PCI Biotech Holding ASA emphasises good corporate governance

The Norwegian Code of Practice for corporate governance is a guideline for listed companies to help regulate the division of roles between shareholders, the Board of Directors and executive management more comprehensively than is required by legislation.

PCI Biotech Holding ASA (“PCI Biotech” or “The Company”) bases its policy for corporate governance on the Norwegian Code of Practice of 30 October 2014. Adherence to the code of practice is implemented on the basis of a “comply or explain principle”.

 In this section, the most important parts of PCI Biotech’s corporate governance policy and CSR are described.

1.     Implementation and reporting on corporate governance and social responsibility

PCI Biotech has implemented a sound corporate governance policy, which is presented in the company’s annual report.

1.1    Corporate governance

PCI Biotech adheres to the code of practice for corporate governance. The company has to date three deviations from the code and these are further explained under section 1.2, 6 and 9.

Guidelines on corporate governance can be found in the Company’s annual report and on our website. PCI Biotech’s corporate values ​​are an important foundation for the company’s corporate governance. Ethical guidelines are also established and these guidelines are based on the corporate values.

1.2    Corporate social responsibility (CSR)

PCI Biotech is a Norwegian based company focusing on research and development within the field of cancer treatment. The PCI Biotech Group consists of 10 employees and the core competencies are possessed by these employees, while the group’s other resources in research and development are purchased from public and private research institutions across Europe.

As of today, the Group has no sales or supply of services and a limited complexity in operations. The Group has established guidelines, policies, procedures and standards in accordance with internal control policies for comparable businesses of similar size, complexity and industry to fight corruption. This means that the group requires its directors and employees to demonstrate high ethical standards in business and interpersonal relationships. Other principles followed are prevention through awareness-raising activities, limitation of opportunities, high detection risk of and zero tolerance for corruption.

The Group has established its own quality control system in line with authorities’ requirements within the activities that the Group operates, both in terms of production and storage of pharmaceutical products and medical devices, and in connection with preclinical and clinical studies. The quality control procedures are based on the relevant activities in relation to the different phases of operation and the development of procedures are thus a continuous and systematic process. The group is concerned that staff have appropriate training and experience in their areas and staff are regularly updated within their fields.

The group is concerned with human rights, labour rights and social issues. The Group’s management conducts regular performance reviews and internal evaluations. The group adapts according to Norwegian law within the area. The Group’s subcontractors are mainly public and private European research institutions. Clinical research is subject to strict government regulation of human rights and social conditions in all the countries where the research and development work is carried out. The Group therefore considers that human rights, labour rights and social issues are well taken care of, both internally and among its subcontractors.

The Group has not identified any material issues based on the corporate social responsibility procedures performed in 2017. The implementation of further detailed specific goals, strategies or action plans related to CSR, beyond the ones described above, has not yet been prioritized, but will be developed along with the continuous development of PCI Biotech’s operations.

Non-conformance with the recommendation: The Group’s operations are of such character that it does not significantly affect the environment and the Group therefore believes it is not appropriate to establish specific guidelines, policies, procedures and standards in this area, but environmental issues are included in the ethical guidelines.

1.3    Ethical guidelines

The ethical guidelines encompass the following elements: core values, compliance with laws and regulations, working environment, interaction with different stakeholders, intragroup transactions, employees loyalty, conflicts of interest, confidentiality, environment, accounting, financial reporting, trading of Company shares, other employee activities and compliance with the ethical guidelines.

 2.    Business

The objective and purpose for PCI Biotech’s business are clearly defined in the articles of association. “The Company’s business activities shall include cancer treatment and drug delivery based on the PCI technology and other related activities, including participation in other companies with similar activities through equity, loan or by issue of guarantees.” The Company’s articles of association are available at the Company’s website and the Company’s goals and strategy are available in the annual report.

3.     Equity and dividends

The equity ratio is regularly assessed in light of the company’s goals, strategy and risk profile.

The Board of Directors has been authorised by the Company’s General Assembly to increase the share capital by share issue of up to 1,865,000 shares in Connection with the Company’s employee incentive programme. and to issue shares in Connection With private placements by an amount up to 10% of the share Capital in the Company. This authorisations were granted in 2018, and applies to 29 May 2019. Other than the above the Board of Directors has no general authorization to issue shares.

To date the company has not distributed any dividends and this dividend policy will apply as long as PCI Biotech is in a research and development phase.

4.     Equal treatment of shareholders and related party transactions

PCI Biotech has only one class of shares and all shares have equal rights. Each share carries one vote.

The Board of Directors and management are committed to treating all shareholders equally. All material and extraordinary transactions between the Company and shareholders, directors, management or close associates of any such parties are valuated independently by a third party. Directors and members of the executive management are obliged to notify the Board of Directors of any direct or indirect material interest in any transaction entered into by the Company.

