Statement of Corporate Governance

The objective of Axactor is to create and perform sound, sustainable, responsible and competitive business – creating long-term value and returns for the company’s stakeholders.

The objective of Axactor is to create and perform sound, sustainable, responsible and competitive business – creating long-term value and returns for the company’s stakeholders. To achieve such objectives and to have a well-run business, effective corporate governance is indispensable. In Axactor, such governance forms the foundation of business. Accordingly, Axactor sets clear responsibilities and expectations for leaders, employees and partners through governance. This enables Axactor to operate efficiently as well as having the necessary oversight and control. Effective corporate governance ensures that everyone has a clear understanding of the distribution of roles, responsibilities, rights and accountability. Corporate governance in Axactor complies with formal regulations and generally accepted best practice.

Axactor’s Corporate Governance policy of 2019 can be found on the company’s website.

1. Statement on Corporate Governance

Axactor is committed to good corporate governance that contributes to optimal value creation over time. The objective of corporate governance is to regulate the division of roles between shareholders, the Board of Directors, the chief executive officer (the “CEO”) and the company’s executive management team. The company is a Norwegian SE-company listed on the Oslo Stock Exchange thus adheres to the Norwegian Code of Practice for Corporate governance (NUES), last revised 17 October 2018, issued by the Norwegian Corporate Governance Board (NCGB).

Axactor’s Board of Directors (the “Board”) has the ultimate responsibility for ensuring that good corporate governance is practiced. Corporate governance is subject to an annual evaluation and discussion by the Board. Confidence in Axactor and its business activities is essential for the Axactor Group’s continuing competitiveness. Axactor is committed to openness about its systems and procedures for the management of the Group. This strengthens value creation and builds internal and external confidence, while at the same time promoting an ethical and sustainable approach to business. The Board approved the Corporate Governance policy 12 December 2019.

Application of the Code of Practice is based on the “comply or explain” principle and any deviation from the Code of Practice is explained under each item.

Deviations from the Code of Practice in 2019: None

2. Business activity

The company’s business as set out in the Articles of Association is: “to directly or indirectly through subsidiaries or investment partnerships, conduct debt collection work, financial and administrative services, legal services, invoicing services, debt acquisition and other investment activities, as well as therewith associated activities”.

An overview of Axactor’ adherence to the 15 principles in the Code is summarised in the table below

Principle of the Code Devatiation from the Code Explanation of Devation
Implementation and reporting on corporate governance None
Business activity None
Equity and dividends None
Equal treatment of shareholders and transactions with related parties None
Freely transferable shares None
General meetings None
Nomination committee None
The Board of Directors – composition and independence None
Board of Directors’ work, procedures and responsibility None
Risk management and internal control None
Remuneration of the Board of Directors None
Executive Management remuneration None
Information and communication None
Takeovers None
Auditor None

Objectives and strategies
Engaging in the activities described above, the company’s long-term objective is to establish itself as a leading European player within the areas of its operations as defined by the Articles of Association.

The company will pursue the following main strategies to reach its overall objective:

  • Putting emphasis on loyal and satisfied customers;
  • Being an innovative player that takes full advantage of available technologies to achieve competitive advantages;
  • Identifying and securing access to attractive debt portfolios and other opportunities in the marketplace based on responsible investment and product offering;
  • Being an attractive employer, with a focus on creating an
    environment for professional and personal growth, with respect
    and due regard for each employee;
  • Being a profitable company with a focus on organic and structural growth;
  • Maintain a sound corporate culture, efficient corporate governance and preserve Axactor’s integrity by supporting employees to follow good ethical business standards towards all people and players in
    all our markets; and
  • Emphasis on becoming and maintaining a position as a leading, responsible and sustainable European player in the company’s market.

Ethical guidelines and values
The company shall maintain a high ethical standard in our business concept and relations with customers, suppliers, employees, debtors, and other stakeholders and commit to our social responsibility to contribute to long term relationships and trust from our customers, partners and employees. The company’s ethical guidelines outlined in the Code of Conduct and the Corporate Social Responsibility policy, as approved by the Board, are available at the company’s website. The company has measures to deter non-compliance and reduce exposure to unethical opportunities.

