Corporate Governance

Corporate Governance Guidelines

General principles, implementation and reporting on Corporate Governance
The Group believes that good and sound corporate governance creates shareholder value and reduces risks, and has made a strong commitment to develop high standards of Corporate Governance. The Group has complied, and will continue to comply, with the Norwegian Code of Practice for Corporate Governance (the “Corporate Governance Code”), last revised on 30 October 2014, and which is available on the Norwegian Corporate Governance Board’s web site www.nues.no. The principles are also in accordance with section 3-3b of the Norwegian Accounting Act, which can be found at https://lovdata.no/dokument/NL/lov/1998-07-17-56. Magseis considers the development of a high-quality Corporate Governance standard as a continuous process and will continue to focus on improving the level of Corporate Governance.

The Board of Directors has the overall responsibility for Corporate Governance at Magseis and ensures that the Group implements sound Corporate Governance.

Purpose and background
Good corporate governance is characterised by open, responsible communication and cooperation among the Company’s owners, its Board of Directors, and management, in the context of both short- and long-term value creation perspectives. The Board of Directors wants our shareholders, employees, customers, suppliers, financial associates, and governmental bodies, as well as society in general, to be confident and trust that Magseis is governed in a satisfactory manner. The Board of Directors and the nomination committee also have procedures in place to ensure that the Board of Directors is sufficiently independent in the execution of its duties. Corporate governance deals with questions and principles related to the distribution of roles between governing bodies, as well as their respective areas of responsibility and authority. Sufficient attention must be given to the formulation of these roles and functions, in order to secure ample control, but at the same time to encourage innovation and entrepreneurship.

The purpose of this policy is to regulate the division of roles between shareholders, the Board of Directors and executive management and through the efficient use of the Company’s resources help to ensure the greatest possible value creation over time in the best interests of shareholders, employees and other stakeholders.

Business of Magseis
The vision of Magseis is to re-shape the Ocean Bottom Seismic market. This is reflected in Article 3 of the Articles of Association, which reads “The Company’s business activities include development of geophysical equipment and methods, generation, marketing and sale of exclusive and non-exclusive geophysical exploration and other thereto naturally related activities”.

The Group’s core purpose is the continued development of our proprietary MASS technology to enable large scale, efficient and cost effective OBS acquisition services. Magseis wants to be the customers’ first choice within field development and the exploration industry. In fulfilling this purpose, Magseis will create long-term value for its customers and shareholders.

Equity and dividends
The Group’s equity as per 31 December 2016 amounts to USD 49.0 million, 56.6% of the Group’s total assets, and is considered adequate relative to the Company’s financial objectives, overall strategy and risk profile. On a continuous basis, Magseis evaluates the available alternatives to ensure adequate liquidity for its prioritised project activities and to provide the required long-term financial strength and flexibility. To achieve its ambitious long-term growth objectives, it is likely that Magseis will need to raise additional capital in the years to come. Board authorisations for share capital increases and buy-back of own shares are generally limited to defined purposes and are granted only with effect until the next annual general meeting.

The Group is currently in a growth phase and has not yet distributed any dividends. As per 31 December 2016, the Company has no distributable equity. Magseis will over time develop and disclose a dividend policy including an appropriate payout to its shareholders.

Equal treatment of shareholders and transactions with close associates
Magseis has only one class of shares, and all shares carry equal voting rights. The shareholders exercise the highest authority in the Group through the General Meeting. All share-holders are entitled to submit items to the agenda, and to meet, speak, and vote at the General Meeting. The shareholders of the Company have preferential rights to subscribe for new shares. If and to the extent that the preferential right is set aside, either by the general meeting or by the Board of Directors on the basis of an authorisation granted by the general meeting, the reason for this will be disclosed by the Company. Any trades in the Company’s own shares will be conducted over the trading platform of Oslo Axess or at stock exchange prevailing prices. In respect of any related party agreements which are not immaterial, the Board of Directors will consider to obtain an independent valuation, unless the agreement shall be approved by the general meeting in accordance with law. Magseis has implemented guidelines to ensure that board members and members of the executive management notifies the Board if they directly or indirectly hold a significant interest in respect of an agreement being made by the Company.