The Norwegian Code of Practice for corporate governance is based on «the comply or explain principle» whereby companies must comply with the Code of Practice or explain why they have chosen an alternative approach (see chapter 1).

The Oslo Børs circular nr 2/2006 contains the following information related to «the comply or explain» principle:

Companies must produce a statement of policy on corporate governance for inclusion in their annual report. The statement must cover each of the recommendations that make up the Code of Practice. The Code is based on the «comply or explain» principle. This means that a company must either follow each of the recommendations that make up the Code, or explain why the company has chosen another solution. The recommendations that companies must either comply with or explain deviations from, are shown in bold text in the boxes at the beginning of each section of the Code. The commentary following each box provides further detail and explanation, as well as the rationale for each of the recommendations. Company statements are expected to be particularly detailed when dealing with any areas where the company does not comply with the recommendation, and must also explain the reasons for non-compliance. The requirement for an overall statement of policy on corporate governance is intended to make it easy for the market to understand how a company operates in respect of corporate governance. However, the overall statement can refer to supplementary information elsewhere in the annual report or on the company’s web pages.