Governance Entities Description

The owners’ interests are represented through the Company’s General Meeting and the shareholder-elected members of the Board and other bodies. The General Meeting is Eltek’s highest authority and can formally make any decision unless otherwise specifically stipulated by law. The meeting can instruct the Board of Directors and reverse any decision that is not binding in relation to third parties.

 

The General Meeting approves the Annual Accounts and Report of the Board of Directors, allocation of profit, payment of dividend, changes in share capital and elects the Board of Directors. All shareholders have the right to meet at the GM and decisions are made on the principle of one share equals one vote. The company has only one class of shares and all shares are freely transferable.

 

The General Meeting is normally hosted at the company’s premises in Drammen, although the Board has also opened for the possibility of hosting the General Meeting in Oslo. Notice of the General Meeting will be sent to all shareholders with known address at least 14 days in advance, together with the agenda and the proposal from the nomination committee. The notice will be formed in compliance with the recommendations in the Norwegian Code of Practice for Corporate Governance.

 

The Annual General Meeting gives shareholders the opportunity to raise questions regarding the Company and the results of the year under review. Members of the Board of Directors, Group management as well as the external auditors are normally present to answer such questions.

Please find the notices calling - and the minutes from Eltek’s general meetings here.
 

The Nomination Committee shall propose candidates relating to the Annual General Meeting’s election of shareholders’ members and deputy members to the Board of Directors. The Nomination Committee is independent of the Board and the Company’s executive management, but may include one or more members who are also members of the Board.

The Committee’s mandate is described in the “Charter for the Nomination Committee of Eltek ASA”, which is an internal document approved by the Board of Directors and filed with the Board documentation.

In accordance with Norwegian law and generally accepted auditing practices, the auditor submits an auditor’s report on the Group. The auditor must comply with requirements as to expertise, capacity, independence and objectivity. The requirements as to objectivity and independence mean that the auditor has a free, independent position in relation to the Company, but the auditor must nonetheless comply with the General Meeting’s lawful orders.

The auditor is to be given the opportunity to conduct the audit investigations and be given the information and other assistance the auditor finds necessary to carry out his/her tasks. This right implies a corresponding duty for the Company’s management and employees to ensure that the auditor is given all the relevant, necessary information in order to carry out his/her tasks, and they must act with due care and not provide misleading information. The auditor has, with a few exceptions, a duty of confidentiality regarding Company information.

The auditor’s task is to submit an auditor’s report in accordance with Norwegian law on annual accounts prepared pursuant to Norwegian accounting legislation and IFRS, and to ensure that the accounting and bookkeeping complies with prevailing legislation and practice and that the appropriation of the profit/settlement of the loss meets the law’s requirements in relation to Eltek ASA. In addition, the legislation stipulates some other obligations.

The Board represents the shareholders and shall ensure that the Company has proper Corporate Governance and that it’s being properly managed.  In accordance with this management responsibility, the Board makes decisions regarding how the Company is to be organized, keeps up to date on the Company’s financial position, determines the Company’s plans and budgets and ensures that the Company’s operations, accounts and asset management are subject to appropriate controls.
 
The Board’s duties include passing resolutions and, if necessary in each individual case, authorizing others to pass resolutions in cases that, according to the nature of the Company, are unusual or of major importance to the Company. Each year, the Board determines a plan for its work, with particular emphasis on goals, strategy and implementation.

In addition to the requirements stipulated by law, the Board complies with the instructions the Board itself has agreed to for Eltek ASA.

The Board also has a supervisory responsibility. The Board oversees the Company’s management, and in connection with this, the Board has prepared Instructions for the Group CEO.  These describe, among other things, what can be regarded as issues that are to be submitted to the Board for its decision.

The Board is also responsible for certain tasks in connection with changes in the ownership of the Company, including keeping a shareholders’ register.

The Board’s duties and responsibilities are described in the “Rules and procedures for the Board of Directors of Eltek ASA”, which is an internal document approved by the Board of Directors and filed with the Board documentation.

