Good corporate governance is characterized by responsible interaction between the owners, the Board of Directors and management seen from a long-term and value-creating perspective. Effective cooperation between the day-to-day management and the Board of Directors, respect for the company’s other stakeholders as well as open and honest communication with the world outside are required in order for Software Innovation to be able to fulfill its objective of being an investment, supplier, employer and business partner which creates value in the long term.
The most important principles and the guidelines for control of Software Innovation are described below.
Operations
Software Innovation's objectives are to undertake consulting, systems development, production and sale of software products. Today, Software Innovation is one of the foremost Nordic centres within the development of innovative IT solutions. In close cooperation with our Nordic customers in the private and public sectors, we have focused on value creation for 20 years. Software Innovation offers IT solutions that help enterprises to improve, maintain and strengthen relationships with employees, customers, suppliers and other business partners. What we cannot assemble on the basis of our standardized families of solutions - Public 360 and Corporate 360 - our consultants develop according to the customer's needs. The company's Articles of Association are available on the Group's Internet pages www.software-innovation.com .
Nominal share capital and dividend
At 31.12.2006 the Group has an equity ratio of 33.7 %. the Board continuously assesses the company’s capital adequacy requirements in the light of the company’s strategy and risk profile.
Equitable treatment of shareholders and transactions with related parties
The company has only one share class and all shares confer the same rights. the articles of association do not include any restrictions on the transferability of the shares. historically, any capital increases in the company have been undertaken in connection with the acquisition of operations and issues for cash, as well as option schemes for employees and the Board of Directors at the company. New subscriptions have largely taken place without pre-emptive rights for the other shareholders. the exception has been private placings for cash [without the requirement for a prospectus] where the largest shareholders have been consulted first. all contracts in connection with the acquisition of operations are entered into between independent parties. “Independent parties” means parties which cannot be classified as closely related in accordance with the Norwegian accounting standard regarding closely related parties.
Authorization to the Board for a capital increase from the general meeting held on 4 may 2006
To ensure a high degree of flexibility in relation to being able to strengthen the company’s capital base, with a view to acquisitions of other companies or operations with settlement in forms other than cash, such as the company’s shares, and to be able to implement incentive programmes for employees in the company, the general meeting resolved the following, in accordance with the Board’s proposal:
The Board of Directors at software Innovation asa is authorized to increase the company’s share capital by up to NoK 544,000, which amounts to 1,600,000 shares at NoK 0.34 (9.98 % of the issued share capital at 10 april 2006), through one or more new subscriptions. the authorization may be used for strengthening the company’s equity,acquisition of operations including mergers, and in connection with entry into cooperation with industrial partners. the authorization also covers capital increases for non-cash payment (and includes the issue of shares in connection with mergers and acquisitions of companies and assets).
In addition, the Board of Directors is authorized to issue shares with a total nominal value of up to NoK 476,000, which represents 1,400,000 shares at NoK. 0.34 (8.74 % of issued share capital at 10 april 2006), in one or more private placings in connection with the approved 3-year incentive plan for managers at software Innovation.
Subscription to new shares may take place without pre-emptive rights for the other shareholders in accordance with section 10-4 of the Norwegian act on public limited companies (allmennaksjeloven)
The Board of Directors determines the dates for the capital increases, the price at which the shares may be offered, the number of shares to be offered in total and to each subscriber through the individual new subscription, and other subscription conditions. the authorization in the first and second sections remains in force until the date of the next general meeting, and includes the right to make the necessary amendments to the articles of association, as well as to register these in the Norwegian Register of Business enterprises. If the nominal value of the company’s shares is reduced or increased, the authorization shall continue to apply to the extent that it is within the framework of the Norwegian act on public limited companies. the authorization granted herein replaces all previous authorizations granted to the Board of Directors to issue shares.
Authorization to the Board for a capital increase from the extraordinary general meeting held on 8 january 2007
The Board of Directors at software Innovation asa is authorized to sell 300,000 options to executive employees at NoK 22.00 per underlying share, as well as to increase the company’s share capital by up to NoK 102,000, which comprises 300,000 shares at NoK 0.34 in one or more private placings in connection with the exercise of the above-mentioned options.
