Updated recommendation on corporate governance

The Norwegian Committee for Corporate Governance (NUES) issued an updated recommendation on corporate governance on 14 October 2021 - the "Corporate Governance Recommendation". The purpose of the recommendations is that companies listed on regulated markets in Norway shall have corporate governance that clarifies the division of roles between shareholders, the board and executive management in addition to what follows from current legal rules. Good corporate governance will strengthen trust in the companies and contribute to the greatest possible value creation over time.

Who are the recommendations for?

Mainly companies with shares listed on regulated markets in Norway, currently the Oslo Stock Exchange and Euronext Expand. The recommendation may also be appropriate for other companies with dispersed ownership, and where the shares are subject to regular trading.

What does this mean for me / my company?

The changes may require updating the board instructions, instructions for the nomination committee and instructions for the compensation committee.

A summary of the most important recommendations:

• New recommendation on sustainability : The recommendation clarifies the company's responsibility for sustainability and links this responsibility more closely to the company's activities and value creation. Sustainability means that value creation takes place taking into account economic, social and environmental conditions.
• New recommendation for members of the nomination committee: The right for board members or senior executives to sit on the nomination committee has been removed.
• New recommendation on agreements with related parties: The board instructions should state how the board and the day-to-day management are to deal with agreements with related parties (formerly "related parties"), including whether an independent valuation is to be obtained.
• New recommendations on salaries and other remuneration to senior executives: The changes are a follow-up to new rules in the Public Limited Liability Companies Act on guidelines for determining executive salaries, which came into force on 1 January 2021. As a result of new legal rules, several of the previous recommendations are removed. It is emphasized that the guidelines on salaries and other remuneration should be clear and comprehensible.

We at AGP are happy to talk to you about this and assist if you need to update your Corporate Governance documents!