The Audit Committee’s objective is to assist the Board of Directors in administering and exercising the Board of Directors’ supervisory responsibility pursuant to sections 6-12 and 6-13 of the Norwegian Public Limited Liability Companies Act, by preparing matters for the Board of Directors within selected areas:

• Regarding its relationship with the Group’s financial and accounting reports
  • Ensure quality of the financial reporting and so report such to the Board.
  • Ensure that the Board of Directors has sufficient knowledge of relevant accounting and auditing standards.
  • Assess the Group’s on-going financial and accountancy reporting to Group Management and to the market/stock exchange.
• Regarding its relationship with the company’s elected auditor
  • Assess, and recommend for election the external auditor.
  • Assess, and recommend adoption of the auditor’s engagement letter and fee.
  • Discuss plans for and the extent of the auditing work with the auditor, including accounting problems of particular importance for the coming accounting period.
  • Discuss the result of the audit with the external auditor and check that instructions or recommendations made by the auditor are followed up by the administration.
  • Assess the scope of any other services which the audit company provides the Group beyond the statutory audit.
  • Assess the need for internal audits in the Group.
• Regarding its relationship with the company’s internal controls etc.
  • Monitor that the Group has satisfactory and effective systems for assessing and controlling the Group’s risk exposure, overall and in respect of individual projects.
  • Assess the Group’s processes for preparing, implementing and following up investment decisions.
  • Ensure that measures are implemented, if necessary, to reduce the Group’s extraordinary risk exposure.
  • Assess the Group’s authorization structures.
• Miscellaneous
  • Act as the Group’s independent channel for Whistle Blowers.
  • Assess other matters that have been decided by the Board of Directors, or which one wishes to have assessed by the external auditor.

The Committee’s mandate is described in “Charter for the Audit Committee of Eltek ASA”, which is an internal document approved by the Board of Directors and filed with the Board documentation.

The Compensation Committee’s main responsibility is to advise the Board of Directors regarding salary and other remuneration, including retirement compensation of the Group CEO and direct reports to the Group CEO. Other responsibilities include:

• Propose the compensation policy of the Eltek Group
• Propose any share option programs, group bonus programs and relevant pension programs for Eltek
• Propose compensation to the Board of Directors

BoD has delegated decision making on the remaining compensation issues to the CEO of Eltek.

The Committee’s mandate is described in “Charter for the Compensation Committee of Eltek ASA”, which is an internal document approved by the Board of Directors and filed with the Board documentation.
 

Eltek Group
The Eltek Group comprises of Eltek ASA with its subsidiaries.

Company
When referring to Eltek Companies we mean all subsidiaries within the Eltek Group. A subsidiary is a company controlled either directly or indirectly by Eltek ASA, typically through ownership above 50%.

Associated Company
An Associated Company is a company in which Eltek ASA owns, directly or indirectly, between 20% and 50% of the voting shares. Control is not exercised by or on behalf of Eltek ASA, but the ownership position is of strategic importance to the Group.

The Group CEO is responsible for the day to day management of Eltek. The CEO shall manage the Company with the purpose of creating values for the owners in accordance with the Company’s strategy as decided by the Board of Directors. The overall responsibilities consist of:

• Engage in the development of the Eltek Group and the development and implementation of strategies and action plans as adopted by the Board.
• Oversee and attend to the joint interests of the Eltek Group.
• Ensure that the business of the Eltek Group is operated and managed in accordance with existing Norwegian legislation and regulation and other relevant laws.
• Ensure that the Company’s accounts are in accordance with existing Norwegian legislation and regulation and other relevant laws, and that the assets of the Company are managed adequately.
• Ensure that the necessary corporate resolutions are adopted by the Board of Directors of the Eltek Group.
• Act as member of the board of the subsidiaries of the Company as decided.

The CEO’s duties and responsibilities are described in the “Instructions to the Chief Executive Officer of Eltek ASA”, which is an internal document approved by the Board of Directors and filed with the Board documentation.

By authority of the Group CEO of Eltek ASA, the Group CFO ensures that the finance activities within the Eltek Group at all times are aligned with and support the realization of Eltek Group’s business objectives.

In accordance with Norwegian law, strict accounting and financial reporting requirements must be met. Together with the Group CEO, the Group CFO is responsible for and shall ensure that the Group conducts reporting in accordance with Norwegian law and IFRS.

Eltek Companies are subject to the legislation of the country in which the company is registered in addition to the laws and regulations that apply to the Group as such. The frameworks for each Eltek Company are set by the relevant legislation, the Company’s Articles of Association and internal regulations. The formal corporate control is normally exercised through the Company’s General Meeting, and the Company’s Board and Group CEO.

In companies that are not wholly owned but in which Eltek ASA directly or indirectly owns more than 50% of the voting shares or in which control is exercised by or on behalf of Eltek ASA, the same management and control principles are to apply unless local legislation, justifiable commercial reasons or ownership considerations indicate otherwise.

The Group CEO oversees Eltek ASA’s ownership interests in the Companies, and has the authority to request that a General Meeting be held and to represent the company’s shares at the General Meeting, including voting in accordance with any instructions by the board of Eltek ASA.

