Corporate governance

3. EQUITY AND DIVIDENDS

The board of directors should ensure that the company has a capital structure that is appropriate to the company's objective, strategy, and risk profile.

The board of directors should establish and disclose a clear and predictable dividend policy.

The background to any proposal for the board of directors to be given a mandate to approve the distribution of dividends should be explained.

Mandates granted to the board of directors to increase the company’s share capital or to purchase own shares should be intended for a defined purpose. Such mandates should be limited in time to no later than the date of the next annual general meeting.

At year end 2022 AKVA group had a consolidated equity of MNOK 1,144 which accounts for 31.9% of the total consolidated assets of the Company. The view of the Board is that the above stated equity capital level is appropriate in consideration of the Company’s objectives, strategy and risk profile.

Dividend policy:

The Company’s main objective is to maximise the value of the investment made by its shareholders through both increased share prices and dividend payments. The Company aims to give the shareholders a competitive return on investment by a combination of cash dividend and share price increase. The Company’s dividend policy shall be stable and predictable.

When deciding the dividend, the Board will take into consideration expected cash flow, capital expenditure plans, financing requirements/compliance, appropriate financial flexibility, and the level of net interest bearing debt. The Company needs to be in compliance with all legal requirements to pay dividend.

The Company will target to pay dividend twice a year.

The dividend policy has been established by the Board and is disclosed on the Company’s website.

On 11 February 2022, the Board resolved to distribute a half-yearly dividend of NOK 1.00 per share, in total NOK 33,667,733. Information on the Company's dividend distributions each year is available on https://www.akvagroup.com/investors/the-share/dividend-policy.

In order to enable the Company to maintain the dividend policy, the Board will propose that the Annual General Meeting to be held in May 2023 authorizes the Board pursuant to the Norwegian Public Limited Liability Companies Act (the "Public Companies Act" or the "Act") section 8-2(2) to approve the distribution of dividends based on the Company’s annual accounts for 2022. The proposed authority may be used to approve the distribution of dividends up to an aggregate amount of NOK 100,000,000. The authorization shall, if adopted by the Annual General Meeting, be in force from the date of the general meeting until the earlier of the time of the Annual General Meeting in 2024 and 30 June 2024.
 
Authorisations to the Board

The Annual General Meeting held on 12 May 2022 resolved to grant the Board an authorization to increase the Company’s share capital by up to NOK 3,666,773 through the issuance of new shares. The authorization is in force until the earlier of the date of the Annual General Meeting in 2023 and 30 June 2023, and replaced all previous Board authorizations to increase the Company’s share capital. The authorization does not authorize the Board to (i) waive the pre-emptive right of shareholders pursuant to section 10-4 of the Act; (ii) carry out a capital increase by contribution in kind, (iii) incur any special obligations on behalf of the Company, cf. section 10-2 of the Act, (iv) decide on mergers pursuant to section 13-5 of the Act, or (v) use the authorization in connection with the Company’s option program. The authorization has not been used by the Board to date.

The Board will propose that the Annual General Meeting to be held in May 2023 grants the Board a new authorization on similar terms, replacing the authorization granted to the Board in 2022, with a limitation corresponding to 10% of the Company's total share capital. The new authorization shall, if adopted by the Annual General Meeting, expire at the earlier of the date of the Annual General Meeting in 2024 and 30 June 2024.

The Annual General Meeting in 2022 also resolved to grant the Board an authorization to acquire own shares on one or several occasions, in accordance with sections 9-2 to 9-4 of the Act, at a price per share not exceeding the market price of the Company's shares on the Oslo Stock Exchange. The minimum and the maximum price that may be paid for each share is NOK 1 and NOK 150, respectively. The maximum face value of the shares which the Company may acquire pursuant to this authorization is NOK 916,693, which, at the time the authorization was granted, equalled approximately 2.5% of the Company’s share capital.

Acquisitions of shares pursuant to this authorization may only take place if the Company’s distributable reserves according to the most recent balance sheet exceed the consideration paid for the shares to be acquired. The Board is free to determine how the Company’s own shares will be acquired and sold, provided that an acquisition under this authorization must be in accordance with prudent and good business practice, with due consideration to losses which may have occurred after the balance-sheet date or to expected such losses.

The authorization is valid until the earlier of the date of Annual General Meeting in 2023 and 30 June 2023. This authorization replaced the authorization for acquisition of own shares granted by the Annual General Meeting on 6 May 2021. The authorization has not been used by the Board to date.

