EMGS is committed to healthy corporate governance practices which strengthens and maintains confidence in the Company, thereby contributing to optimal long-term value creation for shareholders and other stakeholders. The objective of corporate governance is to regulate the division of roles between shareholders, the Board and executive management more comprehensively than is required by legislation.

EMGS’ principles for corporate governance are based on the following elements:

  • All shareholders are treated equally
  • EMGS will provide open, reliable and relevant communication to shareholders, governmental bodies and the public about the Company’s activities and its corporate governance commitment
  • EMGS’ Board is fully independent from the Company’s executive manageme
  • The EMGS’ Board has a majority of members who are independent of shareholders
  • EMGS pays particular attention to ensuring that there are no conflicts of interest between the interests of its shareholders, the members of its Board and its executive management
  • EMGS will ensure a clear division of responsibility between the Board and the executive management

1. Implementation and reporting on corporate governance 

Implementation and reporting 

The board of directors (the “Board”) of Electromagnetic Geoservices ASA (the “Company” or “EMGS”) is committed to maintaining a high standard of corporate governance, in line with both Norwegian and international best practice standards. In addition to having a continuous focus on corporate governance, the Board and the executive management of the Company carries out, on an annual basis, a comprehensive review and evaluation of its principles for corporate governance and the implementation of these. This report (the “Report”) summarises the Company’s corporate governance work and compliance with applicable requirements and fulfils the Company’s reporting obligations under applicable law and other legal frameworks. 

EMGS is a Norwegian-registered public limited liability company, with its shares listed on the Oslo Stock Exchange (Oslo Børs). 

The Norwegian Accounting Act Section 3-3b, which the Company is subject to, sets out certain corporate governance related information which is to be disclosed and reported on through the issuance of an annual reporting document. This Report meets the requirements provided by the Accounting Act. The Accounting Act is available on www.lovdata.no. 

Furthermore, the Continuing Obligations of Stock Exchange Listed Companies (the “OSE Continuing Obligations”) issued by the Oslo Stock Exchange requires listed companies to publish an annual statement of their practice related to their policy on corporate governance. In addition to setting out certain minimum requirements for such reporting (equivalent to those under the Accounting Act), the OSE Continuing Obligations requires that the Company reports on its compliance with the recommendations of the Norwegian Code of Practice for Corporate Governance (the “Code”) published by the Norwegian Corporate Governance Board. Both the OSE Continuing Obligations and the Code requires that an explanation is provided where a company has chosen an alternative approach to specific recommendations in the Code (i.e. a “comply or explain” basis). 

EMGS complies with the current Code, issued on 17 October 2018. The Company provides a report on its principles for corporate governance in its annual report and on its website, www.emgs.com. EMGS’ objective is to comply with all sections of the Code, but the Company may deviate from principles in the Code if required for special purposes. 

The OSE continuing Obligations are available on www.oslobors.no, and the Code is available on www.nues.no. 

This Report sets out how the Code is accommodated through the financial year 2018. 

Values and guidelines for business ethics and corporate social responsibility 

EMGS has a set of clearly defined core values: Integrity, Commitment, Innovation and Quality. The values are operationalised in EMGS’ daily operations and management, including in our approach to corporate governance. 

The Board recognises that confidence in EMGS as a company and in its business, activities is essential for the Company’s continuing competitiveness. Therefore, EMGS is committed to transparency and openness about its management systems and procedures. This strengthens value creation, builds internal and external confidence and promotes an ethical and sustainable approach to business. 

The Board has, in close cooperation with the Company’s executive management, established a comprehensive framework of guidance documents. The core element and top-tier in this framework is the Company’s policy documents, which includes amongst other the Company’s ethics policy, the corporate social responsibility policy (see also separate report in the annual report) and the health, safety and environment policy. Other core guidance documents include the Company’s Code of Conduct Standard and the EMGS Sustainability and Corporate Social Responsibility Standard. These policies and standards are evaluated and updated on a regular basis. The Company has adopted a program for corporate social responsibility, including an anti-corruption compliance programme incorporating mandatory training of all employees. 

EMGS’ website provides more information about the Company’s business activities, policies and standards. 

2. Business 

EMGS is the market leader in controlled source electromagnetic (CSEM) imaging. Pursuant to Section 3 of the Company’s Articles of Association, the Company’s purpose is as follows: 

“The Company's activity is to engage, by itself or through proprietary interests in other companies, in the prospecting for hydrocarbon deposits in connection with the exploration, development and production of hydrocarbons.” 

The Company has clear objectives and strategies for its business within the scope of the definition of the business purpose in its Articles of Association. 