In companies that are not wholly owned but in which Eltek ASA directly or indirectly owns more than 50% of the voting shares, or in which control is exercised by or on behalf of Eltek ASA, Eltek’s representatives on the board shall vote in accordance with the authorization granted. If the board resolution in question necessitates an authorization beyond that already delegated to the individual representative, the necessary authorizations must be obtained before the vote is cast. The Company will hold regular board meetings and keep minutes of those meetings.

In Associated Companies the same principles shall apply to Eltek’s representatives on the board. In addition, Eltek’s directors in such companies shall make efforts to ensure that the Group’s management and control principles are implemented to the greatest possible extent.

Irrespective of the form of ownership or ownership link, Eltek’s representatives on the board have an independent responsibility to ensure that the procedural work of each subsidiary is satisfactory and dealt with correctly and according to Eltek principles. It is recognized, however, that responsibility for the day-to-day operations of subsidiaries rests with the subsidiaries and their management.
 

The Governance regime in Eltek is intended to ensure the systematic management and control of the Group’s operations in line with the Group’s tasks at any time and the need to manage and control the operations. Authority is appropriately delegated within the organization to accomplish effective Governance at all levels of the organization. Furthermore the goal for the Governance regime is to ensure continuous efforts to improve performance throughout the Group and thus pave the way for increased value creation and greater competitive ability.

The Governance regime consists of Governing documents that are written rules defined by the Group’s authoritative bodies. Governing documents are intended to be an efficient, simple management tool. They shall therefore be limited in number. 

Group-wide governing documents apply to the entire Group, i.e., to wholly owned companies and entities that form an organizational unit in these, as well as to companies that are not wholly owned, but in which Eltek ASA directly or indirectly owns more than 50% of the voting shares or in which control is exercised by or on behalf of Eltek ASA.

Any deviation from a governing document can either be permitted, and is then referred to as an exception, or not permitted, and is then referred to as a breach. Governing documents must state whether or not a deviation is permitted, as well as the procedure for dealing with such deviations. Governing documents should also describe how breaches are to be dealt with. A well-designed system for dealing with exceptions and breaches is also important in relation to monitoring.

 

The Group’s top level governing documents are approved by the Board and comprise the following:

1.    General Governance Principles
2.    Governance Entities Description (this document)
3.    Code of Conduct

The next level comprises Group Policies that are approved by the Group CEO or CFO. These documents cover management and control principles and internal procedures for control and follow-up requirements. The Group Policies may contain supporting documents of a binding nature. Examples of such supporting documents are instructions and charters, delegation of authority, requirements relating to the organization and roles, requirements as to standards, technical and professional requirements etc.

The level on which these documents have been placed, determines their authority.

Governing documents are to be prepared, used, followed up and improved according to procedures for the preparation and management of governing documents.

In wholly owned companies and organizational units that form part of these, Group-wide and management governing documents are to be applied directly. The CEO shall ensure that governing documents are adopted by the company boards in question and that the line managers become familiar with and comply with the requirements stipulated in governing documents.

Eltek’s representatives on the Board of the individual Eltek companies shall ensure that the Managing Director of the company in question clarifies with the board whether Group-wide governing documents are to be applied directly or whether the documents are to form the basis for the company preparing corresponding documents of its own. Unless there are justifiable needs or special grounds for doing otherwise, the Group-wide governing document shall be applied directly. These documents must also be submitted to the board in question for discussion and a resolution.

In Associated Companies Eltek’s representatives on the board shall make efforts to ensure that the company prepares corresponding governing documents.

The Board and management of Eltek ASA must be able to state with reasonable certainty to which the Company’s financial reports are reliable.

In order to attain these goals, Eltek must have effective internal controls. In this document internal controls are described as a management and control process that is engineered and carried out by Eltek ASA’s Board, management and employees, and which is designed to achieve reliable financial reporting.

The process will include internal controls that are to be established and carried out as an integral part of the general business operations and other operations. Eltek put emphasis on establishing a control environment that is recognized by factors such as:

• the integrity, ethical values and expertise of Eltek’s employees
• management philosophy and operational form
• correct distribution of authority and responsibilities
• proper organization and development of the Company’s human resources
• correct supervisory and control functions by the Board

Eltek’s Group CEO and Group CFO shall ensure that internal control activities are developed and communicated to and understood by the employees who are affected by the individual control activities, and that the control activities are monitored, enforced, updated and otherwise maintained. Managers at all levels are responsible for helping to ensure that expedient internal controls are established within their own area and that these have the desired effect.

Internal controls are to be formalized and documented. The extent to which this is done will depend on the degree/scope of the risk in the area in question and the formal requirements that apply to this area. In order to ensure completeness, accuracy, validity and correct/restricted access, internal controls relating to financial reporting must always be formalized and documented.