The Board will propose that the Annual General Meeting to be held in May 2023 grants the Board a new authorization on similar terms, replacing the authorization granted to the Board in 2022, to expire at the earlier of the Annual General Meeting in 2024 and 30 June 2024.

Deviation from the Recommendation: The Board authorizations granted by the Annual General Meeting in 2022 to increase the share capital and to acquire own shares respectively are not limited to defined purposes. The same applies to the Board authorizations to be proposed to the Annual General Meeting in 2023. The Board however believes that it is in the best interest of the Company that the Board has flexibility to use the authorizations as considered necessary and advantageous from time to time at the Board's discretion, always considering the interests of the Company's shareholders and other stakeholders. It should be noted that the authorization to increase the share capital has restrictions as to waiver of the pre-emptive right of shareholders and certain other restrictions as described above, and is limited in time as recommended by the Code.

4. EQUAL TREATMENT OF SHAREHOLDERS

Any decision to waive the pre-emption rights of existing shareholders to subscribe for shares in the event of an increase in share capital should be justified. Where the board of directors resolves to carry out an increase in share capital and waive the pre-emption rights of existing shareholders on the basis of a mandate granted to the board, the justification should be publicly disclosed in a stock exchange announcement issued in connection with the increase in share capital.

Any transactions the company carries out in its own shares should be carried out either through the stock exchange or at prevailing stock exchange prices if carried out in any other way. If there is limited liquidity in the company’s shares, the company should consider other ways to ensure equal treatment of all shareholders.
 
Pre-emption rights of existing shareholders

If the proposed Board authorization to increase the share capital referred to in section 3 above is adopted by the Annual General Meeting in 2023, the Board will not be authorized to waive the existing shareholders' pre-emptive rights in connection with a share capital increase under the authorization.

In the event the Board would propose to the general meeting that the pre-emptive rights of shareholders should be waived, this proposal will be justified in the notice of the general meeting and disclosed in a stock exchange notice in connection with the capital increase.

It should be noted that Israel Corporation Ltd. ("ILCO"), in connection with its investment in AKVA group equalling approximately 18% of the share capital completed on 21 October 2021, is entitled for a period of 24 months thereafter to participate in any capital raising in the Company in such a manner that ILCO's shareholding is retained. This means that in a situation where the pre-emption rights of existing shareholders in AKVA group in general are set aside, ILCO may still invoke its pre-emption right. See also section 8 below on ILCO's right to appoint one member of the Board pursuant to the Company's Articles of Association.

As set out in the Company's stock exchange notice of 29 September 2021, ILCO is considered as a long-term strategic investor and its global business experience and technology background will contribute to the Company's goal to build a world-leading offering of technical & digital solutions within sea and land-based aquaculture. Consequently, the investment by ILCO and arrangements related thereto are deemed to be in the common interest of AKVA group and its shareholders

Transactions by the Company in its own shares

Any transactions carried out by the Company in its own shares will be carried out either on the Oslo Stock Exchange or at prevailing stock market prices. In situations with limited liquidity in the Company’s shares, the Board will consider alternative means to ensure the equal treatment of shareholders.

Deviation from the Recommendation: None

5. SHARES AND NEGOTIABILITY

The company should not limit any party's ability to own, trade or vote for shares in the company.

The company should provide an account of any restrictions on owning, trading or voting for shares in the company.

The Company's shares are freely transferable. The Articles of Association place no restrictions on negotiability.

Please refer to section 8 below regarding ILCO's right to appoint one member of the Board pursuant to the Company's Articles of Association.

Deviation from the Recommendation: None

6. GENERAL MEETINGS

The board of directors should ensure that the company's shareholders can participate in the general meeting.
 
The board of directors should ensure that:

• the resolutions and supporting information distributed are sufficiently detailed, comprehensive and specific to allow shareholders to form a view on all matters to be considered at the meeting
• any deadline for shareholders to give notice of their intention to attend the meeting is set as close to the date of the meeting as possible
• the members of the board of directors and the chairman of the nomination committee attend the general meeting
• the general meeting is able to elect an independent chairman for the general meeting

Shareholders should be able to vote on each individual matter, including on each individual candidate nominated for election. Shareholders who cannot attend the meeting should be given the opportunity to vote. The company should design the form for the appointment of a proxy to make voting on each individual matter possible and should nominate a person who can act as a proxy for shareholders.

The Board shall ensure that as many of the Company's shareholders as possible are able to exercise their voting rights at the Company's general meetings, and that the general meeting is an effective forum for shareholders and the Board.

