The Norwegian Code of Practice for Corporate Governance - Statoil

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CommentaryFundamental considerations and responsibilitiesThe stock market plays an important commercial role for society as a whole,and so helps to ensure the efficient allocation of society’s resources. Corporatetake-overs contribute to improving the efficiency of price quotationfor shares, and can serve to impose a discipline on corporate management.However, the bidding process and corporate take-overs must be carried outin a manner that maintains respect for the stock market, and that does notunnecessarily disrupt the business activities of the target company.A take-over bid is a contractually binding action that has major consequencesfor the employees, board of directors and shareholders of both the bidderand the target company. All the parties involved must therefore conductthemselves in such a manner as to maintain public confidence in the stockmarket. For the target company, it is therefore important that the boardhas previously thought through some of the guiding principles as to how itwill behave in the event of receiving a bid, for example whether it will seekto encourage competing bids and how it will ensure equal treatment of thecompany’s shareholders. There is, however, no requirement for a companyto disclose the stance it has taken on these principles.A bid must only be made when the bidder has carried out sufficient preparationsto demonstrate its ability to carry through the bid, including accessto sufficient financing for the terms of the bid.Relationship between this section of the Code of Practice and legislation4The Securities Trading Act only regulates situations where a mandatorybid is made, or where a voluntary bid will cause the bidder’s shareholdingto pass the threshold for a mandatory bid if it is accepted by the partiesto whom it is made. The Code of Practice also applies to situations wherethe bidder already has a shareholding in excess of the threshold for a mandatorybid, and it then makes an offer to buy the shares of all remainingshareholders.The requirement that the board of directors should not hinder or obstructany take-over bid also supplements the provisions of the legislation in thatit applies to bids not regulated by the Act and also applies to the situationbefore a bid is made.54 CORPORATE GOVERNANCE
Take-over situations are not frequent occurrences for the majority of companies.It may therefore be difficult to provide a precise statement pursuantto the first item of this section. In this particular respect, it should thereforebe permissible to provide a somewhat less detailed statement.Equal treatment and opennessIt is a fundamental principle of the Code of Practice that all shareholders inthe target company should be treated equally.5 Openness in respect of takeoversituations will help to ensure equal treatment of all shareholders.4 Vphl. Chapter 6 sets out the rules for mandatory and voluntary offers. Any party thatthrough acquisition becomes the owner of shares representing more than 1/3 of the votingrights in a Norwegian company whose shares are quoted on a Norwegian regulatedmarket is required to either make an offer to purchase the remaining shares in the company(duty to make a mandatory offer), or to reduce its shareholding to below this threshold. Thisalso applies when the number of voting rights held passes 40% and 50%, (repeated dutyto make a mandatory offer). Such a party must immediately notify the stock exchange andthe company when it enters into an agreement to acquire shares that will trigger the dutyto make a mandatory offer. The offer price must be at least as high as the highest pricethe party making the offer has paid or agreed during the last six months prior to the duty tomake a mandatory offer being triggered, cf. Vphl. § 6-10. The offer must also be unconditional,with settlement in cash, and the period for acceptance must be between 4 and 6 weeks.A voluntary offer becomes subject to statutory regulation if the offer will cause the thresholdfor a mandatory offer to be exceeded if the offer is accepted by the parties to whom itis available, cf. Vphl. § 6-19.5 In the case of both mandatory and voluntary offers, there are statutory requirements on theequal treatment of shareholders and on the information to be provided in the offer document,cf. Vphl. § 6-10, final paragraph and § 6-13. Asal. § 6-28 stipulates that neither theboard of directors nor any other parties who represent the company may take any actionwhich may confer on certain shareholders or other parties an unfair advantage at theexpense of other shareholders or the company. This restriction also applies to the generalmeeting by virtue of Asal. § 5-21. The principle of equal treatment is also a requirement ofVphl. § 5-14.6 In the case of an offer regulated by Vphl. Chapter 6, neither the board of directors nor themanagement of the target company may, from the time that they have been notified thata bid is to be made, pass resolutions in respect of any matters outside the company's normalday-to-day business operations in respect of the issue of shares, merger, purchase orsale of significant business areas or the purchase or sale of the company's own shares, cf.Vphl. § 6-17. The restrictions in the Securities Trading Act do not apply if the general meetinghas granted mandates for the board to make such decisions in anticipation of a take--over situation.55 CORPORATE GOVERNANCE
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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 16 and 17: 3. Equity and dividendsThe company
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 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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The Norwegian Code of Practice for Corporate Governance - Statoil

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