The Board has developed clear objectives, strategies and risk profile for the business within the scope of the definition of its business, to create value over time. A description of the key risk factors and risk management can be found in the Board of directors’ report on page 20 in this annual report. The company’s objectives, strategies and risk profile are subject to regularly review by the Board.

Deviations from the Code of Practice: None

3. Company capital and dividend

The Board aims to maintain a satisfactory equity ratio in the company considering the company’s goals, strategy and risk profile, thereby ensuring that there is an appropriate balance between equity and other sources of financing. The Board shall continuously assess the company’s capital requirements in light of the company’s strategy and risk profile.

At 31 December 2019, the Group had an equity ratio of 28% and a debt-to-equity ratio of 2.6x. The Board regards the current capital structure as appropriate in the context of objectives, strategy and risk profile.

The Board’s authorities to increase the share capital and to buy own shares shall be granted under Norwegian law, and not for periods longer than necessary.

The Annual General Meeting of Axactor held 10 March 2019 granted the following authorizations to the Board in 2019:

Decision to authorize the Board to increase the share capital through the issue of new shares:
In accordance with the proposal from the board, the general meeting adopted the following resolution:

(i) Pursuant to section 10-14 of the Public Limited Liability Companies Act, the board is granted authorization to increase the company's share capital by issuing new shares with a total nominal value of up to EUR 15,702,696, equal to 30,000,000 shares, each with a nominal value of EUR 0.523423187712375.

(ii) The authorization may be exercised in one or several capital increases.

(iii) This authorization may be exercised in connection with (i) placements and issuances of shares to eligible investors to obtain more capital for the company, or (ii) as full or partial consideration for investments in other businesses or acquisitions of assets within the company's core areas of expertise.

(iv) The existing shareholders' pre-emptive rights may be waived.

(v) Payment of share capital in connection with a capital increase under this authorization may also be made by a contribution in kind or otherwise as described in section 10-2 of the Public Limited Liability Companies Act.

(vi) The authorization also comprises issuance of shares in connection with a merger.

(vii) The board is granted the power to determine the subscription rate and the conditions for subscription, and to amend the articles of association section 4 according to the increase in the share capital.

(viii) The authorization is valid until the annual General Meeting in 2020, expiring at the latest on 30 June 2020.”

The Board have stated a policy for shareholder return as part of the overall strategy for the company. The company’s objective is to generate a return for the shareholders at a level which is at least equal to other investment possibilities with comparable risk. The company does not distinguish between such a return in the form of dividends and in the form of capital appreciation. The company does not foresee declaring dividends during the growth phase.

Deviations from the Code of Practice: None

4. Equal treatment of shareholders and transactions with closely related parties

The company’s share capital is in one class only. The Articles of Association do not impose any restrictions on voting rights and all shares have equal voting rights. The company’s Board and Executive management are committed to treating all the company’s shareholders equally.

Any transactions, agreements or arrangements between the company and its shareholders, members of the Board, members of the Executive Management Team or close associates of any such parties shall only be entered into as part of the ordinary course of business and on arms-length market terms. With respect to any material related party transactions, the Board shall arrange for a valuation to be obtained from an independent third party unless the transaction, agreement or arrangement in question must be considered to be immaterial or the arrangement is subject to approval by the shareholders’ meeting.

No person or company mentioned in the above paragraph shall vote or otherwise participate in any decision by the company regarding a transaction, agreement or arrangement with such person or company as counterparty.

Board members and members of the Executive Management Team shall forthwith notify the Board if they have any material direct or indirect interest in any transaction entered into by the company.

Deviations from the Code of Practice: None

5. Freely negotiable shares

The shares of Axactor are freely negotiable. There are no restrictions on owning, trading or voting for shares in the Articles of Association.

The shares in the company are not subject to any transfer restrictions.

Deviations from the Code of Practice: None

6. The general meeting

The General Meeting (“GM”) is the company’s ultimate corporate body. The Board strives to ensure that the GM is an effective forum for communication between shareholders and the Board. All registered shareholders have the right to participate in the GMs of the company, which exercise the highest authority of the company. The notice calling the Annual General Meeting (“AGM”) and any Extraordinary General Meeting (“EGM”) is made available on newsweb.no and the company’s website (axactor.com) and will be sent to all shareholders no later than three weeks in advance of the meeting. Article 6 of the company’s Articles of Association stipulates that the supporting documents handling matters to be considered at a meeting can be made available on the company’s website rather than being sent to shareholders by post. However, shareholders are still entitled to receive the documents by post upon request if they so wish.

