Corporate governance (CG)

Corporate governance addresses the triangular interaction between a company's shareholders, board of directors and management. In a somewhat wider context corporate governance also embraces the relationship between a company and parties other than shareholders such as employees, creditors, the local community and other parties with whom the company has a relationship.

Research has demonstrated that investors take a more positive view of companies recognized as having good corporate governance practices, and this in turn contributes to the market placing a higher value on such companies. In order to be recognized as having good corporate governance practices, companies must not only establish and communicate a clear policy on corporate governance but must also live up to this policy. Several of the recommended components of good corporate governance have been initiated by the investment community. Over time investors will choose to move liquidity away from companies that ignore these recommendations in favour of companies that do practice good corporate governance.

Oslo Børs requirements

In its role as an operator of securities marketplaces, Oslo Børs plays a central role in helping to ensure good corporate governance among the companies listed on Oslo Børs and Oslo Axess. In a world of global competition for risk capital, it is important for a small market such as Norway that not only individual companies but also the stock market as a whole enjoy a good reputation, and this naturally includes a good reputation for corporate governance.

The major measures implemented by Oslo Børs to promote good corporate governance are as follows:

  • Companies that apply for listing on Oslo Børs or Oslo Axess must confirm in the application that they comply with the Norwegian Code of Practice for Corporate Governance, or the equivalent code of practice in the company's home state or the country in which it has its primary stock exchange listing. If the company does not comply in full with such a code of practice, it must explain why it deviates from the code.
  • Corporate governance is one of a number of areas that Oslo Børs evaluates when considering whether to admit companies to listing on Oslo Børs or Oslo Axess. The listing rules for these marketplaces include provisions on the composition of the board of directors that are designed to ensure that the company's board is free to operate independently of special interests. The composition of a company's board is reviewed very carefully as part of the process of admission to listing, and may play a role in deciding whether the company is considered suitable for listing.
  • The exchange's rules stipulate that companies listed on Oslo Børs and Oslo Axess must provide a comprehensive report on the company’s corporate governance in the directors’ report or in a document that is referred to in the directors’ report. The purpose of the corporate governance reports is to clarify the corporate governance principles that the companies apply, and the reports are intended to assist existing and potential shareholders in their evaluation of the company. The corporate governance report must separately address the company's compliance with each of the recommendations that make up the code of practice. If the company does not fully comply with the Norwegian Code of Practice for Corporate Governance, this must be explained in the report. Foreign companies and companies with a secondary listing on Oslo Børs or Oslo Axess are permitted to report their compliance in accordance with the equivalent code of practice for corporate governance applicable in the state in which they are registered or in their primary market.
  • According to section 7.2 of the Continuing obligations, listed companies must moreover ensure that the report also satisfies the requirements set out in Section 3-3 b of the Accounting Act. If the report is made available in a document that is referred to in the directors’ report, this document must be publicly disclosed in full no later than at the same time as the annual report is publicly disclosed.
  • In addition to these specific measures, Oslo Børs is committed to promoting corporate governance issues as part of the wider debate on the role of business in society as a whole. Oslo Børs plays an active role as a member of the Norwegian Corporate Governance Board (NCGB) which is responsible for maintaining and updating the Norwegian Code of Practice for Corporate Governance and for publicising and promoting the Code in Norway and internationally.

Prospectuses are also subject to requirements for information on corporate governance. As part of its work on inspecting and approving prospectuses, The Financial Supervisory Authority of Norway ensures that companies provide a statement on their compliance with the relevant corporate governance rules and recommendations, and that they provide an explanation for any deviation.

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Elisabeth Adina Dyvik