The notice of a general meeting, with reference to or including supporting information on the resolutions to be considered by the general meeting, shall be sent to shareholders and made available on the Company's website and NewsWeb no later than 21 days prior to the date of the general meeting. The Board will seek to ensure that the resolutions and supporting information are sufficiently detailed and comprehensive to allow shareholders to form a view on all matters to be considered.

Deadlines for shareholders to give notice of their attendance shall be set as close to the date of the general meeting as practically possible. However, it is noted that as of 1 July 2023, shareholders whose shares are registered on a nominee account must give notice of attendance. Such notice must have been received by the Company no later than two business days prior to the general meeting, unless the Board has set a later deadline in the notice of the general meeting. Further, as of 1 July 2023, only those who own shares in the Company on the fifth business day before the general meeting (the record date) will have the right to attend and to vote for their shares as of the record date.

The Board will in each specific case consider whether to allow shareholders to vote separately on each candidate nominated for election to the Board and other corporate bodies (if applicable). However, and as set out below in respect of the Annual General Meeting in 2022, voting for individual candidates in board elections has so far not been allowed, as the need to take into consideration inter alia the overall combination of expertise represented in the Board and statutory requirements to the Board's composition have outweighed other considerations.

It is the intention of the Company and the Board to have representatives of the Board and the nomination committee present in the general meeting. However, the entire Board will normally not attend the meeting unless this is considered necessary based on the matters to be handled by the meeting. The auditor will attend the Annual General Meeting and any extraordinary general meetings to the extent required by the items on the agenda or other relevant circumstances.

The general meeting is chaired by an independent chair, to be proposed by the Board and appointed by the general meeting.

The Board will aim to prepare and facilitate the use of proxy forms which allows separate voting instructions to be given for each item on the agenda, and also nominate a designated person who will be available to vote on behalf of shareholders as their proxy. The Board may decide that shareholders may submit their votes in writing, including by use of electronic communication, in a period prior to the general meeting. The Board will seek to facilitate such advance voting. Furthermore, the Company's shareholders shall have the right to attend and vote at general meetings by electronic means, unless the Board finds that there is sufficient cause for not allowing this form of voting and attendance.
 
The Annual General Meeting in 2022
The Annual General Meeting in 2022 was in all material respect carried out in accordance with recommendation no. 6 of the Code with the following exceptions:

• The agenda and proxy form for the Annual General Meeting did not open for voting in individual candidates for the Board. The nomination committee made a recommendation for a board composition reflecting several criteria, where inter alia stakeholder interests, independence, competence and experience have been weighed to provide a representative and skilled board. This would not be possible to achieve with separate voting for individual candidates.
• The entire Board did not participate at the Annual General Meeting as this was not considered necessary in light of the matters to be dealt with by the meeting.

The Annual General Meeting in 2022 was held as a digital meeting in accordance with section 5-8 of the Public Companies Act, and shareholders were encouraged to attend by granting a proxy (with or without voting instructions) to the chairman of the Board.

Deviation from the Recommendation: None other than as stated above

7. NOMINATION COMMITTEE

The company should have a nomination committee, and the nomination committee should be laid down in the company’s articles of association. The general meeting should stipulate guidelines for the duties of the nomination committee, elect the chairperson and members of the nomination committee, and determine the committee’s remuneration.

The nomination committee should have contact with shareholders, the board of directors and the company’s executive personnel as part of its work on proposing candidates for election to the board.

The members of the nomination committee should be selected to take into account the interests of shareholders in general. The majority of the committee should be independent of the board of directors and the executive personnel. The nomination committee should not include any executive personnel or any member of the company’s board of directors.

The nomination committee’s duties should be to propose candidates for election to the board of directors and nomination committee (and corporate assembly where appropriate) and to propose the fees to be paid to members of these bodies.

The nomination committee should justify why it is proposing each candidate separately.

The company should provide information on the membership of the committee and any deadlines for proposing candidates.

The Articles of Association set out that the Company shall have a nomination committee consisting of at least three members elected by the general meeting. The nomination committee shall consider and recommend resolutions at the general meeting on the following matters:

• Candidates for election as members of the Board
• Candidates for election as members of the nomination committee, including the chairman of the committee
• The proposed remuneration of the Board and the members of the nomination committee
• Any proposed amendments to the nomination committee Charter
• Approve the text in the annual report (Corporate Governance section) of the Company, related to the nomination committee

The nomination committee shall justify its proposal for candidates to the Board and the nomination committee on an individual basis.

