Corporate governance
Management reporting systems and internal control systems
Being a listed company the Company must establish procedures to ensure that the Board has a fair basis for making appropriate estimates concerning the Group’s financial situation and its future prospects.
In managing, supervising and reporting concerning the Group’s financial situation and its operating profits, the Board adheres to the reports described below:
- A strategy plan.
- A budget and a prognosis for the coming year.
- An ongoing follow-up on budgets and a revision of prognoses.
- A monthly report/a quarterly report.
Ongoing management reporting includes:
- Monthly financial results and a statement of financial standing.
- Comparison of budgeted and actual results on a monthly, a quarterly and an annual basis
- Quarterly reports concerning financial results and the financial situation.
- Summary of important result indicators or events at each board meeting
- Reviewing contracts and co-operation agreements with a view to ensuring that all undertakings and obligations are included.
- Reviewing the operating results of the vessels.
- Liquidity prognosis and ready capital.
- Reviewing currency and interest risks
The Company has arranged its internal accounting control with a view to ensuring perfection and accuracy in the Company’s account books and a detailed internal control concerning buying and selling of the Company’s shares. It is the opinion of the Board that the above control ensures efficient procedures for presentation of accounts.
Audit Committee
The Board has formed a permanent audit committee which, together with the Executive Management in the dialogue with the accountant and the finance institutes, monitors that internal controls, risk management and the audit is conducted as agreed.
Corporate Governance
The company aims at complying with high standards within Corporate Governance, and the Board of Directors of the Company on an ongoing basis adapt to the framework and the principles for the general management of the Group. The aim is to ensure that the Group is managed in such a way that the Group can reach the goal of ensuring a long term accrued value for its shareholders.
In preparing the annual report the Board has reviewed the recommendations for corporate governance published by the Copenhagen Stock Exchange Committee on Corporate Governance in August 2005 and revised on 6 February 2008 and not later than 10 December 2008. The Company complies with the majority of the Committee’s recommendations but do not follow the recommendations in the below areas:
- Three out of five members of the Board own shares of vessels partly owned or operated by the Group and thus do not fully comply with the recommendation that a minimum of 50% of the board must be independent. The Board considers it to be an advantage that they share the interest of the investors concerning the operation of the vessels.
- Presently, the Company sees no need for age limits for board members as the Company emphasizes that the board includes members with an important, relevant business experience and due to the fact that board members are elected for one year at the time only.
- The Company has no work or task descriptions for the duties, tasks and responsibilities of neither the Chairman of the Board nor the Deputy Chairman. It is the opinion of the Board that this is not relevant and that these questions are indirectly included in the procedures of the Board.
- There is not limit to the length of time a board member may sit in the Board. All board members are up for re-election every year and the Company therefore finds it irrelevant to establish time limits.
- Due to the relatively simple structure of the Group and the limited number of employees the board finds it unnecessary to establish a nomination committee and remuneration committee. At the beginning of 2008 an audit committee was introduced according to the 2009 requirements to replace the existing audit committee that is made up of the Board of Directors.
- As a consequence of the Group’s structure and the limited number of employees it is the opinion of the management that the question of staff-elected board members is not relevant.
- The Board has not established an actual remuneration policy but has and will on an ongoing basis assess the fees for board and Executive Management in relation to their tasks and responsibilities.
- As pr 30 June 2008, the Company has decided to introduce actual part annual reports.
Shareholders and other stakeholders
The Company’s board and Management want and actively work towards maintaining a good communication and dialogue with shareholders and other stakeholders. The Company aims at establishing a high degree of openness in its communication of information concerning the Group’s financial development and its activities. Information to and the dialogue with shareholders and other stakeholders will be effected via publication of news items as well as via meetings with investors, analysts and media. There will be access to information on the Company’s web-site immediately after publications on OMX the Nordic Exchange Copenhagen. Further to this, presentations will be published via the Company’s web-page. Company news, annual reports and articles of association are available in Danish or English. The Company’s financial matters and profits policy is assessed on an ongoing basis.
Board of Directors
The tasks of the Board are to a wide extent defined by Danish law. This means that the Board handles the general management of the Group and decides about targets and strategies. Furthermore, the Board manages the overall surveillance of the Company and its subsidiaries/K- structures and controls that they are managed in a proper way and in accordance with the legislation and the articles of association of the individual companies. The tasks of the Board are established in a procedure that is, at least once a year, reconsidered and adapted to the needs of the Group.
The Board is considered to have the necessary qualifications concerning technical background and experience within international business, shipping, finance, economy, law, communication and management, meaning that the Board is capable of handling its managerial and strategic duties and of ensuring a controlled growth in a constructive co-operation with the Executive Management.
In accordance with the Company’s articles of association the general assembly elects between three and seven board members. The Board consists of five members elected by the general assembly, elected for one year at a time and with the possibility of re-election. The Board members elects among themselves a Chairman and a Deputy Chairman. The profiles of new members are submitted to the general assembly and the newly elected members are introduced to the Company in detail.
The Executive Management normally participates in the board meetings that are held 4 times a year. The Board is on an ongoing basis informed about the Group matters and on a regular basis receives a monthly report.
No person can be a member of both Board and Executive Management and no board members are involved in the day-to-day management of the Group.
The Board members receive a fixed annual fee accepted by the general assembly in connection with the adoption of the annual report. The Board is not included in any arrangements concerning bonuses or options. None of the Board members are entitled to particular remuneration in connection with resignation.
Executive Management
Executive Management is employed by the Board who decides the terms of employment of the Executive Management. The Executive Management is responsible for the day-to-day operation of the Group with due consideration to the guidelines and directions established by the Board.
Remuneration of the Executive Management, consisting of one member, is decided by the Board. The Executive Management is not entitled to particular fees in connection with resignation apart from salary during the period of notice.
Incentive programmes for Executive Management and Board include a share option programme and a general bonus programme. The principles for incentive programmes are presented for the general assembly.
Risk Management
One of the control functions to be handled by the Board is to ensure efficient risk management, including the identification of important risks and the arrangement of risk management systems. In this connection the Group focus is on the financial situation, liquidity, foreign currencies, interest and loan agreements, to ensure that at any time the Group complies with the actual covenants of its loan agreements.
On an ongoing basis the Management stays updated on the development in markets where the Group operates. This in ensured by e.g. keeping a close contact to the Group’s partners and by maintaining a wide network with shipping analysts etc.
In connection with the adoption of the annual report, the Board assesses the Group’s risk management and the adopted policies. In this connection the Board has decided that Group accounts are made in DKK.
Audit and internal control
The Company’s external auditor is elected by the general assembly for one year at a time.
The framework of the auditor’s work, including his remuneration, audit services as well as non-audit services, is described in the audit protocol and letters of agreement.
At meeting with the external auditor, the Board reviews the annual report, and the auditor’s observations as well as essential issues revealed in connection with the auditing are discussed. Furthermore, the adopted accounting policies are discussed as well as their consequences for the audit.
Once a year as a minimum, the Board assesses the internal control systems with a view to ensuring that these are appropriate and sufficient and comply with good practice within the area.
The Company’s monitoring of the audit has been referred to an audit committee.