Copy 7 12x
Audits conducted by internal auditor on county level in Italy and Germany since 2017. Group Audit plan approved by the Board 12.12.2018 for implementation in the entire organization from 2019.

The notices for such meetings shall include documents providing the shareholders with sufficient detail in order for the shareholders to make an assessment of all the matters to be considered as well as all relevant information regarding attendance and voting procedures. Representatives of the Board, the company’s auditor and the Nomination Committee shall be present at AGM and at EGMs when deemed necessary depending on items treated.

Notices for AGM and EGMs shall provide information on the procedure shareholders must observe in order to participate in and vote at the general meeting. The notice should also set out:

(i) the procedure for representation at the meeting through a proxy, including a form to appoint a proxy,

and

(ii) the right for shareholders to propose resolutions in respect of matters to be dealt with by the general meeting.

Any cut-off for confirmation of attendance shall be set as short as practicable, and the Board shall arrange matters so that shareholders who are unable to attend in person are able to vote by proxy. The form of proxy shall be distributed with the notice.

The Board decides the agenda for GMs. The main agenda items for the AGM are determined by the requirements of the Public Limited Liability Companies Act. The person chairing a general meeting should be independent of the company and the Board. The minutes from GMs shall be published on newsweb.no and on the company’s website at axactor.com.

Deviations from the Code of Practice: None

7. Nomination committee

The Company shall have a nomination committee (“Nomination Committee”). The General Meeting shall elect the leader of the Nomination Committee and its members, and determine their remuneration based on the nature of the duties performed and the time invested. The Nomination Committee shall consist of between two and four members and shall be elected by the GM for a period of one year at a time.

The duties and responsibilities of the Nomination Committee shall be set out in the instructions to the Nomination Committee established by the AGM. The Nomination Committee’s main responsibilities are to propose candidates for election to the Board and to recommend remuneration for board members. Reasonable rationales should be provided for the Nomination Committee’s recommendations, and relevant information should be provided about the candidates and their independence. The recommendations of the Nomination Committee shall generally be made available to the shareholders at the time of the notice of the GM. Efforts shall be made to ensure that the composition of the Nomination Committee is broadly representative of shareholder interests and necessary expertise.

The majority of the members of the Nomination Committee should be independent of the Board and the executive personnel. The Nomination Committee should ensure renewal of members that have served in the committee for an extensive period of time. An overview of Nomination Committee members and the contact details of the Chair shall be available on the company’s website. As of 31 December 2019, the members of the nomination committee were:

  • Robin Bakken (Chair)
  • Magnus Tvenge (Member)
  • Cathrine Lofterød Fegth (Member)

Deviations from the Code of Practice: None

8. The Board

Composition
The Board of Directors shall be elected by the GM. The Board of Directors shall constitute of minimum three and maximum six directors as regulated in the Articles of Association clause 5 available at the company’s website. In appointing members to the Board, it is emphasized that the Board shall have the requisite expertise to evaluate independently the matters presented by the Executive Management Team, as well as the company’s operation. The Nomination Committee has evaluated the Directors of the Board and found all of the Directors to be independent of the company and only five out of six members independent of the company’s significant shareholders. The independence of the board members shall also be evaluated by the Board and the board members inform the Board if any changes in these circumstances occur, in which case their independence will be re-evaluated. It is also considered important that the Board can function well as a body of colleagues. Board members shall be elected for periods not exceeding two years at a time, with the possibility of re-election. The Board shall have rules on conflicts of interest to ensure that any potential conflicts are identified and handled in a professional manner.

Responsibility of the Board
The Board shall prepare an annual plan for its work with special emphasis on goals, strategy and implementation. The Board’s primary responsibilities shall be: (i) participating in the development, approval of the company’s strategy, (ii) performing necessary monitoring functions, and (iii) acting as an advisory body for the Executive Management Team. Its duties are not static, and the focus depend on the company’s ongoing needs. The Board ensures that the operation of the company complies with the company’s values and ethical guidelines, that the company’s business and assets are managed, and risk management carried out in a prudent and satisfactory manner.

