For full annotated Code of Practice, see the Oslo Stock Exchange's website at www.oslobors.no/ob/cg or Norwegian Corporate Governance Committee (NUES) at www.nues.no.

 

1. Implementation and reporting

The Board has decided that 'The Norwegian Code of Practice for Corporate Governance' is to be observed. The Group has drawn up its own Ethical Guidelines, most recently revised in November 2008. For more details, visit the investor-pages at www.simrad-optronics.no.

  

2. Business description

The object of Simrad Optronics ASA is to 'engage in industrial activities, trade and other related activities such as participation in other companies of similar category as well as to own and manage real estate, securities and other capital assets'. This sentence appears in § 3 in the Company's Articles of Association that can be found at the investor-pages at www.simrad-optronics.no. The Company focuses on delivering products and services to defence organizations globally. For a brief presentation of goals and main strategies, see the annual report or visit www.simrad-optronics.no.

 

 3. Equity and dividends

The Board continuously monitors the equity of the Company, and ensures that it is adequate for goals, strategies and risk profile.

The Board's dividend policy is to propose dividend payment or purchase of its own shares to the Annual General Meeting (AGM) to the extent that the result, the cash flow, the equity and possible covenants allow this. Prevailing loan covenants are discussed in the annual report 2009 note 14.

Mandates granted to the Board of Directors to increase the company's share capital shall be restricted to defined purposes. If the general meeting is to consider mandates to the Board of Directors for the issue of shares for different purposes, each mandate shall be considered separately by the meeting. Mandates granted to the Board should be limitied in time to no later than the date of the next Annual General Meeting. This shall also apply to mandates granted to the Board for the company to purchase its own shares. 

 

4. Equal treatment of shareholders and transactions with related parties

All shares in Simrad Optronics ASA are Class A shares. The Articles of Association places no restrictions on voting rights. All shares are equal. 

The authorisation to undertake share issues, see clause 3 above, includes an exception from preemptive rights of shareholders to subscribe for shares. The reason for the exception is the desire to get large long term investors as shareholders, or to use part payment in shares with a possible acquisition.

In the Board's opinion, in 2009, there have been no transactions between the company and a shareholder, director, executive personnel or a party closely related to such individuals that can be described as significant and not complying with arms length principle. Related parties are discussed in the annual report 2009 note 11.

The Group's Ethical Guidelines includes articles instructing members of the Board and the executive personnel to notify the Board if they have any material direct or indirect interest in any transaction entered into by any company in the Group. For more details, visit the investor-pages at www.simrad-optronics.no.

 

5. Freely negotiable shares

The shares are freely negotiable.

One exception has been prevailing until January 11th 2010: The exception is shares issued in connection with the acquisition of Vinghøg AS where the previous shareholders in Vinghøg AS  - among other elements - were compensated with 21,422,965 shares in Simrad Optronics ASA subject to lock-up restrictions. The final 1/3 was released on January 11th 2010.

 

6. General meetings

The Board of Directors takes steps to ensure that as many shareholders as possible may exercise their rights by participating in general meetings of the company, and that general meetings are an effective forum for the views of shareholders and the Board. In 2009, 49,1% of the aggregate share capital was represented in the AGM.

The Board ensurses

• making the notice calling the meeting and the support information on the resolutions to be considered at the general meeting, to the extent possible including the recommendations of the nomination committee, posted by mail and available at the company's website no later than 21 days prior to the date of the general meeting

• that the resolutions and supporting information distributed are sufficiently detailed and comprehensive to allow shareholders to form a view on all matters to be considered at the meeting

• setting any deadline for shareholders to give notice of their intention to attend the meeting as close to the date of the meeting as possible

• that the Board of Directors and the person chairing the meeting will make appropriate arrangements for the general meeting to vote separately on each candidate nominated for election to the company's corporate bodies

• that the members of the Board of Directors and the nomination committee and the auditor are present at the general meeting

• making arrangements to ensure an independent chairman for the general meeting

 The shareholders have the following rights in respect of a general meeting:

• The right to attend the general meeting, either in person or by proxy.

