The nomination committee should be laid down in the company’s articles of association. The general meeting should stipulate guidelines for the duties of the nomination committee.
The members of the nomination committee should be selected to take into account the interests of shareholders in general. The majority of the committee should be independent of the board of directors and the executive personnel. At least one member of the nomination committee should not be a member of the corporate assembly, committee of representatives or the board. No more than one member of the nomination committee should be a member of the board of directors, and any such member should not offer himself for re-election to the board. The nomination committee should not include the company’s chief executive or any other executive personnel.
The nomination committee’s duties are to propose candidates for election to the corporate assembly and the board of directors and to propose the fees to be paid to members of these bodies.
The nomination committee should justify its recommendations.
The company should provide information on the membership of the committee and any deadlines for submitting proposals to the committee.
Commentary:
The use of a nomination committee is not regulated by legislation, and should therefore be laid down in the articles of association³. The articles of association or separate written guidelines should set out how elections to the nomination committee are to be prepared, the criteria for eligibility, the number of members, the term of office for which members are appointed, the fees to which they are entitled etc.
The remuneration paid to members of the nomination committee should reflect the character of their duties and the time commitment involved, taking into account the central importance of the nomination committee.
Composition of the committee
The provisions of the Code of Practice on the composition of the nomination committee seek to balance differing aspects. On the one hand, the Code of Practice reflects the principles of independence and the avoidance of any conflict of interest between the nomination committee and the candidates it puts forward for election. On the other hand, the Code of Practice takes into account that elected officers of the company with experience from the corporate assembly and board of directors contribute an understanding of the company’s situation. The composition of the nomination committee should also be such that it reflects the interests of shareholders in general.
The company should provide information on the membership of the nomination committee on its web site.
The nomination committee should be independent of the company’s board of directors. This means that the candidates for election to the nomination committee should not be proposed by the board of directors. The independence of the nomination committee from the company’s board of directors and executive management dictates that candidates for election to the nomination committee should be put forward by the nomination committee itself.
The company’s guidelines for the nomination committee should establish rules for rotation of the members of the nomination committee, for example by requiring that at a stipulated regular interval the member of the committee with the longest service at that time shall retire and be replaced.
The work of the nomination committee
The chairman of the nomination committee has the overall responsibility for the work of the committee.
The nomination committee should ensure that it has access to the expertise required in relation to the duties for which the committee is responsible. The nomination committee should have the ability to make use of resources available in the company or be able to seek advice and recommendations from sources outside of the company.
When reporting its recommendations to the general meeting, the nomination committee should also provide an account of how it has carried out its work.
The nomination committee is expected to monitor the need for any changes in the composition of the board of directors and to maintain contacts with shareholder groups, members of the corporate assembly and board and with the company’s executive personnel. The nomination committee should pay particular attention to the board’s report on its own performance, cf. Section 9 on the work of the board.
In carrying out its work, the nomination committee should actively seek to represent the views of shareholders in general, and should ensure that its recommendations are endorsed by the largest shareholders.
In accordance with Section 6 above, the nomination committee’s recommendations and report should be made available in accordance with the 21-day deadline for the notice calling a general meeting. The committee’s recommendation should include relevant information on the candidates, cf. Section 8 on the composition of the corporate assembly and board of directors. The recommendation should include information on each candidate’s competence, capacity and independence. Information on the members of the board of directors should include each individual’s age, education and business experience. Information should be given on how long each individual has been a member of the board of directors and any assignments carried out for the company, as well as the individual’s material appointments with other companies and organisations. In the case of a proposal for re-election, the recommendation can refer to the information already provided in the annual report.
The company should give notice on its web site, in good time, of any deadlines for submitting proposals for candidates for election to the board of directors, nomination committee or, if appropriate, the corporate assembly.
| ³The Public Companies Act does not regulate nomination committees, and the nomination committee is therefore a ‘voluntary’ corporate body. However, financial institutions are subject to specific rules on nomination committees. |