Composition
The current nomination committee was elected by the Annual General Meeting on 12 May 2022 and consists of:

• Eivind Helland, (chair, for 2 years) General Manager, Blue Planet AS
• Bjørnar Mikalsen (for 1 year), Head of Sales, Skretting Nord
• Ingvald Fardal (for 2 years), MsC Business Administration

None of the nomination committee members are members of the Board or the Company's management. All members of the committee are independent of the Board and the Company's management.

The nomination committee is of the opinion that the composition of the committee reflects the common interest of all the Company’s shareholders.
 
The work of the committee

The nomination committee’s work is based on the nomination committee Charter initially approved by the Annual General Meeting in May 2007, which includes appropriate arrangements for shareholders to submit proposals to the committee for candidates for election.

The nominating committee has held 1 meetings since the Annual General Meeting in 2022.

Deviation from the Recommendation: None

8. BOARD OF DIRECTORS: COMPOSITION AND INDEPENDENCE

The composition of the board of directors should ensure that the board can attend to the common interests of all shareholders and meets the company’s need for expertise, capacity, and diversity. Attention should be paid to ensuring that the board can function effectively as a collegiate body.

The composition of the board of directors should ensure that it can operate independently of any special interests. The majority of the shareholder-elected members of the board should be independent of the company’s executive personnel and material business contacts. At least two of the members of the board elected by shareholders should be independent of the company’s main shareholder(s).

The board of directors should not include executive personnel. If the board does include executive personnel, the company should provide an explanation for this and implement consequential adjustments to the organisation of the work of the board, including the use of board committees to help ensure more independent preparation of matters for discussion by the board, cf. Section 9 of the Code of Practice.

The general meeting (or the corporate assembly where appropriate) should elect the chairman of the board of directors.

The term of office for members of the board of directors should not be longer than two years at a time.

The annual report should provide information to illustrate the expertise of the members of the board of directors, and information on their record of attendance at board meetings. In addition, the annual report should identify which members are considered to be independent.

Members of the board of directors should be encouraged to own shares in the company.

According to the Articles of Association, the Board shall consist of four to ten members. The Board currently consists of the following ten members:

Mona Skåtøy, Torstein Graven and Helen Helland serve as deputy members of the Board.

Further details of the individual directors can be found in the Company's annual report and at https://www.akvagroup.com/investors/management-and-board/.

As set out in the above table, four of the shareholder-elected members of the Board are independent of the main shareholders of the Company and as such, the Company complies with the Code's recommendation regarding independence of main shareholders.

It should be noted that Article 5 of the Articles of Association of the Company includes the following regarding election of Board members:

"The Board of Directors shall be composed of 4 to 10 members, in accordance with a decision by the General Meeting. The Chairperson and one Board member jointly sign on behalf of the company.

The company Israel Corp., Millennium Tower, 23 Aranha Street, Tel Aviv 61204, Israel, business registration number 520028010 (the "Entitled Shareholder") shall for as long as it owns 15% or more of the total number of shares in the company be entitled to appoint one director to the Board of Directors. The Entitled Shareholder shall retain the right to appoint one director to the Board of Directors also in the event its shareholding is reduced below 15% (no matter how), as long as its ownership is minimum 12% of the total number of shares in the company.

The Entitled Shareholder’s right to appoint a director to the Board of Directors pursuant to this article shall terminate if the Entitled Shareholder engages, directly or indirectly, through investments or holdings, including minority investments, in activities directly competing with the company, provided however that this shall not apply for financial investments in land based projects. For purposes of the foregoing, “financial investments” means any investment that does not have the goal of combining an acquired business with another business owned or controlled by such shareholder."

The right to appoint one Board member pursuant to Article 5 is in accordance with section 6-3 (3) of the Public Companies Act, which allows for an exemption from section 6-3 (1) of the Public Companies Act, and constitutes a deviation from the commentary to the Recommendation. As further detailed in section 4 above, the investment in the Company by ILCO and rights granted in relation thereto are considered to be in the common interest of AKVA group and its shareholders.

The Board elects the chair and the deputy chair, which represents a deviation from the Code. The Board is however of the view that the composition of the Board ensures that it can attend to the common interests of all shareholders and operate independently of any particular interests.

The nomination committee’s recommendation of candidates, including the reasoning for the recommendation, will be appended to the notice of the Annual General Meeting as published on the Company’s website and on the Oslo Stock Exchange’s NewsWeb, www.newsweb.no.

All the members of the Board are generally encouraged to own shares in the Company.

Deviation from the Recommendation: None other than as stated above regarding the election of one Board member and the Board's competence to elect the chairman of the Board.

