CHANGES TO THE NORWEGIAN CODE OF PRACTICE FOR CORPORATE
GOVERNANCE: AUTUMN 2011


1.     Introduction


The Norwegian Corporate Governance Board (NCGB) has resolved to make a change to
Section 1 of the Code of Practice in order to harmonise the recommendation with the
provisions of Section 3-3b of the Accounting Act on the procedure for public disclosure of
the report on corporate governance. In addition, NCGB has decided to include a
clarification in Section 1 on the scope and content of the explanation of any deviation
from the Code of Practice.

In addition, certain minor adjustments have been made to the commentary and
footnotes to Section 8 and Section 9 in response to changes to legislation and
regulations that have taken place since the current version of the Code of Practice was
issued in 2010.

Since only minor changes and amendments have been made to the Code of Practice for
Corporate Governance this year, NCGB has decided that there is no need to issue a new
version of the Code in 2011. NCGB considers it adequate to communicate the changes to
the current version of the Code of Practice dated 21 October 2010 by means of this
document, which will be made available on the NCGB website (www.nues.no/English/).
This document will also be distributed to all companies that have shares listed on Oslo
Børs or Oslo Axess.

The changes come into effect immediately.

2.     Code of Practice Section 1 “Implementation and reporting on corporate
       governance”

Harmonisation of the procedure for public disclosure of the Corporate Governance report,
cf. Accounting Act, Section 3-3b
Section 3-3b of the Accounting Act has introduced a statutory requirement whereby
enterprises that are obliged to keep accounts and have Norway as their home state, and
that have securities listed on a regulated market, must provide a report on their policies
and practice for corporate governance. This requirement comes into force for annual
reports and annual accounts issued in respect of annual accounting periods commencing
on or after 1 August 2010.

This section of the Accounting Act sets out certain requirements for the content of a
company‟s report on corporate governance. This includes identifying the code of practice
and rules for corporate governance to which the company is subject or which it otherwise
chooses to apply, and stating where the code of practice and rules in question are
publicly available. The company must also provide a justification for any deviation from
the code of practice and rules for corporate governance to which it is subject or which it
has chosen to apply.

Section 3-3b, first paragraph, of the Accounting Act stipulates that the report on
corporate governance must be included in the directors‟ report section of the annual


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report or in a document referred to in the directors‟ report. The concept of ‟document‟
includes a report provided in electronic format and published on the company's website 1.


NCGB has decided to harmonise the requirements of the Code of Practice on the
publication of the report on the company's corporate governance with the requirements
of the Accounting Act. Section 1 of the Code of Practice will following the amendment
contain a requirement for the report on corporate governance produced in accordance
with the Code of Practice to be included in the directors‟ report, but with the opportunity
to publish the report on the company‟s website subject to the directors‟ report including a
reference to where the report is available. The requirement in Section 1 of the Code of
Practice that the report must cover every section of the Code of Practice will continue
unchanged.

Explanation for deviations – clarification
The introduction to the Code of Practice provides an explanation of the “comply or
explain” principle on page 7. This makes it clear that companies must explain how they
comply with each of the recommendations that make up the Code of Practice, or explain
why they have chosen an alternative approach. NCGB has decided to include an
equivalent clarification in Section 1 of the Code of Practice in order to make it clear that
in order to give a satisfactory report on any deviation from the Code of Practice, the
company must provide an explanation of the reason for the deviation and what
alternative solution the company has selected.


The wording of Section 1 of the Code of Practice is accordingly now as follows:

          The board of directors must ensure that the company implements sound corporate
          governance.

          The board of directors must provide a report on the company‟s corporate
          governance in the directors‟annual report or in a document that is referred to in
          the directors‟ report. The report on the company‟s corporate governance must
          cover every section of the Code of Practice. If the company does not fully comply
          with this Code of Practice, this must be explained in the reportthe company must
          provide an explanation of the reason for the deviation and what alternative
          solution it has selected.

          The board of directors should define the company‟s basic corporate values and
          formulate ethical guidelines and guidelines for corporate social responsibility in
          accordance with these values.

Oslo Børs has amended the provisions in the “Continuing obligations of stock exchange
listed companies” on the procedure for public disclosure of the corporate governance
report to reflect the requirements of the Accounting Act. NCGB has therefore made an
equivalent change to the second paragraph of the footnote to Section 1 of the Code of
Practice, which refers to the Oslo Børs Issuer Rules in this respect.

The wording of the first sentence of the second paragraph of the footnote to Section 1 of
the Code of Practice is accordingly now as follows:

       Companies listed on Oslo Børs must publish a comprehensive report on the
       company's corporate governance in the directors‟ report or in a document that is
       referred to in the directors‟ report, cf. „Continuing obligations of stock exchange
       listed companies‟, Section 7.



