided between audit and other services is explained as a separate item at the general meeting and in Note 20 in the consolidated accounts. The Board and the Audit Committee have several meetings with the auditor throughout the year. In the meetings between the Board and or the Audit Committee and the auditor, the company’s internal control is discussed, as well as other significant accounting items.