Corporate Governance

Corporate Governance

In recent years, the debate about the importance of good Corporate Governance has grown, both in Denmark and abroad. In Denmark, the Nørby Report tackled the issue through the examination of a range of issues considered to be part of proper, responsible, corporate management. At TORM, we are pleased to support the ultimate goal of this ongoing debate: the achievement of better, more responsible corporate management.

In our effort to communicate clearly with our international investors, we believe that it is helpful to describe how corporate governance in Denmark is different from that which applies in the US.

There are a number of ways in which key differences between Danish and US corporate management practices affect our business:

- TORM’s Board of Directors is elected at our annual general meeting (AGM), and is entirely composed of people who are not engaged in the daily management of the company.

- The function of non-executive members is to oversee the work of the management, who are, in turn, responsible for the daily management of the business. They follow the guidelines set by our Board of Directors. By Danish law, the Chairman of the Board of Directors of our company cannot be a Managing Director, CEO, or similar of TORM.

- Danish law also stipulates that employees may elect members of the Board. Following the election of our Board members at the AGM, they elect the Chairman.

- Usual Danish procedure specifies that our Board must not supervise the formation of sub-committees charged with specific tasks, such as deciding on salaries.

- In Denmark, the use of incentive programmes and stock options for the Board and management of companies is uncommon, and when this practice does occur, it is far less substantial in contrast with similar programmes in the US. At the Company’s annual general meeting held on 22 April 2008, the shareholders adopted overall guidelines for the Company’s incentive schemes to members of the Board of Directors and Management Board, cf. Section 69b of the Danish Companies Act. Click here to download the overall guidelines.

 - In accordance with Danish corporate governance, each share in TORM accords the shareholder a single vote. We regard each share as equal – that is, there are no different ‘classes’ of shares.

- Under the terms of our NASDAQ listing, TORM is required to comply with the US Sarbanes-Oxley Act. Among other things, this requires that public companies such as ours develop and document our disclosure controls and procedures and that the CEO and CFO certify the truthfulness of financial statements. Under special circumstances, this will also lead to the establishment of audit committees of the Board of Directors.