The Board of Directors’ report in the Company’s annual report includes a description of the Company’s objectives and principal strategies according to the business activities clause from the Articles of Association. The Articles are available at the Company’s homepage, www.emgs.com

3. Equity and dividends


As of 31 December 2018, the EMGS Group had a combined equity of USD 3.3 million, representing an equity ratio of 4.5%. 

The Board’s assessment of the Company’s equity position and a description of certain initiatives by the Board in this connection is set out in the Board of Director’s Report. 


The Company has at present no intention to pay dividends. The Board will establish a dividend policy when relevant. 

The Company’s objective is to generate a long-term return for its shareholders through dividends and increases in the share price that is, at least, in line with the return available on similar investment opportunities of comparable risk. 

Authorisations to increase share capital and to acquire own shares 

At the Annual General Meeting (AGM) held in 2018, the Board was authorised to increase the share capital of the Company by up to NOK 13,096,969 (being 10% of the registered share capital of the Company) through one or more share issues. Further details are set out in the resolution by the AGM that states, among others, that the authorisation may be utilised in connection with potential transaction / M&A activity, and/or to finance general corporate purposes. 

The Board was also given an authorisation to increase the share capital by up to NOK 9,822,726 to be utilised for fulfilling the Company’s obligations towards holders of options, should such options be exercised. All options are based on the Employee Option Programme. 

The two authorisations are valid until the next AGM of the Company, but in no event beyond 30 June 2019. As of 31 December 2018, the Board had not used these authorisations. 

Share capital increase in connection with 2018 rights issue 

At an EGM of the Company held on 23 March 2018, it was resolved to issue up to 70,833,333 new shares in a rights issue. The subscription price in the rights issue was determined by an independent board (not including board members with ties to major shareholders). Through the rights issue, a total of 39,540,816 new shares, each at a subscription price of NOK 2.45, were issued.

Following completion of the rights issue, the Company’s registered share capital is NOK 130,969,690 divided into 130,969,690 each having a par value of NOK 1.  

4. Equal treatment of shareholders and transactions with close associates 

Equal treatment 

Equal treatment of shareholders is an important principle for corporate governance in EMGS. The Company has one class of shares, and any purchases or sales of own shares are carried out over the stock exchange. 

The Articles of Association do not impose any restrictions on voting rights. All shares have equal rights. 

Pursuant to the Norwegian Public Limited Liability Companies Act, existing shareholders have pre-emption rights in connection with share capital increases and issuance of financial instruments which grants the holder a right to have new shares issued. However, this right can be waived from time-to-time by a qualified majority of the shareholders. When proposing to the shareholders to resolve such a waiver, the Board shall explain the rationale for such a waiver. 

Where a share capital increase is resolved by the Board in accordance with an authorisation by the general meeting of the Company, the pre-emption right may only be set aside where this has been pre-approved by the shareholders as part of the issuance of the authorisation. Where the Board resolves to carry out an increase in the share capital and waive the pre-emption rights of the existing shareholders on the basis of such an authorisation granted to the Board, an explanation will normally be publicly disclosed in a stock exchange announcement issued in connection with the increase of the capital. 

The Board of EMGS will waive the pre-emption of existing shareholders in connection with share capital increases following the Company’s obligations towards holders of options if and when such options are exercised. 

Transactions with close associates 

In the event of any material transaction between the Company and its shareholders, a shareholder’s parent Company, members of the Board, members of the executive personnel or close associates of any such parties, the Board will, as a general rule, arrange for a valuation by an independent third party. 

EMGS has implemented procedures for the Board, the board committees and the executive personnel to ensure that any conflicts of interest connected to agreements entered into by the Company are reported to the full Board. 

5. Freely negotiable shares 

The shares in EMGS are freely negotiable and the Articles of Association do not contain any restrictions on negotiability. 

EMGS is listed on the Oslo Stock Exchange, and the Company works actively to attract the interest of new shareholders. 

6. General meetings 

General Meetings 

General Meetings are the Company’s ultimate corporate body. EMGS encourages all shareholders to participate in general meetings. The Board endeavours to organise the general meetings to ensure that as many shareholders as possible may exercise their rights by participating, and that such meetings are an effective forum for the views of shareholders and the Board. 

Preparation for the Annual General Meeting (AGM) 

The AGM is normally held in June each year, and in any case no later than 30 June, which is the latest date permitted under applicable law. The 2018 AGM was held on 8 June 2018. The 2019 AGM is scheduled to be held on 13 June 2019. 

The notices calling the general meetings are made available on the Company’s website and sent to shareholders in the form requested in their VPS account, in each event no later than three weeks prior to the meeting. 

