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Recommendation 24 Committee meetings

The company shall report the number of committee meetings held during the reporting year.

The information regarding the number of meetings permits the shareholders to evaluate the activities of the committee and subsequently also the effectiveness of board work.

Recommendation 25 Election of members to the committees

The board shall elect from among the directors the members and the chairman of the committee.

In view of the fact that the committees work to render assistance to the board and prepare matters belonging to the competence of the board, the board should elect from among the directors the members of the committees.

Recommendation 26 Composition of the committees

The company shall report the composition of each committee.

The information on the committees permits the shareholders to evaluate the effectiveness of committee work and the relation- ships of the committee members to the company.

Audit committee

Recommendation 27 Establishment of the audit committee

The audit committee shall be established, if the extent of the company’s business requires preparation of matters relating to financial reporting and control to be dealt with by a group with more compact composition than the entire board.

The extent of the operations of the company may require some directors to concentrate particularly on matters relating to financial reporting and control. The audit committee has better possibilities than the entire board to review questions connected with the financial administration and control of the company and ensure contacts with auditors and the internal audit function.

Recommendation 28 Appointment of the members of the audit committee

The audit committee shall comprise at least three members. The members shall have the qualifications necessary to perform the responsibilities of the audit committee.

To ensure the effective implementation of the duties of the audit committee, it shall comprise at least three members. The mem- bers must have sufficient knowledge of the accounting practices and preparation of financial statements, because the audit com-

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mittee deals with matters relating to the financial reporting and control of the company.

Recommendation 29 Independence of the members of the audit committee

The members of the audit committee shall be inde- pendent of the company.

Due to the nature of the matters dealt with by the audit commit- tee, its members must be independent of the company as speci- fied in Recommendation 18.

Recommendation 30 Duties of the audit committee

The board shall define the duties of the audit commit- tee.

The duties of the audit committee shall be defined in the charter approved for the committee and tailored to the particular cir- cumstances of the company. The duties of the audit committee may include e.g.:

  • follow-up of the financial position of the company

  • supervision of financial reporting (financial statements, interim reports)

  • evaluation of the adequacy and appropriateness of internal control and risk management

  • handling of internal audit plans and reports

  • evaluation of compliance with laws and regulations

  • preparation of the decision concerning appointment of external auditor

  • contacts with the auditor, and examination of the auditor’s reports

  • evaluation of the advisory services supplied by the external auditor

The duties of the audit committee shall be disclosed in ac- cordance with recommendation 23.

Nomination committee

Recommendation 31 Establishment of the nomination committee

The board may establish a nomination committee to improve the effective handling of matters relating to the nomination and compensation of directors.

Identification of individuals suitable as directors and analysing the experience, knowledge and skills of candidates prior to elec- tion is critical to ensure and balance of the competences of the board. The board may improve the effectiveness of the prepara- tion for election of directors by establishing a nomination com- mittee. The nomination committee promotes the transparency and systematic functioning of the election process.

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