Corporate Governance

Corporate governance describes the ways in which rights and responsibilities
are distributed among the various corporate bodies according to the rules,
processes or laws they are subject to. In practice, corporate governance defines
the decision-making systems and structure through which owners directly or
indirectly control a company.

The scope of Eltek’s business activity is stated in the Company’s articles of association, and the Company has defined clear goals and strategies within the framework of its mission statement. The objective of the Company is development, production and sale of equipment and services within the sectors of energy supply, data- and telecommunications and other activities, also through ownership and participation in other companies.

The following corporate bodies govern and control Eltek:
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The General Meeting

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 General Meeting 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.

The Nomination Committee

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. It shall also propose compensation 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”.

External Auditor

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 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 of Directors (the Board)

The Board represents the shareholders and shall ensure that the Company has proper Corporate Governance and that it is 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 mandate is described in the “Rules and procedures for the Board of Directors of Eltek ASA”.

The Audit Committee

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
o Prepare the Board of Directors’ quality assurance of the financial reporting
o Ensure that the Board of Directors has sufficient knowledge of relevant accounting and auditing standards.
o Assess the Group’s ongoing financial and accountancy reporting to Group Management and to the market/stock exchange.

• Regarding its relationship with the company’s elected auditor
o Assess, and recommend for election the external auditor.
o Assess, and recommend adoption of the auditor’s fee.
o Discuss plans for and the extent of the auditing work with the auditor, including accounting problems of particular importance for the coming accounting period.
o 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.
o Assess the scope of any other services which the audit company provides the Group beyond the statutory audit.
o Assess the need for internal audits in the Group.

• Regarding its relationship with the company’s internal controls etc.
o 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.
o Assess the Group’s processes for preparing, implementing and following up investment decisions.
o Ensure that measures are implemented, if necessary, to reduce the Group’s extraordinary risk exposure.
o Assess the Group’s authorization structures.

• Miscellaneous
o Act as the Group’s independent channel for Whistle Blowers.
o 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”

The Compensation Committee

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, BU CEO and other 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

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”.