2013

 Statutory statement regarding corporate governance, cf. the Danish Financial Statements Act, section 107b

The statutory statement regarding corporate governance of RIAS A/S is a part of the management's review in the annual report for 2012/13. The statement's section on the code for corporate governance is not covered by the audit opinion about the management's review in the annual report of RIAS A/S. The information about the company's control and risk management systems and the composition of the company's management bodies etc. is covered by the audit opinion about the management's review in the company's annual report.

 
Code for corporate governance
 
In August 2011, the Committee on Corporate Governance in Denmark has published new recommendations to be used for financial years starting on the 1st of January or later.
 
In connection with the publishing of the annual report for 2012/13, RIAS A/S has prepared a statement that is based on the recommendations of 16th August 2011 published by the Committee on Corporate Governance. This creates the best possible overview of which recommendations RIAS A/S complies fully with and which recommend-dations the company has chosen not to comply with or is still working on.
 
Links to statement regarding corporate governance:

Corporate Governance Report 2012/13

The Committee on Corporate Governance in Denmark

 
Good corporate governance
 
The management of the company places emphasis on good company management and is continuously making an effort to improve the management of the company. The overall framework for the management of RIAS A/S has been arranged with a view to ensuring that the company lives up to its obligations towards shareholders, customers, employees and authorities as well as other stakeholders as well as possible and supporting the long-term value creation.
 
The board of directors of RIAS A/S is constantly working on ensuring that the company lives up to the policies and procedures drawn up by the Committee on Corporate Governance in Denmark and NASDAQ OMX Copenhagen. The board of directors discusses how the company's corporate governance in practice can always ensure that the management of RIAS A/S is of the highest quality and that the work of the board supports the company's future business potential. A key factor is transparency.
 
The board of directors has chosen to publish the statutory statement regarding corporate governance cf. the Danish Financial Statements Act, section 107b, on the company website. Thus, the views of the board of directors with regard to NASDAQ OMX Copenhagen's recommendations for good corporate governance are available on the website of RIAS A/S. The statutory statement regarding corporate governance covers the accounting period from the 1st of October 2012 to the 30th of September 2013 and is part of the management's review.
 
The management has considered NASDAQ OMX Copenhagen's recommendations regarding corporate governance carefully and the board of directors and the management have decided to derogate from the code and therefore take different steps in the following areas:
  
 

No.

 

Recommendation

Reasons for not complying with the redommendations:

2.1.2.

The Committee recommends that the central governing body adopt a policy on the company’s relationship with its stakeholders, including the investors, and ensure that the interests of the stakeholders are respected in accordance with the company’s policy on such issues.

RIAS A/S’ Board of Directors does not find it relevant to work out a policy on the Company’s relationship with its stakeholders, as the Company is constantly in close contact with the Company’s stakeholders.

 

3.1.3.

The Committee recommends that the company publish quarterly reports.

RIAS A/S only publishes Half Year Reports and Interim reports – due to cost and competition considerations.

4.1.4.

The Committee recommends that the supreme governing body annually discuss the company's activities to ensure diversity at management levels, including equal opportunities for both sexes, and that the supreme governing body set measurable objectives and in the management commentary in the annual report and/or on the company's website give an account of both the objectives and the progress made in achieving the objective.

RIAS A/S’ Board of Directors endeavours to ensure diversity at the management levels, however, when taking into account the size of the Company, qualifications are considered the most important parameter.

4.3.2.

The Committee recommends the preparation of a scope of work and task list specifying the tasks, duties and responsibilities of the chairman and deputy chairman.

RIAS A/S’ Rules of Procedure for the Board of Directors include the tasks of the Board of Directors, however, these tasks are not split on the chairman and the vice-chairman, as this is not considered relevant when taking into consideration the size of the Company.

5.1.1.

The Committee recommends that the supreme governing body annually specify the skills it must have to best perform its tasks and that the specification be posted on the website. Proposals for the nomination/replacement of members of the supreme governing body to be submitted to the general meeting should be prepared in the light hereof.

RIAS A/S’ Board of Directors reviews the work and qualifications of the Board of Directors on an on-going basis. The qualifications of the Board members are not published separately, but the Board of Directors endeavours to ensure diversity of qualifications in the Board of Directors.

