Board of Directors rules of procedure
1. Purpose and introduction
1.1 The purpose of these Rules of Procedure is to provide rules to govern the work and procedures of the Board of Yara International ASA (the “Company”) within the framework of the Norwegian Public Limited Companies Act (“PLC”), the Company’s Articles of Association, other applicable rules and regulations and the Norwegian Code of Practice for Corporate Governance (“NUES”). These Rules of Procedure are binding for the Board members and the President and CEO (“CEO”), and to the extent applicable, for the deputy Board members and the company secretary appointed by the Board (the “Company Secretary”). The Company Secretary shall ensure that each new Board member receives a copy of these Rules of Procedure as he/she assumes his/her duties.
1.2 These Rules of Procedure shall be decided and adopted by the Board.
1.3 The Board shall on an annual basis evaluate the content and the need for any amendments of these Rules of Procedure as part of the Board's review of governance documents.
2. Duties of the Board
2.1 General duties - Management of the Company
2.1.1 The Board has the overriding responsibility for the management of the Company. This Section 2 provides an overview of key duties and responsibilities for the Board in connection with its management of the Company.
2.1.2 The Board shall, inter alia, ensure that the activities of the Company are properly organized, approve plans, keep itself informed about the Company's financial position and shall be obliged to ensure that the operations, accounts and asset management are subject to adequate control. The Board may also issue guidelines for the activities of the Company.
2.1.3 The Board shall supervise the Company’s day-to-day management and the Company’s activities in general and may issue instructions in this respect.
2.1.4 The Board has delegated to the CEO the responsibility for the day-to-day management of the Company's activities, as set out in the separate Rules of Procedure for the CEO. The CEO has the responsibility to select and instruct the other members of the Company’s management team (“Management”).
2.2 Organization of the Company
As a part of its management of the Company's activities, the Board shall inter alia:
• approve the overall organization of the Company and its subsidiaries (the "Group");
• elect a chairperson ("Chair") and a deputy chairperson ("Deputy Chair") among the Board members based on a recommendation from the Company's nomination committee;
• appoint and dismiss, if applicable, the CEO and determine his or her remuneration;
• prepare guidelines for remuneration for the CEO and the other Management members of the Company, such guidelines to be dealt with by the annual general meeting of the Company; and
• grant authorization to someone to sign on behalf of the Company in specific matters and grant power of procuration.
2.3 Supervision and control
2.3.1 On a general basis, the Board shall ensure that:
• the management conducted by the CEO is performed in a proper manner;
• the CEO uses proper and effective management and control systems, including systems for risk management, which continuously provide a satisfactory overview of the Group's risk exposure;
• the control functions work as intended and that the necessary measures are taken to reduce extraordinary risk exposure. The Board shall carry out an annual review of the Company's most important areas of exposure to risk and its internal control systems;
• the CEO reports monthly to the Board about operational and financial developments of the Company, and other material matters.
• the Company complies with statutory requirements when agreements are entered into with related parties and when intra-group agreements are entered into; and
• satisfactory routines are in place to ensure follow-up and compliance with principles and guidelines laid down by the Board in relation to ethical behavior, compliance, including with respect to anti-corruption, health, safety and working environment, and social responsibility.
2.3.2 With regard to internal and external auditing, the Board shall ensure that:
• the Company has a proper internal auditing system that are appropriate in relation to the extent and nature of the Group's activities and that the Board receives and considers annual audit reports from the Audit Committee, cf. Section 4.3 below;
• the external auditor submits the main features of the plan for the audit of the Company to the Board annually;
• the external auditor at least once a year presents to the Board a review of the Company’s internal control procedures, including identified weaknesses and proposals for improvement;
• the external auditor participates in meetings of the Board that deal with the annual accounts. At these meetings the auditor shall review any material changes in the Company’s accounting principles, comment on any material estimated accounting figures and report all material matters on which there has been disagreement between the auditor and the Management of the Company;
• the Board holds a meeting with the external auditor at least once a year at which neither the CEO nor any other member of the Management is present;
• guidelines are established in respect of the use of the external auditor by the Company’s Management for services other than the annual audit;
• the audit committee of the Board shall receive annual written confirmation from the external auditor that the auditor continues to satisfy the requirements for independence. In addition, the auditor shall provide the Board with a summary of all services in addition to audit work that has been undertaken for the Company;
• the remuneration paid to the external auditor is reported at the annual general meeting, including details of the fee paid for audit work and any fees paid for other specific assignments; and
• directives from the external auditor are acted upon and that the external auditor’s recommendations are given proper attention.
