Statement of Policy on Corporate Governance
The principles for corporate governance adopted by the Company are based on the “Norwegian Recommendation for Corporate Governance” issued on the 30th October 2014.
As a company incorporated in the Cayman Islands, Siem Offshore Inc. is an exempted company duly incorporated under the laws of the Cayman Islands and subject to Cayman Island laws and regulations with respect to corporate governance.
Cayman Islands corporate law is to a great extent based on English Law. In addition, due to the Company’s listing on the Oslo Stock Exchange, certain aspects of Norwegian Securities law apply to the Company and there is a requirement to adhere to the Norwegian Code of Practice for Corporate Governance. The Norwegian Code of Practice for Corporate Governance is publicly available at www.nues.no in both Norwegian and English languages.
Due to new provisions implemented in the Norwegian Accounting Act, compliance with the regulations for Corporate Governance reporting is now a legal requirement provided that it does not conflict with the Cayman Islands laws and regulations. The Company endeavours to maintain high standards of corporate governance and is committed to ensuring that all shareholders of the Company are treated equally and the same information is communicated to all shareholders at the same time.Corporate Governance is subject to annual assessment and review by the Board of Directors.
The Board of Directors has reviewed this statement. It is the opinion of the Board of Directors that the Company complies with the Norwegian Code of Practice for Corporate Governance. This statement is structured in accordance with The Norwegian Code of Practice for Corporate Governance.
Cayman Islands laws and regulation do not require the objects clause of the Companies Memorandum and Articles of Association to be clearly defined. The Company has however adopted clear objectives and strategies for its business. Siem Offshore aims to grow the company within offshore support vessels, both organically and through combination with other operators, in order to achieve economies of scale and stronger presence in the market.
Siem Offshore aims to become a preferred supplier of marine services to the energy industry based on quality and reliability and to provide cost-efficient solutions to its customers by understanding their operation and applying technology and experience.
The Company builds its business around a motivated workforce with the appropriate technical solutions. This creates sustainable value for all shareholders. Reference is made to the Board of Directors report for detailed information.
The priorities for the use of Company funds are determined by the Board of Directors and recommendations of Management influenced by existing conditions. At present, priorities for use of funds in order of importance are investment opportunities in the business, repayment of debt and the return of capital to the shareholders in form of share buy-back or dividends.
The Board’s mandate to increase the Company’s share capital is limited only to the extent of the authorized share capital of the Company with certain pre-emption rights for shareholders and in accordance with the Company’s Memorandum and Articles of Association which comply with Cayman Island law.
Under the Articles of Association, the Board can issue new shares, convertible bonds or warrants at any time within the limits of the authorized capital without the consent of the general meeting but with pre-emption rights for shareholders. A General Meeting has further authorized the Board to issue new shares without pre-emption rights to all shareholders up to a limit of 50% of Siem Offshore’ shares at the time the authorization was given. The Board holds authorization from the Extraordinary General Meeting held on 14 August 2015 to issue 157,978,620 new shares.
The authority gives the Board flexibility to finance investments, acquisitions and other business combinations on short notice through the issue of shares or certain other equity instruments in the Company. Furthermore, the Board considers the granting of a new standing authority at the time of holding an Annual General Meeting rather than convening an Extraordinary General Meeting at some future time to be in the best interests of the Company, as this will result in cost savings and more effective time management for both the Company’s senior management and its Shareholders.
An extraordinary general meeting was held on 14th of August 2015 resolving as a Special Resolution that the Company should increase the authorized share capital of the Company from US$5,500,000- divided into 550,000,000 Common Shares of par value US$0.01 each to US$10,000,000- divided into 1,000,000,000 Common Shares of par value US$0.01 each, by the creation of an additional 450,000,000 Common Shares of par value US$0.01 each which shall rank pari passu in all respects with the existing Common Shares.
The Board of Directors of the Company resolved to issue 454,430,000 common shares at a share price of NOK 1.80 in a Rights Issue.
The Company is committed to ensuring that all shareholders of the Company are treated equally and all the issued shares in Siem Offshore, at nominal value US$ 0.01 each, are freely tradable and carry equal rights with no restrictions on voting. Siem Industries Inc, which owns 83% of the Company, is represented by its Chairman, Kristian Siem, Deputy CEO, Eystein Eriksrud and President, Michael Delouche, on the Board of Directors. The Company pays an annual fee to Siem Industries as compensation for directorships, provision of an office and presence in the Cayman Islands, and other services. The fee is adopted by the annual general meeting based on a recommendation from the independent Board Members. Related party transactions are disclosed in the notes to the accounts.
All of the shares in the Company carry equal rights and are freely negotiable. The shares are traded according to normal market practice and no special limitations on transactions have been laid down in the Articles of Association.
The Annual General Meeting of the Company will be held at the registered office of the Company on the Cayman Islands, 6 May 2016, at 9:30am Cayman Islands local time and Shareholders can be represented by proxy. Notices of general meetings and related documents are made available to shareholders at the latest 17 days prior to meeting date. Notice of attendance by proxy is to be provided to either (1) the offices of Siem Offshore AS at Nodeviga 14, P.O. Box 425, Kristiansand 4664, Norway, telefax no. +184.108.40.206.86 or (2) the Company’s office at P.O. Box 10597, George Town, Grand Cayman KY1-1005, Cayman Islands, telefax no. +1.345.946.3342, not less than 24 hours prior to the stated time of the annual general meeting. Shareholders are given the opportunity to vote on the election of board members.