5.4.1.

 In order for the members of the supreme governing body to act independently of special interests, the Committee recommends that at least half of the members elected by the general meeting be independent persons.

 

The independent supreme governing body member may not:

·         be, or have been within the last five years, a member of the executive board/managerial staff of the company or an associated company,

·         have received significant additional remuneration from the company/group or an associated company apart from a fee for its services in the capacity as a member of the supreme governing body,

·         represent the interests of a controlling shareholder,

·         within the last year, have had a material business relationship (e.g. personally or indirectly as a partner or an employee, shareholder, customer, supplier or member of a governing body of companies with similar relations) with the company or an associated company,

·         be, or have been within the last three years, an employee or partner of the external audit firm,

·         hold cross-memberships of governing bodies,

·         have been a member of the supreme governing body for more than 12 years, or

·         have close family ties with persons that are not regarded as independent persons.

RIAS A/S has one main shareholder, who owns all the A-shares and thereby represents more than 50% of the votes, and a row of minority shareholders. The board has assessed the personal capacity of each board member and found that they carry out their assignments in the board of RIAS A/S in a responsible manner - despite the fact that none of the board members elected by the general assembly are independent, as recommended. 

 

5.4.2.

The Committee recommends that at least once every year, the supreme governing body list the names of the members who are regarded as independent persons and also disclose whether new candidates for the supreme governing body are considered independent persons.   

RIAS A/S has one main shareholder, who owns all the A-shares and thereby represents more than 50% of the votes, and a row of minority shareholders. The ownership structure influences the composition of the Boards of Directors and this is reason for not complying with this recommendation.

 

5.8.1.

The Committee recommends that the company’s articles of association fix a retirement age for members of the supreme governing body and that the annual report contain information on such retirement age as well as the age of each member of the board of directors.

No formal retirement age has been determined, however the Board of Directors has internally agreed to a retirement age of 70 years.

On the Company’s website the age of the Board members together with other relevant information is shown.

 

5.10.1

The Committee recommends that the company publish the following information in the management commentary in its annual report or on the company’s website:

·         the terms of reference for the board committees,

·         important activities of the committees during the year and the number of meetings held by each committee, and 

·         the names of the members of each committee, including the chairmen of the committees, as well as information on which members are independent members and which members have special qualifications.

Due to the size of the Board of Directors and the Board Members’ qualifications, the Board of the Directors has decided not establish a board committee, except for an audit committee. The Board of Directors itself manages all such functions of such board committees.

 

5.10.2.

The Committee recommends that a majority of the members of a board committee be independent members.

RIAS A/S has one main shareholder, who owns all the A-shares and thereby represents more than 50% of the votes, and a row of minority shareholders. The ownership structure influences the composition of the Boards of Directors and this is reason for not complying with this recommendation.

5.10.3.

The Committee recommends that the supreme governing body establish an actual audit committee.

 

Due to the size of the Board of Directors, the Board of Directors itself manages all functions of the audit committees.

5.10.4.

The Committee recommends that the following be taken into account in composing the audit committee:

·         the chairman of the supreme governing body should not be chairman of the audit committee, and

·         between them, the members should possess such an amount of expertise and experience as to provide an updated insight into and experience in the financial, accounting and audit conditions of companies whose shares are admitted to trading on a regulated market.

The Board of Directors in RIAS A/S evaluates that the audit committee possesses sufficient financial qualifications, including special knowledge of accounting and auditing issues in a company noted at the stock exchange. Due to the size of the Board of Directors, the Chairman has also been elected Chairman of the audit committee.

 

5.10.5.

The Committee recommends that, prior to the approval of the annual report and other financial reports, the audit committee monitor and report to the supreme governing body about: 

·         significant accounting policies

·         significant accounting estimates,

·         related party transactions, and

·         uncertainties and risks, including in relation to the outlook.

Due to the size of the Board of Directors, the Board of Directors itself manages all functions of the audit committees.

 

5.10.7.

The Committee recommends that the supreme governing body establish a nomination committee with at least the following preparatory tasks:

·         describe the qualifications required in the two governing bodies and for a given position, state the expected time commitment for a position and evaluate the balance of skills, knowledge and experience available in the two governing bodies.

