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 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 on 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 covenants are discussed in the annual report 2008 note 14.

The Board has authorisation to undertake share issues, which is valid until the ordinary 2009 AGM, but in any event cease to be valid on 30 June 2009. The AGM will be advised to renew the authorisation for a period of one year. 

 

4. Equal treatment of shareholders and transactions with related parties

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

The authorisation to undertake share issues, see point 3 above, includes an exception from pre-emptive 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 2008, there have been no transactions between the company and a shareholder, director, executive management 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 2008 note 11.

The Group's Ethical Guidelines includes articles instructing members of the Board and the executive management 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 investor-pages at www.simrad-optronics.no.

 

5. Freely negotiable shares

The shares are freely negotiable with exception of shares subject to lock-up restrictions.

The exception is shares issued in connection with the acquisition of Vinghøg AS where the previous share holders in Vinghøg AS - among other elements - was compensated with 21,422,965 shares in Simrad Optronics ASA subject to lock-up restrictions. 1/3 of these shares was released at 11 January 2008, another 1/3 was released at 11 January 2009 and the remaining 1/3 will be released at 11 January 2010.

 

6. General meetings

Through the Annual General Meeting (AGM), the shareholders are guaranteed participation in the Group's supreme governing body.

In 2008, 51.6 % of the aggregate share capital was represented in the AGM.

The notice for the AGM and the support information are published on www.simrad-optronics.no no later than 21 days prior to the date of the meeting. All sufficiently detailed information is sent to the shareholders no later than two weeks prior to the date of the meeting.

The notice calling the AGM informs the shareholders about all procedures in order to participate in and vote at the meeting including a proxy form. The Board tries to make it possible for as many shareholders as possible to participate. Shareholders who cannot attend the meeting are urged to authorise a proxy, and the system facilitates the use of proxies on each individual item for discussion.

The notice also sets out the right for shareholders to propose resolutions in respect of matters to be dealt with by the AGM.

The Board will make sure that the members of the board, the nomination committee and the auditor are present at the AGM.

The Board makes arrangements to ensure an independent chairman for the AGM.

The Board and the chairman of the meeting ensures that the AGM is given the opportunity to vote separately for each candidate nominated for election to the Company's corporate bodies.

 

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 committee including chairman of the nomination committee.
• Remuneration to be paid to the members of the nomination committee.

Information about the Nominating Committee is available on 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 state 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 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 management. 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 on 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 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.

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

An audit committee has been appointed by the Board of directors. For more information, see Board of directors' report or visit 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 are drawing up bi-weekly performance reports that are sent to and reviewed by the executive management, and where selected highlights are conveyed to the board through 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 are provided with financial statements, on a quarterly basis as 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 Ethical guidelines on 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 2008 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 shareholder-elected 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 2008 note 11.

 

12. Remuneration of executive management

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

The Company does not grant any performance-related remuneration of the executive management 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 a 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 form the Board's statement.

The Board will consider arranging a valuation from an independent expert if any member of the Board or executive management, 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 a 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 Board of directors 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 management 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 management is present.

The Board has established guidelines in respect of the use of the Auditor by the Company's executive management 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.