The annual report 2019 pg. 36-39 provides information to illustrate the expertise and capacity of the members of the Board, which is also available from the Group’s website www.axactor.com.

9. The work of the Board

The chairman of the Board shall ensure that the Board’s work is performed in an effective and correct manner.

The Board shall annually adopt working procedures for the Board.

The Board shall ensure that the company has a good management with clear internal distribution of responsibilities and duties. The Board shall appoint the CEO. A clear division of work between the Board and the Executive Management Team shall be maintained. The CEO shall be responsible for the operational management of the Axactor Group.

The Board shall adopt written instructions to establish the allotment of work between the CEO and the Board as well as in relation to any other corporate body established by the Board.

All members of the Board shall regularly receive information about the company’s operational and financial development. The company’s strategies shall regularly be subject to review and evaluation by the Board. The Board shall hold regular physical meetings, at least every two months. Extraordinary Board meetings shall be hold between the ordinary meetings as and when required and may be conducted as telephone conferences or in exceptional circumstances the Board may take its decisions on the basis of circulating documents. In 2019, a total of 21 board meetings were held. 14 of these were extraordinary board meetings, of which 5 physical meetings and 4 held by telephone meetings. 5 extra ordinary board meetings related to portfolio investments and administrative decisions needed for specific dates were held by circulation. One meeting was an annual strategy meeting.

The Board shall prepare an annual evaluation of its work.

Sub-committees of the Board
The Board shall establish an Audit Committee, an Investment Committee and a Remuneration Committee. The sub-committees shall provide subject matter advice to and preparation for the full Board.

The Audit Committee’s main responsibilities shall be to supervise the Group’s systems for internal control, to ensure that the auditor is independent and to ensure that the annual accounts give a fair picture of the Group’s financial results and financial condition in accordance with generally accepted accounting practice. The Audit Committee shall review the procedures for risk management and financial controls in the major areas of the Group’s business activities. A majority of the members shall be independent of the company’s executive management, and at least one member shall have qualifications within accounting or auditing. The Audit Committee shall receive reports on the work of the external auditor and the results of the audit.

The Audit Committee held 6 meetings in 2019.

As of 31 December 2019, the Audit Committee consisted of the following members:

  • Merete Haugli (Chair)
  • Terje Mjøs
  • Beate Skjerven Nygårdshaug

The Remuneration Committee shall make proposals to the Board on the employment terms and conditions and total remuneration of the CEO and other executive personnel which shall be communicated to the GM. These proposals may also be relevant for other employees.

The guidelines for the remuneration of the CEO and executive personnel shall set out the main principles applied in determining the salary and other remuneration of the executive personnel. Performance-related remuneration of the executive personnel shall be linked to value creation for shareholders or the company’s earnings performance over time and be subject to an absolute limit.

The Remuneration Committee held 6 meetings in 2019.

As of 31 December 2019, the Remuneration Committee consisted of the following members:

  • Bjørn Erik Næss (Chair)
  • Lars Erich Nilsen

The Investment Committee shall be appointed by the Board to assist the Board in discharging its oversight responsibilities. The Investment Committee shall oversee the financial investment process and proposals to ensure that the relevant investments meet the company’s requirements with respect to expected return, responsible investments and due diligence prior to commitment of funds.

The Investment Committee held 13 meetings in 2019.

As of 31 December 2019, the Investment Committee consisted of the following members:

  • Lars Erich Nilsen (Chair)
  • Bjørn Erik Næss
  • Brita Eilertsen

Deviations from the Code of Practice: None

10. Risk management and internal control

The Board shall ensure that the company has sound internal controls and systems for risk and compliance management that are appropriate in relation to the extent and nature of the company’s activities. The Board has adopted a policy for compliance and the business and risk management that describes Axactor’s guidelines for the management of the business, internal controls, and risk management. Head of Group legal and compliance has the operational responsibility for risk management in Axactor and provides the Board with a status of the internal control, most important risks and mitigation measures on a quarterly basis.

