ARTICLES OF ASSOCIATION
The bylaws are issued in Norwegian and translated into English. In case of discrepancy between the two versions, the Norwegian version prevails.
Chapter I - Company, objectives, registered office
§ 1 The Company's name is Kommunalbanken AS.
§ 2 The Company is a direct continuation of the enterprise carried out by the government administrative body, Norges Kommunalbank.
The State's shares may be assigned to municipalities, counties, intermunicipal companies and municipal pension funds. Such assignment will be done in accordance with the Company's aim of maintaining highest possible creditworthiness.
§ 3 The Company's objectives are to provide loans to local governments, counties, intermunicipal companies and other companies that carry out local government tasks against either a municipal guarantee, government guarantee, or other satisfactory security.
The Company can also undertake other tasks appropriate to the Company's business.
§ 4 The Company's registered office is in Oslo.
Chapter II - Equity and subordinated loan capital - shares
§ 5 The Company's share capital is NOK 3,144,625,000 (three billion, one hundred and forty-four million, six hundred and twenty five thousand Norwegian kroner) divided into 3,144,625 shares of NOK 1,000 (one thousand Norwegian kroner) each.
§ 6 The acquisition of shares is conditional on the consent of the Company's Board of Directors. Consent can only be withheld on grounds of fact.
§ 7 Pre-emption rights given to shareholders under section 4-19 of the Norwegian Companies Act can also be claimed for shares which have changed owner.
Chapter III - Board of Directors
§ 8 The Company's Board of Directors shall collectively exhibit diversity and breadth of qualifications, experience and background and consist of between five (5) and nine (9) members. If a majority of the employees should so decide, it can demand that a third and at least two (2) of the members of the Board shall be elected by and from amongst the Company's employees. For these members two (2) personal deputies shall be elected.The other members shall be elected by the Annual General Meeting for two-year terms, so that at least two (2) shall be elected annually, but no more than four (4) of the elected members.
The Annual General Meeting shall elect the chairman and vice-chairman of the Board of Directors.
§ 9 The chairman of the Board shall ensure that the Board holds meetings as often as the Company's business necessitates, or when a member calls for a meeting to be held. The Board constitutes a quorum if more than half the members are present. Valid resolutions are those for which the majority of the members present have voted, although a proposal which implies an alteration or amendment requires more than one-third of all board members. If the votes on each side are equal, the chairman of the meeting shall have the casting vote.
§ 10 The responsibility for the overall management of the Company belongs to the Board and shall therefore inter alia:
- Ensure that the Company’s business operations/activities are soundly organised.
- Draw up strategies and plans, budgets and guidelines for the Company's business operations/activities and check that they are followed:
- Keep itself informed of the Company’s financial position and ensure that its operations, accounts and fund management are subject to adequate control.
- Make decisions and grant authority for new loans raised.
- Grant special powers and authorisation to sign on behalf of the Company per procurationem.
- Present the annual accounts and directors' report to the Annual General Meeting.
- Make recommendations to the Annual General Meeting with respect to alterations to the Articles of Association.
- Appoint the managing director.
- Fix the managing director's salary.
- Prepare statements on remuneration policy.
- Supervise the day-to-day management of the Company and its overall operations.
§ 11 The chairman of the Board, or the vice-chairman of the Board shall jointly with one of the Board members or the managing director sign for the Company.
§ 12 The managing director shall be responsible for the day-to-day management of the Company and its business operations/activities in accordance with the instructions laid down by the Board.
Chapter IV - Supervisory Board
§ 13 The Supervisory Board shall consist of twelve members and five deputy members. One member and one personal deputy member shall be elected by and from amongst the employees. The remainder of the members and deputy members shall be elected by the Annual General Meeting. The Supervisory Board should be composed of as broad a range of members as possible, so as to ensure that the various districts and interest groups affected by the Company's business are fairly represented. No member of the Board of Directors nor any of the Company’s senior executives can be elected member of the Supervisory Board.
The members of the Supervisory Board shall be elected for two-year terms. One third of the members shall retire each year. At least one third of the members shall be elected annually.
The Supervisory Board shall elect chairman and vice-chairman from amongst its members to serve for a term of one year.
§ 14 The Supervisory Board shall be convened by the chairman and meet at least once a year or as often as the chairman finds necessary or when called for by the Board of Directors, or by a minimum of two members of the Supervisory Board. The notice of the meeting shall set out the business to be considered.