9. THE WORK OF THE BOARD OF DIRECTORS
 

The board of directors should issue instructions for its own work as well as for the executive management with particular emphasis on clear internal allocation of responsibilities and duties.

These instructions should state how the board of directors and executive management shall handle agreements with related parties, including whether an independent valuation must be obtained. The board of directors should also present any such agreements in their annual directors’ report.

The board of directors should 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.

In order to ensure a more independent consideration of matters of a material character in which the chairman of the board is, or has been, personally involved, the board's consideration of such matters should be chaired by some other member of the board.

The Public Companies Act stipulates that large companies must have an audit committee. The entire board of directors should not act as the company’s audit committee. Smaller companies should consider establishing an audit committee. In addition to the legal requirements on the composition of the audit committee etc., the majority of the members of the committee should be independent of the company.

The board of directors should also consider appointing a remuneration committee in order to help ensure thorough and independent preparation of matters relating to compensation paid to the executive personnel. Membership of such a committee should be restricted to members of the board who are independent of the company’s executive personnel.

The board of directors should provide details in the annual report of any board committees appointed.

The board of directors should evaluate its performance and expertise annually
 
Board responsibilities
The Board has the ultimate responsibility for the management and organisation of the Company and supervising routine management and business activities. This involves that the Board is responsible for establishing control arrangements to secure that the Company operates in accordance with the adopted values and the Code of Conduct as well as with shareholders’ expectations of good corporate governance. The Board primarily looks after the interests of all the shareholders but is also responsible to the Company’s other stakeholders.

The Board’s main task is to ensure that the Company develops and creates shareholder value. Furthermore, the Board shall contribute to the shaping of and implementation of the Group’s strategy, ensure appropriate supervision and control of management and in other ways ensure that the Group is well operated and organised. The Board sets the objectives for the financial performance and adopts the Company’s plans and budgets. Items of major strategic or financial importance for the Group are the responsibility of the Board. The Board appoints the CEO, defines his or her work description and authority and sets his or her salary and other compensation. The Board each year produces an annual plan for its work as recommended.
 
Instructions to the Board
The Board has adopted separate instructions for the work and responsibilities of the Board and the Company's management. The instructions cover inter alia the following matters: Composition of the Board, the Board’s duties, day-to-day management, calling of Board meetings and related issues, the Board’s decisions, Board minutes, disqualification and conflict of interest, confidentiality obligation, convening general meetings, insider rules and ethical guidelines for conduct of business. The Board can decide to deviate from instructions in certain cases. The members of the Board shall, pursuant to the instructions to the Board, make the Company aware of any material interests that they may have in items to be considered by the Board.

The Board's instructions do not cover the handling of all agreements with related parties, and as such, this represents a deviation from the Code. However, based on the statutory requirements in sections 3-10 to 3-19 of the Public Companies Act and the Company's procedures to detect and handle potential conflicts of interest in a thorough manner, the Board is of the opinion that there are adequate procedures in place to ensures sufficient clarity with regard to the balance of any agreement with related parties.

The Company is not aware of any potential conflicts of interest between the duties owed to the Company by the members of the Board or the Company’s management, and their private interests or other duties. The Company is party to facility lease agreements with companies that are controlled by shareholders of AKVA group; however, these are all based on arm’s length market terms.
 
Financial Reporting
The Board receives regular financial reports on the Group’s economic and financial status and keeps up to date on AKVA group's financial performance and development.
 
Audit Committee
In accordance with sections 6-41 to 6-43 of the Act, AKVA group has established an audit committee, consisting of Kristin Reitan Husebø (Chair), Hans Christian Mong and Heidi Nag Flikka. The Group CFO acts as the secretary of the committee. The mandate and work of the audit committee are described in further detail under item 10 below.

The Company has had an audit committee since 2011. 6 meetings were held by the audit committee during 2022.
 
The remuneration committee
The Company has established a remuneration committee in order to ensure thorough and independent preparation of matters relating to compensation to the executive personnel. The committee's duties and responsibilities are governed by a separate Charter adopted by the Board. The committee’s tasks revolve around the CEO’s terms of employment and the remuneration of executive personnel including salary levels, bonus systems, options schemes, pension schemes, employment contracts etc.
 
The committee prepares, subject to approval by the Board and the general meeting as required under applicable law:

• The Company's policy on determination of salaries and other remuneration for executive personnel in accordance with the Act section 6-16 a;
• An annual report on salaries and other remuneration for executive personnel in accordance with the Act section 6-16 b; and
• other matters relating to remuneration and other material employment issues in respect of the executive personnel.