The authorization remains in force until the date of the next general meeting, and includes the right to make the necessary amendments to the articles of association, as well as to register these in the Norwegian Register of Business enterprises. If the nominal value of the company’s shares is reduced or increased, the authorization shall continue to apply to the extent that it is within the framework of the Norwegian act on public limited companies. the authorization applies only to a capital increase against cash contributions.
Subscription to new shares may take place without pre-emptive rights for the other shareholders in accordance with section 10-4 of the act on public limited companies. the authorization shall not include decisions regarding mergers in accordance with section 13-5 of the act on public limited companies. this authorization is in addition to the authorization granted at the annual general meeting held on 4 May 2006.
Authorization to the Board to acquire treasury shares granted at the annual general meeting held on 4 may 2006
The Board of Directors at software Innovation asa has been authorized on behalf of the company to acquire own shares with a total nominal value of up to NoK 1,500,000. the holding of own shares after the acquisition must however never exceed 10 % of the registered share capital at any time. the highest amount that may be paid per share is NoK 500, and the lowest is NoK 0.34, but shares may never be acquired at a price higher than 5 % above the closing market price on the day before acquisition.
Aacquisition of own shares can take place through one or more transactions from employees or former employees, or through trade on the oslo stock exchange. It will be possible to use the shares as payment in connection with individual transactions or to sell them to employees in connection with share incentive schemes or through transactions on the oslo stock exchange. the authorization applies until the next ordinary general meeting.
The background for the resolution includes the desire to enable the repurchase of treasury shares in connection with the departure of employees. the authorization is to replace the previous authorization granted on 28 april 2005.
Free transferability
The shares are traded on the oslo stock exchange, and are freely transferable. the articles of association do not include any restrictions on the transferability of the shares.
General meeting
Shareholders have the right to participate in the annual general meeting, which exercises the highest authority in the company. the company’s articles of association are adopted here. the annual general meeting is normally held by 1 June every year. In 2006, the annual general meeting was held on 4 May, and 26.71 % of the total share capital was represented.
Notice of the annual general meeting is sent at the latest two weeks in advance and complies with the minimum requirements of the legislation. emphasis is placed on ensuring that the relevant documents contain all necessary information so that the shareholders can consider all the matters that are to be addressed. Registration for the meeting takes place in the form of a written response by post, fax, or e-mail until the date on which the annual general meeting is held. shareholders who cannot attend are encouraged to appoint a proxy. the chairman of the Board and the Group’s ceo are also present to answer questions from the shareholders.
The company’s financial calendar is announced every year via the notification system to the oslo stock exchange as well as on the company’s Internet pages.
The agenda is determined by the Board of Directors, where the principal points follow from the articles of association § 8.
Nomination committee
The company shall have a nomination committee consisting of two members and a chairman. the members are elected by the general meeting for two years at a time. For the election of Board members, in connection with the convening of the general meeting, the nomination committee shall submit proposals for candidates to the general meeting. For 2006 and the period until the annual general meeting in 2007, the nomination committee is elected by the company’s Board with authority from the general meeting.
Corporate assembly and Board of directors, composition and independence
Corporate assembly
Software Innovation asa has no corporate assembly.
Election of the Board of Directors
The annual general meeting elects the representatives elected by shareholders to the Board of Directors. Recommendations for Board members to be elected by the shareholders are sent together with the notice of the annual general meeting. the resolution about the Board’s composition takes place by simple majority.
The members of the Board are elected for two years at a time, with the possibility of re-election. to ensure continuity in the Board, only half of the members stand for election each year. the members of the Board elected by employees are elected by direct ballot by and among the staff in the Group.
Composition of the Board of Directors
Emphasis is placed on ensuring that the combined Board of Directors will have competence within Board work and the company’s main business. the Board of Directors currently comprises 5 external and 3 employeeelected members. the ceo is not a member of the Board. the Board appoints the ceo.the Board of Directors elects its chairman itself, and has elected Peter Pay as chairman of the Board.
Independence of the Board of Directors
The Board regards itself as autonomous and independent of the Group’s administrative management. emphasis is placed on avoiding conflicts of interest between owners, the Board of Directors, the administration and the company’s other stakeholders.
The Board of directors’ work
The Board of Directors’ tasks the Board of Directors’ function in the company is primarily to take care of all the shareholders’ interests, but it also has a responsibility for the company’s other stakeholders.