• The right to speak at the general meeting.

• The right to be accompanied by an advisor at the general meeting and to give such an advisor the right to speak.

• The right to in the general meeting require certain information from the members of the Board of Directors and the Chief Executive Officer in accordance with further regulations in the Norwegian public limited companies act section 5-15. *)

• The right to present alternatives to the Board of Directors' proposals in respect of matters for discussion at the general meeting.

*) According to the Norwegian public limited compaies act section 5-15, first paragraph a shareholder can claim that members of the Board and the CEO, at the general meeting give available information about conditions that might influence the judgement of:

• approval of the annual accounts and the Directors' report

• matters submitted to the shareholders for decision

• the company's financial situation, including the operations in other companies that the company takes part in, and other points that are to be addressed by the general meeting, unless the information required cannot be given without causing disproportionate damage to the company.

If collection of information is needed, and one thereby is unable to give an answer at the general meeting, a written answer is to be prepared within 2 weeks after the meeting. The answer is to be made public for the shareholders at the company's offfice and is to be sent to all the shareholders who have asked for the information. If the answer is considered to be of substantial importance for the judgement of conditions as above, the answer will be made public for all the shareholders at the company's web page.

Shareholders who cannot attend the meeting in person shall be given the opportunity to vote. The company shall provide information on the procedure for representation at the meeting through a proxy. It shall be nominated a person who will be available to vote on behalf of shareholders as their proxy. To the extent possible it will be prepared a form for the appointment of a proxy, which allows separate voting instructions to be given for each matter to be considered by the meeting and for each of the candidates nominated for election

 

7. Nomination committee

The Company has a nomination committee whose members are shareholders or representatives for the shareholders. The members of the nomination committee, including its chairman, are appointed by the Annual General Meeting (AGM) for a period of two years if not otherwise decided by the AGM.

The duty of the nomination committee is to present its recommendations to the AGM in respect of:

• Election of shareholder elected members and deputy members to the Board of Directors including Chairman of the Board.

• Remuneration to be paid to the members of the Board of Directors.

• Election of members to the nomination committe including chariman of the nomination committee.

• Remuneration to be paid to the members of the nomination committe 

Information about the nomination committee is available at the investor-pages at www.simrad-optronics.no.

 

8. Corporate assembly and Board of Directors: Composition and independence

The Board of Directors attends to the common interests of all shareholders and meets the Company's need for expertise, capacity and diversity.

The Articles of Association states that the Board of Directors is to consist of three to seven members, as resolved by the Annual General Meeting. The Directors of Simrad Optronics are elected for a service periods of two years. Directors may be re-elected and there is no limit on the number of terms that any one Director may serve.

The Board operates independently of any special interests. It does not include representatives of the Company's executive personnel. The annual report is providing information to illustrate the expertise and capacity of the members of the Board of Directors and identifying which members are considered to be independent. Information about the Board of Directors is available at the investor-pages at www.simrad-optronics.no.

 

9. The work of the Board of Directors

The Board bears the ultimate responsibility for managing the Group and supervising day-to-day management and corporate operations.

The Board's main tasks are to contribute to corporate competitiveness, and to ensure that the Group develops and adds value.

A deputy chairman has been elected to chair the Board in the event that the Chairman cannot or should not lead the work of the Board. In order to ensure a more independent consideration of matters of a material character in which the Chairman of the Board is, or has been, personally involved, the Board's consideration of such matters should be chaired by some other member of the Board.

The Board of Directors has issued the instructions for its own work and for the executive personnel. The Board has decided Guidelines for reporting of financial and other information. The Guidelines are available at the investor-pages at www.simrad-optronics.no.

An audit committee has been appointed by the Board of Directors. For more information, see the Board of Directors' report or visit the investor-pages at www.simrad-optronics.no.

The Board is evaluating its performance and expertise annually.