·         annually evaluate the structure, size, composition and performance of the governing bodies and make recommendations to the supreme governing body with regard to any changes,

·         annually evaluate the skills, knowledge and experience of the individual members of the governing bodies and report such details to the supreme governing body,

·         consider proposals submitted by relevant persons, including shareholders and members of the governing bodies, for candidates for executive positions, and

·         identify and recommend to the supreme governing body candidates for the governing bodies.

Due to the size of the Board of Directors and the Board Members’ qualifications, the Board of the Directors has decided not establish a nomination committee. The Board of Directors itself manages all functions of the nomination committee.

 

5.10.8.

The Committee recommends that the supreme governing body establish a remuneration committee with at least the following preparatory tasks:

·         make proposals, for the approval of the supreme governing body prior to approval at the general meeting, on the remuneration policy, including the overall principles of incentive pay schemes, for members of the supreme governing body and the executive board,

·         make proposals to the supreme governing body on remuneration for members of the supreme governing body and the executive board and ensure that the remuneration is consistent with the company’s remuneration policy and the evaluation of the performance of the persons concerned. The committee should have information about the total amount of remuneration that members of the supreme governing body and the executive board receive from other companies in the group, and

·         oversee that the information in the annual report on the remuneration of the supreme governing body and the executive board is correct, true and sufficient.

No remuneration committee has been established, please see comments for recommendation 5.10.1. The Board of Directors has approved a very simple remuneration policy for both the Board of Directors and the Executive Board. The remuneration policy does not contain any incentive schemes or other variable components. The Board of Directors evaluates that there is no need for a remuneration committee.

 

5.10.9.

The Committee recommends that the remuneration committee do not consult with the same external advisers as the executive board of the company.

No remuneration committee has been established, please see comments for recommendation 5.10.1. The Board of Directors has approved a very simple remuneration policy for both the Board of Directors and the Executive Board. The remuneration policy does not contain any incentive schemes or other variable components. The Board of Directors evaluates that there is no need for a remuneration committee.

5.11.1.

The Committee recommends that the supreme governing body undertake an annual evaluation of the performance and achievements of the supreme governing body and of the individual members of the body.

When taking into consideration the size of the Company and the Board of Directors no formal evaluation is carried through, however the Chairman and the Vice-chairman discuss on a regular basis the work and qualifications of the Board of Directors.

5.11.2.

The Committee recommends that the chairman be in charge of the evaluation of the supreme governing body, that the outcome be discussed in the supreme governing body and that the details of the procedure of self-evaluation and the outcome be disclosed in the annual report.

When taking into consideration the size of the Company and the Board of Directors no formal evaluation is carried through, however the Chairman and the Vice-chairman discuss on a regular basis the work and qualifications of the Board of Directors.

 

6.1.2.

The Committee recommends that the remuneration policy and any changes to the policy be approved by the general meeting of the company..

 

As a very simple remuneration policy has been adopted and as the Executive Board only consists of one member, the Board of Directors considers this to be a matter between the Chairman and the Executive Board.

6.1.4.

6.1.4. The Committee recommends that the remuneration policy include:

·         the reasons for choosing the individual components of the remuneration, and

·         a description of the criteria on which the balance between the individual components of the remuneration is based.

RIAS A/S’ Board of Directors has laid down a very simple remuneration policy for both the Board of Directors and the Executive Board.

6.1.5.

6.1.5. The Committee recommends that, if the remuneration policy includes variable components,

·         limits be set on the variable components of the total remuneration package,

·         a reasonable and balanced linkage be ensured between remuneration for governing body members, expected risks and the value creation for shareholders in the short and long term,

·         there be clarity about performance criteria and measurability for award of variable components, and

·         there be criteria ensuring that vesting periods for variable components of remuneration agreements are longer than one calendar year.

RIAS A/S’ Board of Directors has laid down a very simple remuneration policy for both the Board of Directors and the Executive Board.

6.1.7.

The Committee recommends that if members of the executive board receive share-based remuneration, such programmes be established as roll-over programmes, i.e. the options are granted periodically and should not be exercisable earlier than three years from the date of grant.  An explanation of the relation between the redemption price and the market price at the time of grant should be provided.