The Board of Directors and the Company's auditor shall be called to attend the meetings of the Supervisory Board. Unless otherwise determined by the Supervisory Board in individual instances, the members of the Board of Directors are entitled to be present at the meetings of the Supervisory Board with the right to speak and the right of initiative. The Ministry of Local Government and Modernisation can participate in the Supervisory Board meeting with up to two observers.
The Supervisory Board constitutes a quorum when at least 2/3 of its members or deputy members are present. If the requisite number of members is not present, a new meeting of the Supervisory Board shall be called. The new meeting will constitute a quorum if more than half the members are present.
Valid resolutions of the Supervisory Board are those for which the majority of the members present have voted, although a resolution can only be passed if voted for by more than one third of all members. If the votes on each side are equal, the chairman of the meeting shall have the casting vote.
§ 15 The Supervisory Board shall endeavour to ensure that the Company's objectives are being promoted in accordance with law, regulation, memorandum and articles of association, and the resolutions of the Annual General Meeting and the Supervisory Board by:
1. Provide a statement to the Annual General Meeting in respect of the Board of Directors' proposals for the income statement and balance sheet and the Board's proposals for the application of profit or covering of loss for the year.
2. Scrutinise the Board of Directors' report and the auditor's report.
3. Give an opinion on matters concerning the Company which are brought before the Supervisory Board by the Board of Directors or that the Supervisory Board considers necessary to address, with a particular focus on corporate governance.
Chapter V - Annual General Meeting
§ 16 The ordinary Annual General Meeting shall be held before the end of June.
The Ministry (The Ministry of Local Government and Modernisation) calls the Annual General Meeting where members of the Board, managing director and the Company’s auditor are called.
An extraordinary Annual General Meeting shall be held if called for by the Ministry of Local Government and Modernisation, the Board of Directors or the Company's auditor.
The regular Annual General Meeting shall:
- Adopt the Company's annual report and accounts, including the application of profit or covering of loss for the year, and the declaration of dividend.
- Elect members to the Board of Directors in accordance with § 8.
- Elect members to the Supervisory Board in accordance with § 13 of the Articles of Association.
- Elect the Company’s auditor.
- Fix remuneration for members of the Supervisory Board and the Board of Directors, the Board’s subcommittees and the Company’s auditor.
- Approve the Board of Director's statement on remuneration policy.
- Address other business referred to in the notice of the meeting or which by law or Articles of Association falls under the Annual General Meeting.
Chapter VI Auditor
§ 17 The Company's auditor shall be a state-authorised public accountant and shall be elected by the Annual General Meeting based on a recommendation from the Board of Directors.
The auditor's report shall be delivered at least two weeks prior to the meeting of the Supervisory Board which shall consider the accounts.
§ 18 The Company shall raise funds for lending by issuing bonds, certificates or other form of loan notes or by entering into loan agreements. The Company may raise primary capital and other foreign capital.
Raising primary capital and Tier 1 capital instruments is effected based on a majority Annual General Meeting resolution as in the case of alterations in the Articles of Association, or by the Board of Directors according to the authority adopted by such a majority. The authority shall be limited upward in amount and is not valid for longer than the next year’s regular Annual General Meeting, or maximum of 18 months.
§ 19 Loans can only be granted to municipalities, counties, intermunicipal companies and other companies which carry out local government tasks against either a municipal guarantee, government guarantee or other satisfactory security. The Company can also undertake other tasks appropriate to the Company's business.
§ 20 The Board of Directors shall fix all lending terms and conditions as may be in force at any time.
§ 21 The Company's capitalisation and financial administration shall be satisfactory in relation to the Company's business and consistent with the Company's aims of maintaining highest possible creditworthiness.
Chapter VIII - Annual Report and Accounts
§ 22 The Company's financial year shall follow the calendar year.
The Board of Directors shall deliver annual accounts and an annual report for each financial year.
The annual accounts shall be placed at the disposal of the auditor at least one month prior to the ordinary Annual General Meeting. The audited annual report and accounts shall be scrutinised by the Supervisory Board before being laid before the Annual General Meeting.
The Annual General Meeting shall adopt the annual report and accounts no later than the end of June.
The Board of Directors shall publish the annual report and accounts no later than one week after they have been adopted by the Annual General Meeting.
Chapter IX - Age of retirement
§ 23 The age of retirement for the Company's Managing Director is 70 years.
Chapter X - Alterations to the Articles of Association
§ 24 Alterations to the Articles of Association must be approved by the King if prevailing regulations so demand. If such approval is demanded, the Articles of Association will come into force on the date such approval is forthcoming.