The current members are Hans Kristian Mong (Chair), Tore Rasmussen and Yoav Doppelt, all of which are independent of the Company's management. The committee has held 2 meetings since the 2022 Annual General Meeting.
 
The Board’s self-evaluation
The Board completes a self-evaluation annually in terms of efficiency, competence, and the Board’s duties in general. The evaluation is made available for the nomination committee.

Deviation from the Recommendation: None, other than as stated above regarding the Board's instructions not covering the handling of agreements with related parties.

10. RISK MANAGEMENT AND INTERNAL CONTROL

The board of directors must ensure that the company has sound internal control and systems for risk management that are appropriate in relation to the extent and nature of the company’s activities.

The board of directors should carry out an annual review of the company’s most important areas of exposure to risk and its internal control arrangements.
 
The Board and internal control
The Board ensures that the Company has appropriate internal control procedures and appropriate risk management systems tailored to its business. Managing operational risk primarily takes place within the Company’s operational subsidiaries, but with the Company’s management as an active driving force through their positions in the boards of the subsidiaries. Generally, the subsidiaries have established adequate practices for such risk management.

The Group is exposed to currency, interest rate, and market risk, as well as credit risk and operational risk.

The Group has implemented a quality management system which details the processes related to continuous improvements and operational risks. AKVA group ASA is ISO 9001:2015 certified by the accredited certification body DNV.

The Groups' financial guidelines ensure the monitoring of financial risk. Management of exposure in financial markets, including currency, interest rate and counterparty risk, is emphasised in the Company’s governing documents. Further details on these principles are provided in note 16 to the Group's financial statements and AKVA group’s financial statements.

The Group has developed an authority matrix which is included in its governing documents.

Management regularly prepares performance reports that are reviewed by the Board. The interim financial statements are subject to review in Board meetings.
 
The Board’s work plan
The Board has established an annual work plan that includes an annual review of compliance of external and internal laws and regulations, risk and the HSE-situation, financial risks and identification of risk related to the strategic goals and risk handling. By carrying out the established work plan, the Board controls that the Company has sound internal control and systems for risk management for the Company’s activities.
 
The audit committee
The mandate of the audit committee is to monitor and evaluate the Group’s financial reporting, including to evaluate substantial accounting issues, accounting principles and procedures applied by the Group in its financial reporting to the Oslo Stock Exchange, as further detailed in section 6-43 of the Act. The committee is to evaluate the work of the Group’s external auditor, including the auditor’s independence from management and compliance with rules and regulations regarding services beyond financial audit. The committee also discusses the scope of the audit with the external auditor as well as evaluates reports from the auditor to the Board and management of the Group. The audit committee nominates the external auditor for the Group, as well as propose the compensation to be paid to the external auditor, to the Board.

The audit committee is also monitoring the Groups internal control systems, including managements operational and financial risk management.

The audit committee is free to address any other issue it finds necessary to fulfil its mandate.

Deviation from the Recommendation: None

11. REMUNERATION OF THE BOARD OF DIRECTORS

The remuneration of the board of directors should reflect the board’s responsibility, expertise, time commitment and the complexity of the company’s activities.

The remuneration of the board of directors should not be linked to the company’s performance. The company should not grant share options to members of its board.

Members of the board of directors and/or companies with which they are associated should not take on specific assignments for the company in addition to their appointment as a member of the Board. If they do nonetheless take on such assignments this should be disclosed to the full board. The remuneration for such additional duties should be approved by the board.

Any remuneration in addition to normal directors’ fees should be specifically identified in the annual report.

It is the Board’s opinion that the size of the remuneration to the Board is in compliance with the criteria in the recommendation concerning inter alia the Board’s responsibility and expertise. The annual report provides details of all elements of the remuneration and benefits of each member of the Board.
 
Furthermore, the following applies to the remuneration:

• The remuneration is not linked to the Company’s performance, and the Board members are not granted share options;
• None of the Board members and/or companies with which they are associated, have taken on specific assignments for the Company in addition to their appointment as a member of the Board; and
• The remuneration to the Board is proposed to the general meeting by the nomination committee.

Deviation from the Recommendation: None

12. SALARY AND OTHER REMUNERATION FOR EXECUTIVE PERSONNEL

The guidelines on the salary and other remuneration for executive personnel must be clear and easily understandable, and they must contribute to the company’s commercial strategy, long-term interests and financial viability.

The company’s arrangements in respect of salary and other remuneration should help ensure the executive personnel and shareholders have convergent interests, and should be simple.

Performance-related remuneration should be subject to an absolute limit.