5.      Freely negotiable shares

The shares in PCI Biotech are freely negotiable with no form of restriction and no restrictions are included in the Company’s articles of association on transferability.

6.      General Meetings

The Board of Directors facilitates that as many shareholders as possible may exercise their rights by participating in the General Meeting and that the General Meeting is an effective forum for sharing views between shareholders and the Board of Directors. The company facilitates that shareholders who are unable to attend the meeting in person may vote by proxy and the proxy form used is designed to allow voting on each issue and candidate.

Non-conformance with the recommendation: PCI Biotech is a small company and has encouraged directors to attend the General Meeting, but has for both cost and convenience reasons so far not required all directors to attend. The recommendation to implement routines to ensure an independent chairing of the meeting has not been implemented.

7.      Nomination Committee

The requirement for a Nomination Committee follows from the articles of association. The Nomination Committee’s members, including the chairman, are elected by the general meeting for two years at a time unless otherwise resolved by the general meeting. The Nomination Committee shall consist of minimum two members who shall be shareholders or representatives for the shareholders. The remuneration to the members of the election committee is determined by the general meeting. Guidelines for the Nomination Committee are stated in the Articles of Association.

8.      Board of Directors, composition and independence

The Board of Directors is composed to ensure that it can operate independently, attend the common interest for all shareholders and the Company’s need for expertise, capacity and diversity. An overview of directors’ CVs is available at www.pcibiotech.com and their shareholdings are available in the annual financial statement. The chairman and board members are elected by the General Meeting.

9.      Work of the Board of Directors

It is the responsibility of the Board of Directors to ensure that the Company has a well functioning internal control environment in accordance with the regulations that apply to its activities. The Board of Directors adopts an annual plan for its work, which includes objectives, strategy and implementation. The Board of Directors evaluates its performance and expertise annually. The Company has not established a separate Audit Committee and therefore the Board of Directors in its entirety serves as an Audit and Remuneration Committee.

Non-conformance with the recommendation: PCI Biotech has not established separate Audit and Remuneration Committees. The Board of Directors believes that this is most appropriate given the Company’s current size and complexity. The Board of Directors will, depending on the Company’s performance,consider appointing a separate Audit and Remuneration Committee.

10.     Risk management and internal control

The Board of Directors has established procedures to ensure a well functioning internal control environment and risk management procedures, tailored to the size and complexity of the business. The procedures are reviewed annually.

The Company presents its financial statements in accordance with IFRS, and procedures have been established to ensure that the company prepares quarterly and annual reports in accordance with this standard. The Company’s management, the Chief Executive Officer (CEO) and Chief Financial Officer (CFO) is responsible for preparing the financial statements, and financial reports are approved by the Board of Directors prior to publication. Management regularly reports to the Board of Directors on progress in the development of the PCI technology and the Company’s financial situation.

There are established procedures for handling inside information applicable to all employees and insiders reflecting the guidelines of the Oslo Stock Exchange.

11.     Remuneration of the Board of Directors

The General Meeting determines the remuneration to the Board of Directors on a proposal from the Nomination Committee. Remuneration reflects the Board of Directors responsibility, expertise, time commitment and the business complexity. The remuneration is not linked to the Company’s performance, and no share options are granted to any directors.

Non-conformance with the recommendation: The Director, Theresa Comiskey Olsen, rendered in 2015 some legal services to the Company, and she is remunerated separately for these services, while she served as Director. The Board of Directors are informed about the services, and these related party transactions are disclosed in the interim and annual reports. 

12.     Remuneration of the executive management

The Board of Directors has adopted guidelines for remuneration to the Company’s management and the guidelines are presented to the general meeting. Performance-related remuneration is linked to long term value creation for shareholders and is based on quantifiable factors that can be affected by the employees. There is established a limit for the performance-related remuneration. A share option scheme is part of the remuneration policy and the scheme is approved by the general meeting.

13.     Information and communication

The company’s guidelines for reporting of financial and other information is based on openness and taking into account the requirement for equal treatment of all participants in the securities market. Information distributed to the company’s shareholders is published on the company’s web site at the same time as it is sent to the shareholders.

14.     Take-overs

Transaction that in fact is a business disposal shall be approved by the General Assembly.

15.     Auditor

The auditor shall annually in writing confirm to the Board of Directors that he/she satisfies established requirements for independence and objectivity. The auditor participates in at least one Board of Directors meeting per year, where he/she presents auditors assessment of the company’s internal control and participates during the approval of the annual accounts. The auditor has a minimum of one meeting per year with the Board of Directors without the presence of the Executive Management. Other audit related services rendered by the auditor is limited and the Board of Directors has not found it necessary to establish separate guidelines for use of such services.

Last updated by the Board of Directors 19 March 2018