The appointment of a nomination committee is not a requirement under Cayman Islands Law.
In the nominations to the Board of Directors, the Board consults with the Company’s major shareholders and ensures that the Board is constituted by Directors with the necessary expertise and capacity. There is no requirement under Cayman Islands Law for the Company to establish a corporate assembly. Each Board member is elected for a term of 2 years or such shorter term as shall be specified in the ordinary resolution pursuant to which the Director shall be appointed. Representatives of the Executive Management are not presently members of the Company’s Board of Directors. The Board of Directors as a group has extensive experience in areas which are important to Siem Offshore, including offshore services, international shipping, ship broking, finance and corporate governance and restructuring.
The Board monitors the performance of management through regular meetings and reporting. The Company has a Compensation Committee and an Audit Committee. The Compensation Committee consists of two Directors. The mandate of the committee is to review and approve the compensation of the CEO and any bonuses to all executive personnel. Reference is also made to section 12, Remuneration of the Executive Management. The Audit Committee consists of two Directors. The composition of the committee meets the requirements of the Norwegian Code of Practice for Corporate Governance as regards independence.
The committee’s mandate can be summarized as follows:
A prerequisite for the Company’s system of decentralized responsibility is that the activities in every part of the Company meet general financial and non-financial requirements, and are carried out in accordance with the Company’s common norms and values. The executive management of each subsidiary is responsible for risk management and internal control in the subsidiary with a view to ensuring 1) optimizing of business opportunities, 2) targeted, safe, high-quality and cost-effective operations, 3) reliable financial reporting, 4) compliance with current legislation and regulations and 5) operations in accordance with the Company’s governing documents, including ethical and social responsibility standards. The Company’s risk management system is fundamental to the achievement of these goals.
Financial reporting process
The Company prepares and presents its financial statements in accordance with current IAS/IFRS rules. Financial information from subsidiaries is received each month in a reporting package in standard format accommodated necessary information for preparing the consolidated financial statement for the Company. The reporting from the subsidiaries is extended in the year-end reporting process to meet various requirements for supplementary information. There are established routines to check the financial data in the received reporting packages to ensure the best quality for the consolidated figures for the Company.
Training and further development of accounting experience within the Company is provided locally by participating on various external courses on a regular basis.
The remuneration of the Board members reflect their experience and responsibilities, and is adopted by the annual general meeting based on the recommendation from the Board. The Board members do not have share options or profit-based remuneration. The responsibility statement of the Board of Directors in this report and the notes to the accounts include information about the remuneration of the Board of Directors.
The Company has a Compensation Committee which reviews and approves the compensation of the CEO and the bonuses to all executive personnel. The Articles of Association of the Company permit the Board to approve the granting of share options to employees. A long-term share option program for 5 key employees of the company was introduced in Q1 2013. An additional share option program was implemented in Q2 2014 for 7 key employees of the company. The remuneration of the CEO and the share option scheme are disclosed in the notes to the accounts.
The board of director’s statement on the remuneration of executive personnel is presented as a separate appendix to the agenda for the general meeting. The remuneration statement clearly states which aspects of the guidelines are advisory and which, if any, are binding. The general meeting will vote separately on each of these aspects of the guidelines.
The Company has a policy of treating all its shareholders and other market participants equally, and communicates relevant and objective information on significant developments which impact the Company in a timely manner.
The Company also seeks to ensure that its accounting and financial reporting are to the standards of our investors, and the Company presents its financial statements in accordance with the International Financial Reporting Standards (IFRS).
The Audit Committee of the Board of Directors monitors the company’s reporting on behalf of the Board. Notices to the Oslo Stock Exchange and placements of notices and other information, including quarterly and annual reports, may be found on the Company’s website (www.siemoffshore.com). The financial calendar for 2016 may be found on the Company’s website under “Investor Relations”.
The shares in the Company are freely tradable and the Articles of Association of the Company does not hold specific defence mechanisms against take-over situations. In a take-over situation, the Board of Directors will comply with relevant legislation.
The Auditor of the Company is elected at the Annual General Meeting which also approves its remuneration. Details of the Company’s remuneration of the external auditor are given in the notes to the accounts.
The auditor reports to the Audit Committee twice a year at a minimum, but more often if necessary. During the latter half of the year, the external auditor presents to the Audit Committee his assessment of risks, internal controls, risk areas and improvement potential in control systems and his audit plan for the following year. The second report to the Audit Committee is the presentation of Year-End Audit. The external auditor presents a summary of the audit process, including comments on audited internal control procedures and key issue in the financial reporting.
The Audit Committee also receives an annual independence reporting from the external auditor, confirming the external auditor’s independence with respect to the Company, within the meaning of the Norwegian Act on Auditing and Auditors. The confirmation also includes services delivered to the Company other than mandatory audit.