All relevant parties must be confident that the company is soundly operated and that the corporate governance is well defined, fit for purpose and carried out with integrity and independence.
Belships competitiveness hinges on stakeholders and prospective customers trust in the company’s integrity and ethical behavior. Board members, management and employees will therefore always strive to uphold and develop trust in the company. Belships’ values and ethical guidelines are intended to safeguard good corporate ethics.
Implementation and reporting on corporate governance
Belships’ corporate governance policy is based on “The Norwegian Code of Practice for Corporate Governance” (the “Code”), most recently revised on 17 October 2018 and issued by the Norwegian Corporate Governance Policy Board. The policy is designed to establish a basis for good corporate governance to support achievement of the company’s core objectives on behalf of its shareholders, including the achievement of sustainable profitability.
By pursuing the principles of corporate governance, the board of directors and management contributes to achieving open communication, equal rights for all shareholders and good control and corporate governance mechanisms. The board of directors assesses and discusses the corporate governance policy on a yearly basis.
Belships aspire to comply with the recommendations of the Code. If the Code is deviated from, the deviation is described and explained in the relevant section of this statement.
The company’s business is clearly described in the company’s articles of association and is as follows:
“The objective of the company is shipping, charter brokerage and purchase and sale of vessels, offshore operations, participation in the exploration for and the production of petroleum, trade and industry as well as participation in companies of any sort with similar objectives.”
The company is listed on the Oslo Stock Exchange and is for the time being engaged in dry bulk and technical management of ships.
The board of directors has defined objectives, strategies and risk profiles for the company’s business activities, and is in the process of further developing and adapting these objective, strategies and risk profiles in light of the newly combined business of Belships and the Lighthouse Group in order to create value for the company’s shareholders.
The board of directors evaluates the company’s objectives, strategies and risk profiles on an annual basis.
The company has implemented guidelines for how it integrates corporate social responsibility into its activities. These guidelines are further described in the company’s social responsibility report included on page 79 to the annual report.
Equity and dividend
As at 31 December 2018, the company had a total equity of USD 123.8 million, corresponding to an equity ratio of 42.2%. The board of directors deems the liquidity position of the company to be satisfactory, with cash and cash equivalents of USD 32 million. The company had mortgage debt of USD 107 million as of 31 December 2018, and a net lease obligation of USD 40.8 million.
The board of directors is of the view that the capital structure of the company is appropriate to the company’s objectives, strategies and risk profile.
Belships aims to maximize the value for the company’s share through an efficient and profitable management of the company’s resources. A competitive return is to be obtained through growth in the value of the company’s shares and the payment of competitive dividends.
The board of directors does not have any authorization to distribute dividend.
Authorisations to the board of directors
At the AGM in 2018, the board was granted an authorisation to increase the share capital by issuing up to NOK 400 000. The authorisation can be used in connection with the company’s share option program for employees. The authorisation is valid until the AGM in 2019, but not longer than 30 June 2019.
At the AGM in 2018, the board was also granted an authorisation to increase the share capital by issuing up to 4 700 000 new shares. The authorisation can be to raise equity through subscription of new shares or in connection with the acquisition of others companies by merger or otherwise and / or for the acquisition of shares in ships, including shares in limited partnerships and general partnerships. This authorisation accordingly covered more than one purpose, but the board is of the view that such authorisation gives the board a flexibility to increase the share capital either in connection with acquisitions, to raise equity or a combination of the two, depending on the specific needs of the company. The authorisation is valid until the AGM in 2019, but not longer than 30 June 2019.
The board was also granted an authorisation to, on behalf of the company, acquire up to 700 000 treasury shares at the Board’s discretion. The authorisation was not limited to a specific purpose in order to give the board sufficient flexibility.