2.4 Financial matters – financial reporting, investments and divestments
The Board shall inter alia conduct the following tasks:
• approve and implement measures to ensure that the Company's financial position is satisfactory, including to ensure that the Company at all times has an equity and liquidity which are adequate considering the risk and scope of the activities of the Company;
• undertake periodical reviews of results compared with financial plans, investment frameworks and adopted target figures;
• approve periodic (interim and annual) accounts, including the profit and loss accounts, the balance sheet, and issue the annual report of the Board of Directors, and make proposals to the Company's general meeting for the use of profit or coverage of deficit in accordance with applicable laws and regulations; and
• make decisions in cases that involve financial dispositions, including investments, acquisitions, sale and other divestments that exceed the authorizations set forth in Yara's Steering System.
2.5 Matters of procedure
The Board shall inter alia conduct the following tasks:
•make decisions in matters that are of an unusual nature or major significance for the Company’s operations, except for matters delegated by authorization to the CEO on a case-by-case basis, or matters that are to be decided upon by the Company's general meeting;
• make decisions in matters where this is specifically mandated by applicable laws or regulations; and
• undertake such investigations as it finds necessary in order to carry out its tasks. The Board shall undertake investigations if requested by one or more Board members.
2.6 Strategy, business plan and financial targets
The Board shall inter alia conduct the following tasks:
• determine the overriding strategy and the financial targets for the Group, in collaboration with the CEO; and
• approve the Group’s investment frameworks and financial plans as prepared by the CEO.
2.7 Other duties of the Board
• evaluate the Board's qualifications, experience and performance on an annual basis and present the evaluation to the Company's nomination committee;
• the Chair shall attend the Company's general meetings together with the CEO. Other members of the Board shall to the extent possible attend the general meetings;
• summon the annual general meeting of the Company to be held no later than six (6) months after the end of each financial year in order to inter alia approve the annual accounts, and otherwise summon an extraordinary general meeting as required by law or deemed necessary by the Board;
• summon an extraordinary general meeting if demanded by the auditor or shareholders representing at least 5% of the Company's share capital. In such cases, the Board shall ensure that the general meeting is held no later than one (1) month after the demand is made; and
• prepare and approve instructions for the secure handling of inside information in the Company.
3. The Board's proceedings
3.1.1 The Board shall prepare an annual plan for its work that states how and at what time the Board will carry out its functions pursuant to these Rules of Procedure and applicable legislation, and with particular emphasis on objectives, strategy and implementation. The annual plan shall be approved by the Board at or before the start of the calendar year.
3.1.2 The working language of the Board shall be English.
3.1.3 The Chair shall ensure that relevant matters that pertain to the Board are considered by the Board. The Board members and the CEO may demand that the Board considers particular matters.
3.2 Notice of Board meetings and documentation
3.2.1 The Board meetings shall be convened by the Chair. The notice shall be made by the Company Secretary and such meetings shall be announced in a suitable and timely manner, as a general rule within one week prior to the meeting.
3.2.2 The CEO shall prepare matters to be considered by the Board, in consultation with the Chair. A matter shall be prepared and presented in such a way that the Board has an adequate decision-making basis, including recommended decisions.
3.2.4 Changes in the agenda or meeting form that are decided before the meeting shall, if possible, be notified to the Board immediately.