The objective of the risk management and internal control system shall be to manage exposure to risks to ensure successful conduct of the company’s business and to support the quality of its financial reporting. These systems form an integral part of the management’s decision-making process.

The company’s internal control and risk management systems consist of the organizational structure, managerial responsibilities for compliance, a set of policies and procedures, training, customer and supplier due diligence, monitoring through financial reviews and internal audits, incident investigations and corrective actions as well as reporting. The Code of Conduct and Group policies such as policies for procurement, finance and accounting, communication, legal and compliance, delegation of authority, CSR, environmental, debt purchasing, operations, physical security, data privacy, and IT and information security are approved by the Board annually. The internal control framework ensures correct, reliable, complete and timely financial reporting and management information. The risk management framework shall control the business operations in compliance with laws and regulation, ESG and business ethics, as well as ensuring profitability, efficiency and continuity. All Group policies and procedures have a designated owner within Executive management who is responsible for developing and monitoring compliance with the principles stated. The internal control and risk management systems cover processes for the strategy, operations, business ethics, ESG, legislative and regulatory compliance, and internal and external reporting. All employees shall be trained, and key stakeholders receive targeted training within their area of responsibility within e.g. business ethics including anti-fraud and anti-corruption, good debt collection practices, GDPR and anti-money laundering and terrorist financing. The controls shall be tested regularly, and continual improvement work shall be carried out to maintain quality. The company operate a structured risk management process that includes relevant categories of risk, including strategic risk, financial risk, reputational risk, technical risk, and legislative and regulatory compliance risk.

Compliance with the company’s Code of Conduct is a key component of the Group’s internal control system. The Group carry out annual processes to ensure that all business areas are familiar with and comply with the Code. All employees, including employees of wholly owned subsidiary companies, shall re-confirm yearly that they have read and understood the Code. All new employees are provided with an introduction to the Code as part of their training program and sign a declaration confirming they have read and understood it. The company’s Head of Legal and Compliance is responsible for work on business ethics issues.

The Board alongside the executive management of Axactor, is responsible for establishing and maintaining adequate internal control over financial reporting and governance issues. The Audit committee monitors the financial reporting and related internal control, including the application of accounting principles and judgements in financial reporting. The executive management and the audit committee have regular meetings with the external auditor present to discuss issues related to the financial reporting.

Axactor’s separate entities prepares its financial statements within a standard financial accounting system and these are automatically consolidated into the Group’s results. Impairment testing of NPLs is conducted on a quarterly basis and goodwill and REOs on an annual basis. These processes are reviewed by the external auditor for each set of published financial statements. Furthermore, the Audit committee requests that the auditors present a review of the internal control procedures, including identified weaknesses and proposals for improvement, to the Board at least once a year.

The Board shall provide an account in the annual report of the main features of the company’s internal control and risk management systems as they relate to the company’s financial reporting.

The company shall operate a whistle-blowing channel for all employees within the Group to use if they wish to report a circumstance that could be a breach of the Code of Conduct, or if they require advice in relation to ethical matters. The whistle-blowing channel is easily accessible by all employees, independent and available 24/7. The channel handles reported cases in local language with integrity, respect and confidentiality and ensure protection of any reporter reporting in good faith. The whistle-blower channel shall offer full anonymity and allows users to enter into written dialogue and to exchange information without losing their anonymity. The whistle blower report shall be processed in accordance with the company’s procedure and the Board be informed of all cases reported, the types of misconduct and measures taken.

Deviations from the Code of Practice: None

11. Board compensation

The GM shall determine the Board’s remuneration annually. Remuneration of board members shall be reasonable and based on the Board’s responsibilities, work, time invested and the complexity of the enterprise.

The chairman of the Board may receive a higher compensation than the other board members. The Board shall be informed if individual board members perform other tasks for the company than exercising their role as board members. Work in sub-committees may be compensated in addition to the remuneration received for board membership.

Further details in relation to the remuneration of the Board in Note 8 to the company’s financial statements 2019 (page 68 in the Annual Report 2019).

Deviations from the Code of Practice: None

12. Compensation to employed management

The Board shall decide the salary and other compensation paid to the CEO. The CEO’s salary and bonus shall be determined based on an evaluation with emphasis on specific factors determined by the Board. The Board shall annually carry out an assessment of the salary and other remuneration to the CEO and a revision of the total compensation and criteria for compensation without management present.