Its primary responsibility is to take part in developing and approving the Group’s strategy, performing necessary monitoring functions and acting as an advisory body for the executive management of the Group. Its duties are not static, and the focus will depend on the Group’s ongoing needs.
Relationship with the Group’s executive management
A clear division of work has been established between the Board of Directors and the Group’s executive management. the chairman of the Board is responsible for ensuring that Board work is performed in an effective and correct manner in accordance with the tasks of the Board of Directors. the ceo is responsible for the company’s executive management.
The Board’s instructions
Guidelines for the Board of Directors’ work are stipulated in instructions to the Board. the instructions to the Board include provisions on form, content, and implementation of the Board’s work as well as interpretation of the various roles.
Notice and implementation of meetings
Every year, the Board schedules fixed Board meetings. Normally, 7 to 8 meetings are held. In addition, extra meetings are convened as needed. In 2006, 13 meetings were held.
All the Board’s members receive information about the company’s operational and financial development in connection with the established Board meetings. the company’s strategy and risk are regularly subject to review and evaluation by the Board of Directors. It is usually the ceo who proposes the agenda for the Board meetings, and the Board of Directors decides on it. In addition to the members of the Board themselves, the following people participate in the Board meetings: the ceo, the Deputy ceo, the cFo and the cMo. other participants are called in as needed. the Board approves matters of substantial importance to the Group.
These include strategy and strategic plans, approval of acquisitions, sale of operations and approval of the annual and quarterly financial statements.
Remuneration to the Board of Directors
The general meeting determines the Board’s remuneration each year. Remuneration to the Board for 2006 totalled NoK 817,000.
Remuneration to members of the Board is fixed and not related to option plans or similar. For more detailed information about remuneration to members of the Board and their shareholdings in the company, see Note 5 in the financial statements for the year.
Remuneration to executive employees
The terms for the ceo are set by the Board the terms for the other members of the Group management are stipulated by the ceo. Remuneration to the members of the Group management is described in Note 5 in the financial statements for 2006. every year, the Board carries out an assessment of the salary and other remuneration to the ceo. the Board of Directors’ attitude with regard to executive salaries is that they are to be competitive but not leading with regard to the level.
Information and communication
Software Innovation makes a continuous effort to ensure that the share price reflects the underlying value in the company. Important elements of this are:
The annual accounts and Board of directors’ report – periodic reporting
The Group normally presents preliminary annual accounts at the turn of the month January/February. the complete accounts together with the Board of Directors’ report and annual report are sent to shareholders in april. apart from this, accounting figures for the Group are reported every quarter. all shareholders receive the same information at the same time.
Other market information
Open investor presentations are organized in connection with the announcement of the annual and quarterly results for the Group.here, the ceo presents the results and comments on the development in each country, market and the outlook.
The presentations in connection with the annual and quarterly results are available on the Group’s Web site, www.software-innovation.no. In addition to this, regular dialogue and presentations are arranged for analysts and investors. the ceo and cFo are responsible for investor relations. In addition, other information which is considered significant is communicated continuously to the stock market through notices to the oslo stock exchange and press releases.
The company assigns great importance to informing its owners and investors about the group’s development and its economic and financial status. emphasis is placed on ensuring that the information is identical and conveyed to the stock market simultaneously. care is taken to maintain an impartial distribution of information when dealing with shareholders and analysts.
Acquisition
The overall objective of the Board is to provide the best possible return for the company’s shareholders.the Group has no defence mechanisms against takeover bids in its articles of association, nor have other measures been taken to restrict the opportunity to acquire shares in the company.
Auditor
The auditor’s relationship to the Board of Directors
The auditor holds a meeting with the chairman of the Board and the ceo in connection with the planning of the audit. the auditor also takes part in relevant matters on the agenda at the Board meetings.
The auditor’s relationship to management
As well as the ordinary audit, the auditor provides consulting within the areas of accounting, tax and financial due diligence. see Note 5 in the financial statements for 2006.
Management holds regular meetings with the auditor. the matters discussed include the company’s risk areas, internal control routines and accounting policies.
At regular intervals, the Board of Directors evaluates whether the auditor is exercising a satisfactory control function.