Equal rights for shareholders and transactions with related parties
When increasing share capital through the issue of new shares for cash payment, the company’s shareholders have normally a pre-emptive right to subscribe for the new shares. If the board resolves to carry out an increase in share capital and waive the pre-emptive rights of existing shareholders on the basis of an authorization granted to the board, this will only be done where justified in light of the company’s and the shareholders’ interests. Such justification will be published in connection with the announcement of the increase in capital. The board of directors has not made any resolutions to increase the share capital based on the authorizations granted at the GM in 2018.
The board of directors was given an authorization at the GM in 2018 to acquire treasury shares. No such transactions have taken place in 2018.
In the event of any not immaterial transactions between the company and shareholders, a shareholder’s parent company, members of the board of directors, executive personnel or close associates of any such parties, the board will arrange for a valuation to be obtained from an independent third party. This will not apply if the transaction requires the approval of the general meeting pursuant to the requirements of the Public Companies Act. Independent valuations will also be arranged in respect of transactions between companies in the same group where any of the companies involved have minority shareholders. No such transactions have taken place in 2018 other than the merger with the Lighthouse Group which was approved by the general meeting pursuant to the requirements of the Public Companies Act.
Shares and negotiability
The shares in Belships are freely negotiable and there are no restrictions on any party’s ability to own, trade or vote for the share in the company.
The board of directors seeks to ensure that as many of the company’s shareholders as possible can participate in the general meeting and that the resolutions and any supporting documentation are sufficiently detailed, comprehensive and specific allowing shareholders to understand and form a view on all matters to be considered at the general meeting.
In the notice of the general meeting, it may be decided that shareholders who wish to take part in the general meeting, either in person or by proxy, must notify the company to this effect by a deadline of up to two (2) days before the general meeting.
The members of the board have been present at the general meetings in 2018. The company did not have a nomination committee in 2019. The board of directors has previously considered the need for an independent chairman for the general meeting on a case to case basis. The company’s annual general meeting in 2018 was chaired by the chairman of the board of directors, while the company’s extraordinary general meeting in October 2018 was chaired by an independent chairman.
The company has not in the past accommodated for advanced voting, but the board of directors, but the board of directors intend to propose for the annual general meeting in 2019 that the articles of association are amended so that shareholders who are unable to be present at the general meeting will be given the opportunity to vote by proxy or through written voting in a period prior to the general meeting. The company will in this respect provide information on the procedure and prepare a proxy form/written voting form, which will be set up so that it is possible to vote on each of the items on the agenda and candidates that are nominated for election.
As members of the board of directors historically has represented, directly and indirectly, more than 50% of the shareholdings in Belships ASA, the company has not had a nomination committee in the past. The Board has fulfilled this role itself, and the work to review candidates for the board has been handled by ad hoc committees of the board and chaired by the chairman.
The board of directors have, however, decided to propose for the annual general meeting in 2019 that a nomination committee is established and is laid down in the company’s articles of association. The nomination committee will be established in accordance with the recommendation included in the Code.
Board – composition and independence
The Board consists of seven members and the Board is made up of directors with broad experience and knowledge of the sector in order to attend to the common interests of all shareholders and meet the company’s need for expertise, capacity and diversity.
Five directors are independent of day-to-day management, the majority shareholder and major business connections. The board of directors does not include members of the executive management.
The board has historically elected its own chairman, which is a deviation from the Code, but the board of directors will propose for the annual general meeting in 2019 that the chairman is elected by the general meeting going forward.
The term of office for the board members are two years and members may be re-elected.
Further information regarding the expertise of the members of the board and information on their record of attendance at board meetings is included in the annual report.
Board members are encouraged to own shares in the company and three directors own shares in the company. Further information regarding the board of directors, including their record of attendance is included the annual report.
The work of the board of directors
The board of directors have adopted instructions for its own work and for the executive management. The rules of procedure that apply to the Chief Executive Officer, specify his responsibilities and the decisions that have to be approved by the Board. The Board’s duties comprise the review and supervision of the Group’s internal control procedures and risk management. The same applies to ensuring that the company’s integrity is safeguarded.
