Corporate governance

1. Reporting on corporate governance

This statement is prepared according to the chapters in the Norwegian Code of Practice for Corporate Governance. NSB AS and the NSB Group operate in accordance with the Code, with exceptions because the Group is not listed on a stock exchange, is wholly owned by the Norwegian state and has certain limits set out in the Articles of Association.

The Code is designed to ensure that companies listed on the stock exchange shall have ownership control and corporate governance that clarifies the division of roles between shareholders, the Board of Directors and executive management more comprehensively than is required by legislation. The recommendation shall contribute to strengthening the confidence the shareholders, the capital markets and other stakeholders have in the company.

The Group Board of Directors has adopted a set of Group values, and ethical and social responsibility guidelines which are published on the homepage of NSB AS.

2. Nature of the business

NSB is a transport group with operations in Norway and other Nordic countries. The parent company, NSB AS, is owned by the Norwegian Government, represented by the Ministry of Transport and Communications. The Group’s head office is in Oslo.

The Group’s business as stated in the Articles of Association:

  • The company’s social mission is to provide efficient, available, safe and environmentally-friendly passenger and freight transport
  • The company’s business is passenger traffic by rail in Norway, transport of passengers and goods in Norway and other Nordic countries as well as any related businesses
  • The business may be run by the company itself, by wholly owned subsidiaries, through other partly owned companies or cooperating companies. The company may do business in other Nordic countries as far as this helps to strengthen the company’s effectiveness on the Norwegian market and/or helps to strengthen the company’s ability to solve the social duties which are the reason for state ownership

3. Equity and dividends

NSB AS is a state-owned limited liability company. This is a type of limited liability company where the state owns 100% of the shares. The responsible minister or whom he gives authority safeguards the rights of the shareholders in the general meeting.

Important special rules for such companies are:

  • The General assembly is not bound by the dividend recommendation given by the Board of Directors
  • The Office of the Auditor General of Norway audits the management of state ownership and has a right to demand information from the CEO, the Board and the external auditor

The Government expects for the next three to five years that the dividend level should be 50% of the Group profit after tax, but the exact level will be decided annually. The Board has not been given authorisation to approve the distribution of dividends or to increase the number of shares.

4. Equal treatment of shareholders and transactions with close associates

The company has only one class of shares. These are not listed on a stock exchange and the shares are not transacted.

The Ministry of Transport and Communications and NSB AS have entered into an agreement on the public purchase of passenger traffic services on non-profitable lines. Similarly, the Ministry of Transport and Communications has entered into an agreement with NSB’s subsidiary, NSB Gjøvikbanen AS, regarding operation of the Gjøvik line.

Guidelines on how to treat material transactions between the company and members of the Board of Directors or management are included in the Group’s ethical guidelines and are also included in the instructions for the Board of Directors and the President and CEO.

5. Freely negotiable shares

The Articles of Association do not include any restrictions on negotiability.

6. General assembly

The General assembly consists of the Government represented by the Ministry of Transport and Communications. The Ministry calls the meeting. The annual ordinary meeting is held before the end of June.

Members of the Board, the CEO and the auditor have the right to attend the General assembly meetings.

7. Nomination committee

The General assembly consists of the Government represented by the Ministry of Transport and Communications. The General assembly has not appointed a nomination committee.

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

The company does not have a Corporate assembly. The Board is elected by the General assembly. The Board consists of seven to ten members. Five or six members, including the chairman and deputy chairman, are elected by the General assembly. The Board members are elected for two years at a time. Two or three Board members with deputies are elected by and among the employees. An agreement has been made not to have a Corporate assembly, and therefore the employees elect a Board member with deputy in addition to the above representatives.

The members of the Board of Directors are chosen based on experience, competence, diversity and ability to contribute to the development of the company. Company management cannot be a member of the Board of Directors and may not own shares in the company. Information on Board members is published on the homepage of NSB AS.

9. The work of the Board of Directors

The Board’s work is governed by the Norwegian Companies Act, which is to manage the company’s values on behalf of the owners. The tasks of the Board have been set out in separate instructions. The Board follows a formal work plan on an annual basis. The plan regulates the Board’s main tasks which are goals, strategy, organisation and control of operations. The Board of Directors’ work is evaluated annually by the Board.

The Board has established a separate set of instructions for the CEO.

The Board shall according to the principles of association ensure that the company acts in a socially responsible manner.

The Board has established audit and remuneration committees.

10. Risk management and internal control

To ensure the quality of internal control, a separate governing system has been implemented. This includes management documents, preparedness plans, safety procedures and processes to govern and control operations. Guidelines, routines, handbooks and authorisation matrices are in place to ensure the quality of the company’s economics, accounting and financing activities.

Risk analysis of the different activities of the Group is evaluated annually, and measures are taken to control the risks. The Board reviews the company risk management and internal control annually.

11. Remuneration of the Board of Directors

Information on remuneration of the Board and executive management is included in the notes to the financial statements. Board remuneration is not performance-based. The shareholder-elected members of the Board of Directors do not normally take on specific assignments for the company.

12. Remuneration of executive personnel

The Board of Directors hires the CEO and decides the remuneration. The Board evaluates the CEO’s performance and salary conditions on an annual basis, and reviews the compensation of executive management. The Board has prepared guidelines that are to be applied for remuneration of executive management. The CEO has been given authority to determine remuneration for executive management within the above mentioned guidelines and principles for remuneration of management in state-owned companies. The guidelines for remuneration of management are on the agenda of the general assembly. Information pertaining to the remuneration of Board members and executive management is included in the notes to the financial statements.

13. Information and communications

Public information is communicated by the senior management of the Group. Financial information is published on the company’s home page.

Through §10 in the Articles of Association, NSB has a specific duty to inform the shareholders about the Group’s operations. Matters of principle or social significance should be communicated to the Minister of Transport and Communications before the Board of Directors makes its final decision.

Every year the Board of Directors is obliged to present to the Minister of Transport and Communications a plan for the operations of the NSB Group which includes the following aspects:

  1. An assessment of the market and the NSB Group, including developments since the last plan.
  2. The Group’s main activities for the next few years, including plans for major restructuring, further development and scaling down of existing operations and development of new ones.
  3. The level of investments, major investments and their financing.
  4. The Group’s economic development.
  5. A report on measures and results in relation to the company’s social mission.

The Board of Directors has to submit information regarding material changes of already communicated plans to the Minister of Transport and Communications.

14. Take-overs

Due to the company being state-owned this part of the code is not considered to be applicable.

15. Auditor

The auditor is elected by the General assembly. The auditor submits a Management Letter to the Board of Directors annually, reporting the main findings from the audit of the company and the status regarding management and internal control. The Board of Directors convenes an annual meeting with the auditor which the CEO will not attend. The auditor is present at the General Assembly.

The remuneration of the auditor is disclosed in the notes to the financial statements.

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