3.2.5 Any documentation for the Board’s discussions and decisions shall, as far as possible, be sent out together with the notice, or otherwise as soon as possible.
3.3 Board meetings
3.3.1 The Board shall meet as often as the Company’s operations determine, or when any Board member or the CEO so demands.
3.3.2 The Board shall consider matters in meetings, unless the Chair finds that the matter can be presented in writing or dealt with in another appropriate manner. Board meetings are to be held at the Company headquarters, unless otherwise stipulated in the notice of the meeting. The annual accounts and annual report shall be considered in a physical meeting. The same applies to determination of wages and other remuneration to the CEO and, to the extent applicable, the Board's determination of wages and other remuneration to other members of the Management.
3.3.3 Board meetings are chaired by the Chair. If the Chair is not present, the Deputy Chair shall chair the meeting. If neither the Chair nor the Deputy Chair is present, the Board shall elect another chairperson for the meeting. In order to ensure a more independent consideration of matters of a material significance in which the Chair is, or has been, personally involved, the Board's consideration of such matters shall be chaired by some other Board member.
3.3.4 A Board member who is prevented from attending a meeting shall notify the Chair and the Company Secretary as soon as possible. The Company Secretary shall immediately summon the deputy member(s).
3.3.5 The Chair may approve the participation of other members of the Management in Board meetings, in addition to the presence of the CEO, who participates by virtue of his or her office as General Manager. Normally, the CFO, the General Counsel and the Company Secretary will be present in the meetings.
3.4.1 The Board is quorate when more than half the total number of Board members is present or otherwise participates. The Board may nevertheless not make decisions unless all members have as far as possible been given the opportunity to participate in considering the matter.
3.4.2 The decision of the Board shall be whatever a majority among the attendees have voted for, or in the case of a tied vote, whatever the Chair has voted for. Those voting for a decision that involves an alteration of a previous decision or situation must, however, always constitute more than one third of the full Board.
3.4.3 In elections and appointments, whoever has the most votes shall be elected or appointed. The Board may in advance decide that a new vote shall be held in the event no one obtains a majority of the cast votes. If the voting for the role as Chair is tied, the vote shall be decided by lot. In other cases of tied votes, the Chair shall have the casting vote.
3.5.1 Neither a Board member nor the CEO may participate in the discussion or decision of a matter that is of such particular significance for him or her or for any close associate that the member must be deemed to have a special and prominent personal or financial interest in the matter.
3.5.2 All Board members and the CEO shall immediately notify the Board in writing if he or she has an interest in a transaction or agreement that has been entered into or is being considered to be entered into by the Company. The rest of the Board may decide whether there exist such prominent special interests that they can be deemed to constitute a conflict of interest. Beyond this, the Board members shall consider whether he or she is disqualified from discussing a matter prior to commencement of discussions and decide on their legal capacity. Neither a Board member nor the CEO may participate in a matter regarding loans or other credit to himself or herself, or security for his or her own debt. Decisions regarding legal capacity of a Board member shall be recorded in the minutes of the relevant Board meeting.
3.6 Minutes of meeting
3.6.1 Minutes of the Board meeting shall be kept. The Company Secretary, or another person appointed by the Chair, is responsible for the keeping of the minutes.
3.6.2 The minutes shall at least include the following information:
• Time and place of the meeting;
• Participants at the meeting;
• Whether all Board members had been given the opportunity to participate;
• Form of meeting (meeting, written procedure, etc.);
• Whether there was a quorum;
• The matters that were discussed and resolved in the meeting; and
• If the resolution is not unanimous, the minutes must mention the Board members who voted in favor of and against the resolution. If a Board member or the CEO disagree with a resolution, he or she may demand that his or her opinion is recorded in the minutes.