The Executive Board does not receive share-based remuneration.

6.2.1.

The Committee recommends that the remuneration policy be clear and easily understandable and that it be disclosed in the annual report and posted on the company’s website.

RIAS A/S’ Board of Directors considers this to be a matter between the Chairman and the Executive Board.

6.2.2.

The Committee recommends that the company’s remuneration policy and compliance with this policy be explained and justified in the chairman’s statement at the company’s general meeting.

RIAS A/S’ Board of Directors considers this to be a matter between the Chairman and the Executive Board.

6.2.5.

The Committee recommends that the most important aspects of retention and severance programmes be disclosed in the company’s annual report.

RIAS A/S’ Board of Directors considers this to be a matter between the Chairman and the Executive Board.

6.2.6

The Committee recommends that the proposal for remuneration of the supreme governing body for the current financial year be approved by the shareholders at the general meeting.

 

When taking into consideration the size of the remuneration, the Board of Directors considers this to be a board matter. The members of RIAS A/S’ Board of Directors, except for the board members from the main shareholder, receive a fixed fee.

9.1.3.

The Committee recommends that the supreme governing body and the audit committee meet with the auditor at least once every year without the executive board present. This also applies to the internal auditor, if any.

The auditor participates in central meetings held by the Board of Directors/Audit Committee and the Executive Board. As required, meetings are held without the presence of the Executive Board

 

Composition of the company's management bodies and their committees and their functions
 
Tasks and responsibilities of the board of directors
The work of the board of directors is outlined in rules of procedure, which are evaluated at least once a year. Thus, RIAS A/S complies with the recommendation of adapting the rules of procedure to the needs of the company. The board of directors convenes four times a year or more, as needed. This process ensures that the management can react quickly and efficiently to external conditions. During the financial year 2012/13, 4 meetings have been held, including an extraordinary general meeting due to strategic considerations regarding the structure of the company.
 
Composition of the board of directors
The board of directors consists of six members, of which two are staff-elected in the company. The board members elected at the general meeting are elected for one year at a time.
The board of directors has been composed on the basis of a prioritised wish for professional experience. Several of the members of the board elected at the general meeting, excluding employee representatives as defined in the recommendations, are independent. The board of directors has evaluated the personal capacity of each board member and finds that they perform their tasks in the board of directors of RIAS A/S adequately.
 
Management
The management is appointed by the board of directors, which determines the terms and conditions of employment of the management. The management is responsible for the day-to-day running of RIAS A/S, including the development of RIAS A/S with regard to activities and operation as well as results and internal matters. The board of directors' delegation of responsibility to the management is outlined in the company's rules of procedure and the regulations of the Danish Companies Act. The management of RIAS A/S consists of one person.
 
The main elements of the company's internal control and risk management systems in connection with financial reporting
The board of directors complies with the recommendations that the main business-related risks should be identified, that a plan for the company's risk management to be approved by the board of directors should be prepared and that the management should continuously report to the board of directors with a view to the board of directors being able to systematically follow the development within the main risk areas. The complete risk factors of RIAS A/S are listed on page 54 of the annual report.
 
The internal control and risk management of RIAS A/S in connection with the financial reporting process internally as well as externally has the purpose of ensuring:
·  that the financial reporting gives a true and fair view without significant misstatement in accordance with current legislation, standards and other regulation
·  that appropriate accounting policies are chosen and used and that accounting estimates that are reasonable according to the circumstances are performed.
 
The risk assessment is carried out through a top down method that identifies material items of high risk and special areas of significant risk. The implemented control procedures are based on the risk assessment and are structured to contain the control activities that should as a minimum be carried out. The purpose of the control activities is to ensure that potential errors are avoided, discovered and corrected in time during the financial reporting process. The control procedures contain manual as well as automatic controls.
 
The framework of the accountant's work, including accounting-related tasks as well as non-accounting-related services, is regularly agreed upon between the board of directors and the accountant upon recommendation from the management. In consultation with management, the board of directors also carries out an annual assessment of the accountant's independence and competence.
 

 

RIAS A/S  |  Industrivej 11  |  DK-4000 Roskilde  |  Phone: +45 46770000  |  info@rias.dk  |  CVR: 44065118