According to article 8 of the Company’s registered Articles of Association and provided that the shareholders may participate in general meetings electronically, ref. article 9 in the articles, the AGM may, with the majority required to amend the Articles of Association and with effect until the next AGM, decide that the notices calling Extraordinary General Meetings shall be sent no later than two weeks before the date of the meeting. This alternative was not used in 2018. 

Shareholders who wish to take part in a general meeting must give notice to the Company by the date stated in the notice of meeting, which date must be at least two business days before the general meeting. 

Each share carries one vote in the Company's general meetings. 

Article 10 of the Articles of Association stipulates that the supporting documents dealing with matters to be considered by the AGM can be made available on the Company’s website rather than being sent to shareholders directly. However, shareholders are still entitled to receive the documents by post upon request. 

The calling notice to the general meeting along with a form for appointing a proxy and sufficiently detailed supporting information, including proposals for resolutions and comments on matters where no resolution is proposed, are disclosed on the Company’s website. Resolutions and supporting information are sufficiently detailed and comprehensive to enable shareholders to form a view on matters on the agenda to be considered in the meeting. The Company will make appropriate arrangements for the general meeting to vote separately on each candidate nominated for the Company’s corporate bodies. 

As a routine, the financial calendar for the coming year is published no later than 31 December as a stock exchange announcement, and it is also made available on the Company’s website. 

Participation in general meetings 

Shareholders who do not attend the general meeting may be represented and exercise their voting rights by way of a proxy. A person will be nominated to be available to vote as a proxy on behalf of shareholders. Proxy forms will enable the proxy holder to cast votes for each item on the agenda separately. The final deadline for shareholders to give notice of their intention to attend the meeting or to vote by proxy will be set in the notice for the meeting. According to article 9 of the Articles of Association, the Board may decide that the shareholders can participate in the general meeting by mean of an electronic aid, including that they may exercise their rights as shareholders electronically. 

The Chairman of the Board, the CEO, the CFO and the auditor will be present at the AGM. Other board members will, if possible, attend the general meetings. 

Agenda and conduct of the AGM 

The Board decides the agenda for the AGM. The main agenda items are determined by the requirements of the Public Limited Liability Companies Act. 

The Code stipulates that the Board should have arrangements to ensure an independent Chairman for the general meetings. The Company has evaluated the recommendation but decided that it was in the interest of the Company and the shareholders that the general meeting held in 2018 was chaired by the Chairman of the Board. 

The AGM minutes are published by the issuance of a stock exchange announcement and are also made available on the Company’s homepage. 

7. Nomination committee 

EMGS has a nomination committee elected by the AGM. According to article 11 in the Company’s Articles of Association, the committee shall consist of 2 to 3 members who shall be elected by the AGM for a period of 2 years, unless the AGM decides a shorter period. 

As per 31 December 2018, the nomination committee consists of 2 members; 

-          Kristian Siem (Chairperson)
-          Frederik W. Mohn 

The Nomination Committee has refrained from accepting a fee for their work on the Nomination committee. The nomination committee proposes candidates for election to the Board and for the remuneration of the members of the Board. Also, the committee proposes candidates for election to the nomination committee and suggest changes to the mandate or guidelines for the nomination committee. 

EMGS’ nomination committee is in contact with shareholders, the Board and the Company’s executive management when searching for candidates for election to the Board. 

The recommendation to the AGM relating to the election should be available in time to be sent with the notice calling the meeting, so that the shareholders have the opportunity to submit their views on the recommendation to the nomination committee ahead of the meeting. Further details are set out in article 11 of the Articles of Association and in the guidelines for the nomination committee, which were approved by the AGM in 2012. 

8. Board: composition and independence 

The composition of the Board 

EMGS does not have a corporate assembly. 

According to article 5 in the Company’s Articles of Association, the Board shall consist of 5–11 board members. At the end of 2018, EMGS’ Board consisted of seven directors, including two directors elected by and among the employees of the Company. Three of the directors are female and four are male. 

The shareholder-elected members represent varied and broad experience from relevant industries and areas of speciality, and the members bring experiences from both Norwegian and international companies. Any proposal for the election of shareholder-elected board members are made with a view to ensure that the Board can attend to the shareholders’ common interest and the Company’s need for competence, capacity and diversity. Also, the Board should function well as a collegial body. The Chairman of the Board is elected by the general meeting. 