3.6.3 A draft of the minutes from the Board meeting shall be distributed to all members of the Board through the existing digital distribution system of the Company within two (2) weeks after the board meeting took place. Any comments to the minutes shall be provided to the Company Secretary prior to the next board meeting. The minutes shall be adopted and signed at the next board meeting by all those members who took part in the meeting or discussions. Members of the Board absent from a meeting shall review the minutes, and confirm that they have been reviewed by also signing the minutes. The signed minutes shall be stored pursuant to applicable law.
4.1.1 The Board may decide to appoint and constitute subcommittees consisting of Board members to consider special cases or questions. The decision to appoint such a committee shall inter alia state the committee’s composition, mandate and duration. The Board shall issue individual instructions for the subcommittees appointed pursuant to this Section 4.
4.1.2 The responsibilities of the subcommittees are to prepare matters for consideration, and do not change the duties of the Board.
4.1.3 The Board shall provide details in the annual report of any subcommittees appointed.
4.2 HR Committee
4.2.1 The Board shall appoint an HR Committee, consisting of at least three members of the Board, which shall act as preparatory body for the CEO and Management review and compensation matters to be brought before the Board. The Chair of the Board shall be chairperson of the HR Committee.
4.2.2 The HR Committee’s members and Chair are appointed by the Board for a period of two years. The Committee shall consist of Board members that are independent of the Management.
4.2.3 The mandate, tasks, responsibility and procedures for the HR committee are set out in the "Mandate for the Human Resources Committee".
4.3 Audit Committee
4.3.1 The Board shall appoint an Audit Committee, consisting of at least three members of the Board, which shall act as a preparatory body for the Board’s management and supervision related to financial reporting and other financial and risk management matters.
4.3.2 The members of the Audit Committee are appointed for a period of two years. The chairperson of the Audit Committee is appointed by the Board and shall not be the Chair of the Board.
4.3.3 The purpose, responsibilities and procedures for the Audit Committee are set out in the Audit Committee Charter.
5. Confidentiality and due care
5.1 Board members have a duty to loyally and prudently safeguard the Company's interests and in this connection are bound by professional secrecy with respect to all non-public matters with which they are acquainted in their positions in the Company, unless otherwise is stated in applicable laws and regulations. All Board documents marked as “confidential”, including accounts and Board deliberations and assessments, are confidential. Members of the Board must store written documents and handle information received in their capacity as Board members in a secure manner in order to prevent access to the documents and information by unauthorized persons. At the end of a Board member's term of office, the Board member shall return to the Company Secretary all Board documents which he/she has received in his/her capacity as a Board member and which are still in his/her possession.
The duty of confidentiality does not prevent board members to consult with third parties if this is necessary in order for Board members to adequately carry out their duties as board members, provided however, that the party consulted undertakes to observe the same duty of confidentiality with respect to the information as the Board member him/herself. Procedures on handling of inside information shall always be complied with where relevant.
The duty of confidentiality shall not prevent the Chair or a person specifically appointed by the Chair, to give information to third parties provided that this is necessary and in the company’s interest, provided however, that the party receiving the information undertakes to observe the same duty of confidentiality with respect to the information as the Chair or the person appointed.
Individual board members may make their voting or dissent in a specific matter that was different from the Board’s decision known, provided however, that a) such information is not detrimental to the Company; and b) that the dissenting Board member shall inform the Chair in advance.
5.2 The duty of confidentiality applies during the Board members term of office and after the member's term of office has terminated. Any breach of the duty of confidentiality may entail liability for damages and/or criminal liability.
5.3 If the Board has decided that statements may be made to the media or to other third parties regarding matters that have been or are to be considered by the Board, such statements, unless otherwise provided by the decision, will be made by the Chair or by another person designated by the Chair.
6. Other assignments
6.1 Board members and/or companies which they are associated with should not take on specific assignments for the Company in addition to their appointment as a member of the Board. If they do nonetheless take on such assignments, this shall be disclosed to the Board. The remuneration for such additional duties shall be approved by the Board.