The board of directors have also implemented procedures to ensure that members of the board of directors and executive personnel make the company aware of any material interests that they may have in items to be considered by the board of directors. The board of directors will also be chaired by some other member of the board if the board is to consider matters of a material character in which the chairman of the board is, or has been, personally involved.
The board establishes an annual plan for its work and evaluates its performance and expertise annually.
The Board meets at least six times a year and receives a monthly report on the company’s operations. In addition, the Board is consulted on or informed about matters of special importance.
The audit committee consist of Birthe Cecilie Lepsøe (chairman) and Peter Frølich. The committee’s objective is to act as a preparatory working committee and support in connection with the board’s supervisory roles with respect to financial reporting and the effectiveness of the company’s internal control system. The members of the audit committee are independent of the company and at least one member of the audit committee is competent in respect of finance and audit. The Board has prepared rules of procedure for the audit committee.
The board of directors has considered, but not found the need to establish a remuneration committee in the past, but in intends to establish a remuneration committee in accordance with the recommendations of the Code in 2019.
Risk management and internal control
The board is responsible for ensuring that the company has sound internal control and believes that the systems for risk management implemented by the company are appropriate in relation to the extent and nature of the company’s activities. The company’s systems for internal control are closely linked to the company’s guidelines for corporate social responsibility.
The board annually reviews the company’s most important areas of exposure to risk and its internal control arrangements.
Remuneration to the board of directors
The company endeavors to grant directors a remuneration based on market terms which reflect the responsibility, expertise, time commitment and the complexity of the company’s activities. The remuneration to directors is approved by the company’s GM. The remuneration is granted at the end of the year of service.
Directors have no options to buy shares in the company or any other remuneration linked to the company’s results, nor do they receive compensation other than the Board fees.
None of the directors perform other assignments for the company in addition to their appointment as member of the board of directors.
Remuneration to the executive management
The Board has prepared guidelines for the remuneration of the executive management, pursuant to the law, which are submitted to the GM. Details concerning the remuneration of the company’s officers are provided in a separate note to the accounts.
The company has a share option scheme that applies to all employees in Norway, including the executive management. In addition, the Chief Executive Officer has a separate option arrangement. GM has voted separately on the approval of the authorization to the board to issue shares to honor the option program.
Information and communication
The company keeps Oslo Stock Exchange, the stock market and shareholders fully updated through interim reports, annual reports and press releases on important events. The company also has a website, which is regularly updated. Belships regards timely and accurate information as essential for obtaining a price for the share that will reflect the company’s underlying value and prospects.
The Board has not prepared any principles for how to act in the event of a take-over bid. If such a bid should be made, the Board considers it important that shareholders are treated equally and that the company’s operations are not unnecessarily disturbed. The Board’s actions will take this into account in such a situation.
The auditor submits the main features of the company’s annual audit plan to the audit committee.
The company’s auditor attends the board meetings that deal with the annual accounts. At such board meetings, the auditor reports on any material changes in the company’s accounting principles and key aspects of the audit, comments on any material estimated accounting figures and reports all material matters on which there has been disagreement between the auditor and the executive management of the company. The board reviews the company’s internal control procedures together with the auditor at least annually.
The board and the auditor also meet at least once a year without the Chief Executive Officer or other members of the executive management being present.
The auditor also attends the company’s GM and has access to the company’s minutes of board and GMs.
The company’s auditor is Ernst & Young. Besides ordinary audits, Belships receives assistance from Ernst & Young in connection with accounting and tax issues within the field in which the auditor can assist under the rules of independence. The auditing and counseling fees appear from the notes to the accounts. The Board makes a running assessment of whether the audit is performed in a satisfactory manner.
The company’s management meets the auditor regularly to discuss current tax and accounting issues. The board of directors have established guidelines for such use of the auditor by the executive management.