The CEO shall determine in consolidation with the Board the remuneration of executive employees. The Board have issued guidelines for the remuneration of the CEO and the Executive Management Team. The salary level should not be of a size that could harm the company’s reputation, or above the norm in comparable companies. The salary level should, however, ensure that the company can attract and retain executive employees with the desired expertise and experience.

A declaration of remuneration policy for the CEO and the Executive Management Team have been adopted, approved by the AGM and published on the company’s website.

The Board’s statement regarding remuneration of the executive management can be found in Note 8 to the company’s financial statements 2019 (page 68 in the Annual Report 2019).

Deviations from the Code of Practice: None

13. Information and communication

The Board and the Executive Management Team shall assign considerable importance to giving the shareholders quick, relevant and current information about the company and its activity areas. Emphasis shall be placed on ensuring that the shareholders receive identical and simultaneous information.

Sensitive information shall be handled internally in a manner that minimizes the risk of leaks. All material contracts to which the company becomes a party shall, where appropriate, contain confidentiality clauses.

The company shall have clear routines for speakers on behalf of the company on different subjects, and responsible persons for submitting information to the market and investor community. The CEO and the CFO are the main contact persons of the company in such respects.

Financial information is published by producing quarterly reports and annual reports, in accordance with the latest version of continuing obligations for companies listed on the Oslo Stock Exchange.

The Board shall keep itself updated on matters of special importance to the shareholders. The Board shall therefore ensure that the shareholders are given the opportunity to make known their points of view at and outside the GM.

Deviations from the Code of Practice: None

14. Take-over bids

The company’s Articles of Association do not set any restrictions on acquisition of the shares in the company. In the event of a take-over bid for the company, the Board will follow the overriding principle of equal treatment of all shareholders. Further, the Board will strive to ensure that the company’s business activities are not unnecessarily disrupted. The Board will further strive to ensure that the shareholders are given sufficient information and time to assess the offer.

The Board shall not seek to prevent any take-over bids unless it believes that the interests of the company and the shareholders justify such actions. The Board shall not exercise mandates or pass any resolutions with the intention of obstructing any take-over bid unless it is approved by the general meeting following the announcement of the bid.
The Board shall issue a statement in accordance with statutory requirements and the recommendations in the Norwegian corporate governance code. The Board shall also consider obtaining a valuation from an independent expert.

If a bid is made for the shares in the company, the company will not limit others from presenting similar bids for the shares, unless this is clearly justified as being in the company’s and shareholders’ common interest. In the event of a bid for the shares in the company, the company will publish the required disclosures pursuant to legislation and regulations for companies listed on the Oslo Stock Exchange.

Deviations from the Code of Practice: None

15. Auditor

Each year the auditor shall present to the Board a plan for the implementation of the audit work and a written confirmation that the auditor satisfies established requirements as to independence and objectivity. The auditor shall attend at least one meeting each year with the Board at which the company’s management is not represented.

The auditor shall be present at board meetings where the annual accounts are on the agenda. Whenever necessary, the Board shall meet with the auditor to review the auditor’s view on the company’s accounting principles, risk areas, internal control routines, etc.

One meeting was held in 2019.

The auditor shall only be used as a financial advisor to the company if such use of the auditor cannot influence or call into question the auditors’ independence and objectiveness in his capacity as auditor for the company. The Audit Committee is responsible for control of the independence of the Auditor. Only the company’s CEO and/or CFO shall have the authority to enter into agreements in respect of such advisory assignments. The breakdown between the auditor’s fee and consultancy fees for 2019 is described in Note 9.

At the AGM, the Board shall present a review of the compensation paid to the auditor for audit work required by law and remuneration for other concrete assignments.

In connection with the auditor’s presentation to the Board of the annual work plan, the Board shall specifically consider whether the auditor is performing his control function satisfactorily.

The Board shall arrange for the auditor to attend all AGMs and EGMs when deemed necessary depending on item treated.

The company’s auditor is PWC.

Deviations from the Code of Practice: None

Corporate social responsibility report

Board of Directors