As of 31 December 2018, the Board consisted of the following directors:

·         Eystein Eriksrud, Chairman
·         Petteri Soininen
·         Johan Kr. Mikkelsen
·         Mimi Berdal (independent)
·         Anne Øian (independent)
·         Adam Robinson, employee representative
·         Marthe Karlsen, employee representative
·         Ragnhild Gaupen Gåsø, alternate employee representative
·         Ellen Trolid, alternate employee representative
·         Magne Andersen Drage, alternate employee representative
·         Joseph Fletcher, alternate employee representative

Independence of the Board 

The Board does not include any members from the Company’s executive management. 

Two of the five shareholder-elected board members are independent of the Company’s substantial business associations and major shareholders. The three members that are not considered independent are related to the Company’s largest shareholders. 

9. The work of the Board 

The Board’s duties and responsibilities 

The Board has the ultimate responsibility for the management of the Company and for supervising its day-to-day management and activities in general. This includes developing the Company’s strategy and monitoring its implementation. In addition, the Board exercises supervision responsibilities to ensure that the Company manages its business and assets and carries out risk management in a prudent and satisfactory manner. The Board is responsible for the appointment of the CEO. The Board has an annual plan for its work. 

Mandate for the Board 

In accordance with the provisions of Norwegian company law, the terms of reference for the Board are set out in a formal mandate that includes specific rules and guidelines on the work of the Board and decision making. The Chairman of the Board is responsible for ensuring that the work of the Board is carried out in an effective and proper manner in accordance with legislation. 

Mandate for the CEO 

The Board issues a mandate for the work of the CEO. There is a clear division of responsibilities between the Board and the CEO. The CEO is responsible for the operational management of the Company. 

Financial reporting 

The Board receives periodic reports on the Company’s commercial and financial status. The Company follows the timetable laid down by the Oslo Stock Exchange for the publication of interim and annual reports. 

Board meetings 

The Board holds regular meetings and a strategy meeting each year. Extraordinary Board meetings are held as and when required, to consider matters that cannot wait until the next regular meeting. In addition, the Board has appointed three sub-committees composed of board members to work on matters in these areas. The Board has established and stipulated instructions for these committees. 

Audit committee 

The audit committee is appointed by the Board. Its main responsibilities are to supervise the Company’s systems for internal control, to ensure that the auditor is independent and that the interim and annual accounts give a fair and true representation of the Company’s financial results and financial condition in accordance with generally accepted accounting principles. The audit committee has reviewed the procedures for risk management and financial controls for the major areas of the Company’s business activities. 

The audit committee receives reports on the work of the external auditor and the results of the audit. Also, the audit committee meets regularly with the auditor where no member of the executive management is present. 

As per 31 December 2018, the audit committee consisted of the following:

·         Anne Øian, Chairman
·         Eystein Eriksrud

Compensation committee 

The compensation committee makes proposals to the Board on the employment terms, as well as conditions and total remuneration of the CEO and other executive personnel. 

As per 31 December 2018, the compensation committee consisted of the following:

·         Eystein Eriksrud, Chairman
·         Petteri Soininen
·         Johan Kr. Mikkelsen
·         Mimi Berdal

Strategy Committee 

A strategy committee was established by the Board on 11 February 2015. The committee shall contribute to the Company’s strategy development. 

The committee consists of the following:

·         Petteri Soininen, Chairman
·         Eystein Eriksrud
·         Johan Kr. Mikkelsen

 Annual evaluation 

The Board’s working methods and interactions are subject to annual revision. 

10. Risk management and internal control 

The Board ensures that the Company has sound risk management and an internal control system that is appropriate to its activities. The risk management and internal control systems in EMGS are based on its corporate values, ethics guidelines and principles for sustainability and corporate social responsibility (“CSR”). The Board reviews the Company’s internal control system and the main areas of risk annually. 

EMGS’ management conducts day-to-day follow-up of financial management and reporting. Management reports to the audit committee that conducts a review of the quarterly and annual reports before publication. The audit committee assess the integrity of EMGS’ accounts. It also inquiries into, on behalf of the Board, assess issues related to financial review and internal control, and the external audit of EMGS’ accounts. The Board ensures that EMGS is capable of producing reliable annual reports and that the external auditor’s recommendations are given thorough consideration. 

A description of the Company’s financial risk management objectives and policies are included in Note 3 to the financial accounts. 

11. Remuneration for the Board 

The AGM decides the remuneration paid to members of the Board annually. The nomination committee prepare proposals for the AGM regarding remuneration for Board members. The remuneration of the Board reflects the Board’s responsibility, expertise and time commitment, and the complexity of the Company’s activities. 

The Code recommends that remuneration of the Board should not be linked to the Company’s performance and, further, that the Company should not grant options to members of its Board. The employee representatives on the Board hold options, but these have been granted to them as employees of the Company, not as board members. 