The main principles for the Company’s remuneration of executive personnel are that the basic salary shall promote value creation in the Company and contribute to aligned interests between shareholders and executive personnel. The basic salary shall not be of a type or size that may negatively affect the Company’s reputation.

As the industry leader in our sector, AKVA group is dependent on being able to offer compensation that enable AKVA to recruit the most able managers. It is the Board’s policy to employ the most competent managers by offering compensation packages that are competitive with those offered in other similar industries and in the international market.

The total remuneration to the CEO and other members of the executive management consists of base salary, variable salary, benefits in kind and pension schemes. Performance-related remuneration of the executive management in the form of bonus programmes, share-based incentives or similar shall be linked to value creation in the Company over time. Such arrangements shall incentivise performance and be based on quantifiable factors that the employee may influence. As recommended in the Code, the performance-related remuneration is capped by being limited to a certain fraction of recipients' annual salary. Share based incentive schemes are limited by a maximum number of shares in the Company that can be allocated.

The fixed remuneration and performance-based remuneration to the CEO and other executive personnel are described in the notes to the annual accounts.

The Board has established a remuneration committee, which inter alia assists the Board in the preparation of a policy on determination of salaries and other remuneration for executive personnel in accordance with section 6-16 a of the Act. The policy shall be simple and clear and contain the information set forth in the regulation on policies and reports on remuneration for executive personnel (Nw. "Forskrift om retningslinjer og rapport om godtgjørelse for ledende personer"). The Board's aim is that the policy will contribute to the Company's commercial strategy and financial viability as well as the long-term interests of the Company and its shareholders.

The policy shall be made available to and be approved by the Annual General Meeting upon any material change and at least every fourth year and was most recently approved at the Annual General Meeting on 6 May 2021. Within the framework of the policy, the remuneration committee shall each year undertake a thorough review of the remuneration and other compensation to the CEO and other executive personnel. The review shall be based upon market sampling of similar positions. The structure and level of the remuneration and incentive system for the CEO and other executive personnel are determined by the Board, within the framework of the policy as approved by the Annual General Meeting. In accordance with the Public Companies Act and the Code, the policy shall, when up for approval by the Annual General Meeting, be enclosed to the notice of such General Meeting, and shall be available on the Company's website.

The Board shall also, with the assistance from the remuneration committee, prepare a report on remuneration to executive personnel on an annual basis, in accordance with the Act section 6-16 b and the regulation on policies and reports on remuneration for executive personnel. In accordance with the Public Companies Act and the Code, the report shall be made available to and be considered annually by the Annual General Meeting, and was most recently considered at the Annual General Meeting on 12 May 2022. The report shall be enclosed to the notice of the Annual General Meeting, and shall be available on the Company's website.

Deviation from the Recommendation: None.

13. INFORMATION AND COMMUNICATIONS ROUTINE

The board of directors should establish 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 board of directors should establish guidelines for the company’s contact with shareholders other than through general meetings.

The Board has adopted instructions on inter alia disclosure of information to ensure compliance with the Company's disclosure obligations and satisfactory procedures related thereto. The Board will seek to ensure that market participants receive correct, clear, relevant and up-to-date information in a timely manner, taking into account the requirement on equal treatment of all market participants. Furthermore, through the Company's procedures, the Board aims to at all times facilitate for discussions with its shareholders in compliance with applicable laws and regulations.

Annual and periodic accounts
The Company normally presents preliminary annual accounts in its Q4 interim accounts in late February. The complete annual report including annual financial statements and the directors’ report is sent to all shareholders and other stakeholders in March/April and presented at the Annual General Meeting. The Company reports financially on a quarterly basis and thus more frequent than required by statutory law. The Company also makes its interim accounts publicly available through the Oslo Stock Exchange's NewsWeb service, as well as through presentations that are open to the public. The Company’s financial calendar is published on the Company’s website and on NewsWeb. All shareholders have equal access to financial and other material company information.

Other market information
Public presentations are held in connection with the publication of the Company’s interim reports. The interim presentations are made available on the Company’s website and on NewsWeb.

In the interim presentations, the Company presents the result for the past period and comments on the development for the various products and market segments. Furthermore, the Company provides a summary of the market outlook and future short-term prospects. In addition to the CEO, the CFO participates in these presentations. The CEO and CFO also maintain a dialogue with and make regular presentations to analysts and potential investors.

The Company considers it essential to keep shareholders and potential investors informed about its economic and financial development. From time to time, in addition to presentation related to financial reporting, the Company will therefore prepare company presentations which are made available on the Company’s website and through NewsWeb.

