CORPORATE GOVERNANCE AND SOCIAL RESPONSIBILITY

A project group established a consistent governance structure for all majority-owned companies in 2008, with clearly defined roles and responsibilities. In addition to defining governance entities and sustainable business governance principles, the project group revised the Eltek Group’s Code of Conduct to ensure ethical business practices in all markets. The Code of Conduct applies to all employees in all Eltek companies around the world.

A new set of policies was also developed with regards to strategy, delegation of authority, accounting and financial reporting, internal transactions, risk management, tax, treasury, procurement, human resources, anti-corruption, information technology, and communication. The recommended set of governing documents and group policies was approved by the Board of Directors in June 2008.

Eltek also acknowledges its responsibilities to a broader set of stake-holders, and has developed corporate social responsibility principles applicable to the organization, its Board members, managers, employees, hired staff, consultants, intermediaries, and other acting on Eltek’s behalf. The principles for Corporate Social Responsibility and Corporate Governance are available on the company’s website.

Eltek seeks compliance with the recommendations in the Norwegian Code of Practice for Corporate Governance, as described in the following.

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 object 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 Board of Directors would propose to distribute to the Shareholder any distributable equity exceeding the company’s capital requirements. However, the parent company Eltek ASA had no distributable equity at 31 December 2008.

The Board of Directors’ authorizations to execute capital increases or buy back own shares are limited as follows: a general power of attorney to increase the share capital by up to NOK 4 900 000, a power of attorney to increase the share capital up to NOK 2 300 000 in connection with the company’s option program, and a power of attorney to acquire own shares up to NOK 4 900 000. Authorizations are valid until the following ordinary general meeting.

Eltek has one class of shares, and one share carries one vote. The articles of association include no limitations to trading. Deviations from existing shareholders’ pre-emptive rights in capital increases have been and will be explained. If Eltek should purchase own shares, the trading will be executed over Oslo Stock Exchange under normal trading terms.

In the case of material transactions between the company and shareholders, members of the Board or key employees and associated parties, the Board of Directors will seek independent, third-party value estimates, unless the transaction is being presented to the General Meeting. The Board of Directors will also seek independent valuation in the case of transactions with subsidiaries with minority shareholders, except for ordinary business transactions on general market terms. Eltek’s guidelines are designed to secure that Directors and key employees report to the Board of Directors if they directly or indirectly have significant interests in transactions entered into by the company.

The General Meeting is normally hosted at the company’s premises in Drammen, although it may be held 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.

The documents will be made available on the company website, which will also incorporate information about the shareholders’ rights to present cases to the General Meeting, proposed resolutions, and proxy forms. The documentation will be sufficiently detailed to enable shareholders to consider all items on the agenda. Registration deadline will be the day before the meeting, and shareholders prevented from attending may vote by proxy. The Board of Directors and the General Meeting chairperson will ensure that the General Meeting gets the opportunity to vote for each candidate to the Board of Directors or other corporate bodies. The Chairperson of the General Meeting is elected in the meeting, and the Chairman of the Board, the nomination committee and the company’s auditor will be present on the General Meeting.