1
    Proposition to the Storting 117 L (2009-2010), page 108.


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3.     Changes to the footnote to Code of Practice Section 8 “Corporate
       assembly and board of directors: composition and independence”

The footnote to Section 8 of the Code of Practice (Corporate assembly and board of
directors: composition and independence) refers to the requirements in respect of the
composition of the Board of Directors in the Oslo Børs Listing Rules. Oslo Børs amended
its rules in respect of the composition of the Board of Directors in February 2011. The
former rules required that the majority of the shareholder-elected members of the board
of directors must be independent of the company's executive personnel and material
business contacts, and at least two of the members of the board elected by shareholders
must be independent of the company's main shareholder(s). The revised Listing Rules
now stipulate that at least two of the shareholder-elected members of the board of
directors must be independent of the company's executive management, material
business contacts and company‟s larger shareholders. Accordingly, the same change
must be made to the footnote in the Code of Practice. Other than this, it should be noted
that the requirements of the Code of Practice continue unchanged, and are accordingly
stricter than the revised rules applied by Oslo Børs in this respect.

The wording of the second paragraph of the footnote to Section 8 of the Code of Practice
is accordingly now as follows:

       In accordance with the “Listing Rules for shares equities on Oslo Børs”, the
       majorityat least two of the members of the board of directors elected by the
       shareholders must be independent of the company's executive management,and
       material business connectionscontacts, and at least two of the members elected
       by the shareholders must be independent of the company's major larger
       shareholders. In addition, the Listing Rules specify that no member of the
       company‟s executive management may be a member of the board of directors.
       Oslo Børs may grant exemptions from these requirements in special
       circumstances.

4.     Changes to Code of Practice Section 9 “The work of the board of
       directors”
A change made to Section 1 (2) of the Stock Exchange Regulations on 1 July 2010 means
that all issuers of transferable securities listed on a regulated market must have an audit
committee or equivalent corporate body. Norwegian public companies were subject to
this requirement even before the change in the Stock Exchange Regulations, cf. Section
6-41 of the Public Companies Act. The change is therefore principally relevant to foreign
companies, and Norwegian companies that are not public companies, which have
securities listed on a Norwegian regulated market. The Stock Exchange Regulations
include exemptions for smaller companies, equivalent to the exemptions at Section 6-41
(2) of the Public Companies Act.
NCGB has decided to make changes to the commentary and the footnote to Section 9 of
the Code of Practice “The work of the Board of Directors” so that the text reflects the
introduction in the Stock Exchange Regulations of the duty to establish an audit
committee.
Following the change, the third paragraph of the commentary to Section 9 under the
heading “Board committees” will read as follows:

       It is a legal requirement forThe Public Companies Act and the Stock Exchange
       Regulations impose requirements for large companies that exceed certain defined
       thresholds to establish an audit committee. Companies should not make use of
       the opportunity provided in company the legislation and regulations for the entire
       board of directors to operate as the company's audit committee. Smaller
       companies should also consider establishing an audit committee. The evaluation of


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       the independence of members of the audit committee can be based on the criteria
       for independence set out in the section “Independence of the board of directors”
       at Section 8. In addition to satisfying the legal requirements of legislation and
       regulations, the majority of the members of the audit committee should be
       independent of the company. When making recommendations for nominations to
       the board of directors, the election committee should identify which members of
       the board of directors satisfy the requirements of independence and expertise in
       order to be members of the audit committee. Certain companies in the financial
       sector are subject to separate legal requirements in respect of the audit
       committee.

Following the change, the eighth paragraph of the footnote to Section 9 will read as
follows:

       The provisions on the duty of Norwegian public companies to establish an audit
       committee are set out in Asal. § 6-41 (1). Other companies that have negotiable
       securities listed on a Norwegian regulated market are subject to equivalent
       requirements in respect of establishing an audit committee pursuant to Section 1
       (2) of the Stock Exchange Regulations (Børsforskriften). Asal. § 6-42 (3) allows
       companies to stipulate in their articles of association that the entire board of
       directors shall operate as the audit committee, subject to the board satisfying the
       requirements set out in paragraph 2 of this provision at all times. Asal. § 6-41 (2)
       provides an exemption from the duty to establish an audit committee for
       companies that fall below certain thresholds. In such smaller companies, the
       board of directors carries out the duties of the audit committee required for larger
       companies. Where the chairman of the board is an employee of the company, he
       or she cannot participate in meetings of the board that carry out the duties of the
       audit committee. The Savings Banks Act (Sparebankloven) § 17c, the Commercial
       Banks Act (Forretningsbankloven) § 16a, the Financial Institutions Act
       (Finansieringsvirksomhetsloven) § 3-11a (for finance companies) and the
       Insurance Act (Forsikringsloven) § 5-10 impose their own requirements for the
       duty to establish an audit committee, with particular exemptions and rules for the
       election of members to the committee and its composition.


Following the change, the final paragraph of the footnote to Section 9 will read as
follows:

       Oslo Børs Circulars 4/2009 and 2/2011 provides a summary of the rules and
       regulations that relate to audit committees.

The changes come into effect immediately.

Oslo, 20 October 2011

THE NORWEGIAN CORPORATE GOVERNANCE BOARD




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