None of the shareholder-elected board members are engaged by the Company in any other role (e.g. as consultant) than that as board members.Details on the remuneration to the Board can be found in notes to the financial statements of the Company.

The employee representatives do not receive any compensation for their services as board members. 

12. Remuneration of the executive personnel 

The Board determines salary and other remuneration systems for key management personnel pursuant to the provisions of the Norwegian Public Limited Liability Companies Act. The CEO’s employment conditions and remuneration are determined by the Board and are presented to the AGM. The Board annually evaluates salary and other remuneration for the CEO. Details on the remuneration to the Company’s executive personnel are included in notes to the financial statements of the Company. 

The guidelines of the remuneration system for the executive personnel is determined by the Board and is presented to the general meeting through a declaration on principles for management remuneration, which is required by law. This declaration is also included in the Company’s annual report. 

Performance-related remuneration of the executive personnel is linked to value creation for shareholders or the Company’s performance over time. The performance-related remuneration to the executive personnel is subject to an absolute limit. 

The Board believes that the salary levels of executive personnel should be competitive. 

13. Information and communications 

EMGS maintains regular dialogue with analysts and investors. The Company considers it very important to inform shareholders and investors about the Company’s commercial and financial performance. 

The Company strives to continuously publish all relevant information to the market in a timely, effective and non-discriminatory manner. All stock exchange announcements are made available both on the Company’s website and on the Oslo Stock Exchange news website at www.newsweb.no, and are also distributed to news agencies (via Hugin). 

Financial reports 

EMGS publishes its provisional annual accounts as soon as possible after the end of each financial year. The complete annual report and accounts are made available to shareholders no later than three weeks prior to the AGM and no later than by the end of April, as required by the Securities Trading Act (section 5-5 (1)). 

Quarterly reports are normally published within six weeks following the end of the quarter, except for the report for the second quarter which is normally published around seven weeks following the end of the quarter. 

The Company’s financial calendar for the coming year is published no later than 31 December in accordance with the rules of the Oslo Stock Exchange. The financial calendar is available on the Company’s website and on the Oslo Stock Exchange website. 

EMGS holds open web-based presentations in connection with the publication of its interim results. These presentations review the published results, market conditions and the Company’s future prospects. The presentations are given by the CEO and/or the CFO and are distributed by webcast so that anyone can follow the presentation on the internet in real time or view it later. Quarterly reports, presentation material and webcasts are all available on the Company’s website. 

Following the publication of the interim results, the CEO or the CFO meet with shareholders and potential investors. 

Other market information 

In addition to the dialogue between the shareholders in the general meeting, the Board aspires to maintain contact with shareholders throughout the year. If possibly in relation to the quarterly presentations and the participation in seminars mainly aimed at investors. This contact is coordinated between the Chairman of the Board, the CEO and/or the CFO. 

The Company has a policy identifying the positions entitled to speak on behalf of the Company on various subjects who should communicate with the media, investors and investment bankers. 

14. Takeovers 

The Board endorses the recommendation of the Code for corporate governance on takeover bids. EMGS’ Articles of Association do not contain any restrictions, limitations or defence mechanisms on acquiring the Company’s shares. 

In accordance with the Securities Trading Act and the Code, the Board has adopted guidelines for possible takeovers. 

In the event of a takeover bid, the Board will, in accordance with its overall responsibility for corporate governance, act for the benefit of all Company shareholders. The Board will not seek to hinder or obstruct takeover bids for EMGS’ activities or shares, unless the interests of the Company’s shareholders warrants so. 

If an offer is made for EMGS’ shares, the Board will normally both make a recommendation on whether the shareholders should accept the offer and arrange a valuation from an independent expert. 

15. Auditor 

The external auditor presents an annual plan to the audit committee covering the main features for carrying out the audit. The external auditor participates in all meetings of the audit committee, the Board meeting that approves the annual financial statements and other meetings on request. The external auditor presents the result of the audit to the audit committee and the Board in the meeting dealing with the annual financial statements, including presenting any material changes in the Company’s accounting principles and significant accounting estimates, and reporting any material matters on which there has been disagreement between the external auditor and EMGS’ executive management. 

The external auditor annually presents internal control weaknesses and improvement opportunities to the audit committee and, when appropriate, to the Board. The Board holds a meeting with the auditor at least once a year where no member of the executive management is present. 

The Board has adopted instructions as to the executive personnel’s access to the use of the external auditor for services other than auditing. The external auditor provides an overview of his remuneration divided into fee paid for audit work and any fees paid for other specific assignments, which are presented at the annual general meeting. This is also included in the annual report. 

The external auditor has given the Board a written notification confirming that the requirements for independence are satisfied.