The Norwegian Code of Practice for Corporate Governance - Statoil

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3. Equity and dividendsThe company should have an equity capital at a level appropriate toits objectives, strategy and risk profile.The board of directors should establish a clear and predictabledividend policy as the basis for the proposals on dividend paymentsthat it makes to the general meeting. The dividend policy should bedisclosed.Mandates granted to the board of directors to increase the company’sshare capital should be restricted to defined purposes. If the generalmeeting is to consider mandates to the board of directors for the issueof shares for different purposes, each mandate should be consideredseparately by the meeting. Mandates granted to the board should belimited in time to no later than the date of the next annual generalmeeting. This should also apply to mandates granted to the board forthe company to purchase its own shares.CommentaryThe Public Companies Act includes provisions to ensure that companiesmaintain a sound level of equity at all times. If it must be assumed thatthe company’s equity has fallen below an appropriate level in relation tothe scale and risk profile of its business activities, the board of directorsAsal. § 3-4 and § 3-5 stipulate requirements for companies to maintain a sound levelof equity and impose a duty on the board of directors to take appropriate action if thecompany's equity falls below certain thresholds. Asal. § 8-1 stipulates what may bedistributed as dividend. The general meeting cannot adopt a resolution to distribute ahigher amount of dividend than recommended or approved by the board of directors,cf. Asal. § 8-2. Asal. § 10-14 stipulates that the general meeting may grant the board ofdirectors a mandate to increase the share capital subject to the same majority as requiredfor an amendment to the articles of association. Such mandates may not be granted for aperiod longer than two years at a time. A mandate for the company to purchase its ownshares shall not be granted for a period excessing 18 months, cf. Asal. § 9-4.16 CORPORATE GOVERNANCE
is required to call a general meeting within a reasonable time in order toreport the company’s financial condition and the measures proposed torectify the situation. The requirement that a company should maintainits equity capital at a level appropriate to its objectives, strategy and riskprofile also implies that if a company retains capital which is surplus tothese requirements, it must justify why it is not distributing the surplus toshareholders through dividend payments or a capital reduction.The Public Companies Act requires that a mandate granted to the boardof directors to increase a company’s share capital must specify whetherthe mandate extends to an increase in capital for contributions other thancash, or a resolution on a merger and whether the pre-emption rights ofshareholders are to be waived. The Code of Practice goes further thanthe Act by specifying that such mandates should be limited to a definedpurpose, such as the acquisition of companies within a specific sector ora similar definition of purpose. Specifying the purpose of each mandatemakes it possible for shareholders to vote separately on the mandate foreach purpose. Share option programs for employees should always beapproved by means of a specific board mandate, cf. Section 12.The Public Companies Act permits a mandate to the board of directors to bevalid for up to two years. However, companies should not take advantage ofsuch an extended period (except where the company is already committedto honouring options). The company’s situation and its shareholders’ viewsmay change over the course of a year. For this reason, it is recommendedthat shareholders be given the opportunity to consider any board mandatesat each annual general meeting. A mandate to the board of directors for thecompany to acquire its own shares should be dealt with in the same way asa mandate to increase the company’s share capital.17 CORPORATE GOVERNANCE
Page 1 and 2: THE NORWEGIAN CODE OF PRACTICE FORC
Page 3: Published 23 October 2012Seventh ed
Page 6 and 7: TABLE OF CONTENTSThe Norwegian Corp
Page 8 and 9: Unlisted companies with broadly hel
Page 10 and 11: Changes to the Code of Practice sin
Page 12 and 13: Section 14 ‘Take-overs’The reco
Page 14 and 15: However, the overview may refer to
Page 18 and 19: 4. Equal treatment of shareholders
Page 20 and 21: etc. where the value exceeds 1/20th
Page 22 and 23: 5. Freely negotiable sharesThe comp
Page 24 and 25: CommentaryNotice calling the annual
Page 26 and 27: The Public Companies Act requires t
Page 28 and 29: CommentaryThe use of a nomination c
Page 30 and 31: If the recommendation includes cand
Page 32 and 33: CommentaryComposition of the corpor
Page 34 and 35: • does not have any cross-relatio
Page 36 and 37: company, and on any material appoin
Page 38 and 39: The board’s responsibility for th
Page 40 and 41: egulations for the entire board of
Page 42 and 43: The provisions on the duty of Norwe
Page 44 and 45: • contribute to ensuring that the
Page 46 and 47: 11. Remuneration of the board of di
Page 48 and 49: 12. Remuneration of executive perso
Page 50 and 51: The chief executive is appointed by
Page 52 and 53: When publishing annual and interim
Page 54 and 55: CommentaryFundamental consideration
Page 56 and 57: The board of directors and the exec
Page 58 and 59: appended thereto, it must be referr
Page 60 and 61: The knowledge and experience of the
Page 62: The Code of Practice is published b

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