 

10. Risk management and internal control

Management in operating segments is on regular basis drawing up performance reports that are sent to and reviewed by the executive personnel, and where selected highlights are conveyed to the Board through the CEO's operating reports in the Board meetings.

Vinghøg AS and Vingtech Corp are both ISO-certified entities with appurtenant procedures and control systems in place.

The Board is provided with financial statements, on a quarterly basis as a minimum, and with other relevant reports upon request, i.e. health/security/environment reports.

The Company has a system that allows employees to report any unethical behavior. For more information about this 'whistle blowing' procedure, see  the Ethical Guidelines at the investor-pages at www.simrad-optronics.no.

In the Annual report, the Board is carrying out a review of the Company's most important areas of exposure to risk. For more information, see the Board of Directors' report and the Annual report 2009 note 17.

 

11. Remuneration of the Board of Directors

The remuneration of the Board is reflecting the Board's responsibility, expertise, time commitment and the complexity of the Company's activities, and is not linked to the Company's performance.

The Company does not grant share options to members of its Board.

None of the Board's shareholderelected Directors works for the Company in any capacity other than as a Director.

The Annual report provides information on all remuneration paid to each member of the Board of Directors; see the Annual report 2009 note 11.

 

12. Remuneration of executive personnel

The Board has established guidelines for the remuneration of the members of the executive personnel. These guidelines sets out the main principles applied in determining the salary and other remuneration of the executive personnel. They also help to ensure convergence of the financial interests of the executive personnel and the shareholders.

The Company does not grant any performance-related remuneration of the executive personnel in Simrad Optronics ASA in the form of share options, bonus programmes or the like.

 

13. Information and communications

The Board has established guidelines for the Company's reporting of financial and other information based on openness and taking into account the requirement for equal treatment of all participants in the securities market.

The Company publishes an overview each year of the dates for all major events.

All information distributed to the Company's shareholders is published at www.simrad-optronics.no at the same time as it is sent to shareholders.

The presentations of the annual and quarterly reports are accessible either by personal attendance or by following the live presentation on the internet (webcast). The presentations are posted at www.simrad-optronics.no at the same time as they are presented.

The Company has not drawn up any specific guidelines for the Group's contact with shareholders outside the Annual General Meeting, as Stock Exchange Releases are covering all issues the Company is in position to communicate.

 

14. Takeovers

In the event of a take-over bid for the Company's shares, the Board of Directors will not exercise mandates or pass any resolutions with the intention of obstructing the take-over bid unless this is approved by the general meeting following announcement of the bid.

If an offer is made for the Company's shares, the Board of Directors will issue a statement evaluating the offer and making a recommendation as to whether shareholders should or should not accept the offer. If the Board will be unable to give recommendation to shareholders on whether or not to accept the offer, an explanation will be made. The Board's statement on a bid will make it clear whether the views expressed are unanimous, and if this is not the case it will explain the basis on which specific members of the Board have excluded themselves from the Board's statement.

The Board will consider arranging a valuation from an independent expert if any member of the Board or executive personnel, or close associates of such individuals, or anyone who has recently held such a position, is either the bidder or has a particular personal interest in the bid. This shall also apply if the bidder is a major shareholder.

Any transaction that is in effect a disposal of the Company's activities will be decided by an Annual General Meeting, except in cases where such decisions are required by law to be decided by the corporate assembly.

 

15. Auditor

The Auditor submits the main features of the plan for the audit of the Company to the Board annually.

The Auditor presents once a year to the audit committee a review of the Company's internal control procedures, including identified weaknesses and proposals for improvement.

The Auditor is participating in the Board meeting that deals with the annual accounts. At this meeting the Auditor is reviewing any material changes in the Company's accounting principles, comment on any material estimated accounting figures and is reporting all material matters on which there has been disagreement between the Auditor and the executive personnel of the Company.

The Board holds a meeting with the auditor at least once a year at which neither the chief executive nor any other member of the executive personnel is present.

The Board has established guidelines in respect of the use of the Auditor by the Company's executive personnel for services other than the audit.

The Board of Directors reports 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.