Deviation from the Recommendation: None

14. TAKE-OVERS

The board of directors should establish guiding principles for how it will act in the event of a take-over bid.

In a bid situation, the company´s board of directors and management have an independent responsibility to help ensure that shareholders are treated equally, and that the company’s business activities are not disrupted unnecessarily. The board has a particular responsibility to ensure that shareholders are given sufficient information and time to form a view of the offer.

The board of directors should not hinder or obstruct take-over bids for the company’s activities or shares.

Any agreement with the bidder that acts to limit the company’s ability to arrange other bids for the company’s shares should only be entered into where it is self-evident that such an agreement is in the common interest of the company and its shareholders. This provision shall also apply to any agreement on the payment of financial compensation to the bidder if the bid does not proceed. Any financial compensation should be limited to the costs the bidder has incurred in making the bid.

Agreements entered into between the company and the bidder that are material to the market's evaluation of the bid should be publicly disclosed no later than at the same time as the announcement that the bid will be made is published.

In the event of a take-over bid for the company’s shares, the company’s board of directors should 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 the announcement of the bid.

If an offer is made for a company’s shares, the company’s board of directors should issue a statement making a recommendation as to whether shareholders should or should not accept the offer. The board’s statement on the offer should make it clear whether the views expressed are unanimous, and if this is not the case it should explain the basis on which specific members of the board have excluded themselves from the board’s statement. The board should arrange a valuation from an independent expert. The valuation should include an explanation and should be made public no later than at the time of the public disclosure of the board´s statement.

Any transaction that is in effect a disposal of the company’s activities should be decided by a general meeting (or the corporate assembly where relevant).

The Board has established guidelines in the event of an offer for all or a substantial majority of the shares in AKVA group is made.

In the event of a take-over bid for the shares in the Company, the Board shall ensure that shareholders in the Company are treated equally, and that the Company’s business activities are not disrupted unnecessarily. The Board shall ensure that shareholders are given sufficient information and time to form a view of an offer. The Board shall not seek to prevent or obstruct take-over bids for the Company’s business or shares unless there are particular reasons to do so.

Any agreement with a bidder for the shares of the Company that acts to restrict the Company’s ability to pursue and engage for alternative bids for the Company’s shares will only be entered into where such an agreement clearly is in the common interest of the Company and the shareholders. This provision shall also apply to any agreement on the payment of financial compensation to a bidder if the bid does not proceed.

In the event of a take-over bid for the Company’s shares, the Board shall not exercise authorizations or pass any resolutions with the intention of obstructing the take-over bid unless this is approved by the general meeting subsequent to the announcement of the bid.

If an offer is made for the shares in the Company, the Board shall issue a statement making a recommendation as to whether shareholders should or should not accept the offer. The Board's statement on a bid shall make it clear whether the views expressed are unanimous, and if this is not the case, it shall explain the basis on which specific members of the Board have excluded themselves from the Board's statement. Before issuing its final statement, the Board shall where appropriate arrange for an evaluation of the financial aspects of the bid from an independent expert. The evaluation shall include an explanation and shall be made public no later than at the time the Board's statement is made public.

Deviation from the Recommendation: None.

15. AUDITOR

The board of directors should ensure that the auditor submits the main features of the plan for the audit of the company to the audit committee annually.

The board of directors should invite the auditor to meetings that deal with the annual accounts. At these meetings the auditor should report on any material changes in the company’s accounting principles and key aspects of the audit, comment on any material estimated accounting figures and report all material matters on which there has been disagreement between the auditor and the executive management of the company.

The board of directors should at least once a year review the company’s internal control procedures with the auditor, including weaknesses identified by the auditor and proposals for improvement.

The board of directors should establish guidelines in respect of the use of the auditor by the company’s executive management for services other than the audit.

An outline of the work planned by the auditor is presented to the Company's audit committee each year. The auditor shall annually present to the audit committee a review of the Company's internal control procedures, including weaknesses identified by the auditor and suggestions for improvement, and submit the main features of the plan for the audit of the Company.

The auditor is required to be present during the Board’s discussion of the annual accounts. At this meeting the Board is briefed on the annual accounts and any other issues of particular concern to the auditor, including any (i) material changes in the accounting principles and key aspects of the audit, (ii) material estimated accounting figures and (iii) material matters on which the auditor and the Company's executive management have disagreed.

At least one Board meeting with the auditor shall be held each year without the presence of any member of the Company's executive management.

The Board has implemented guidelines in respect of use of the auditor by the Company's executive management for services other than the audit.

Deviation from the Recommendation: None.