CORPORATE GOVERNANCE

The rules on Corporate Governance

The Company is in general compliance with the Icelandic Guidelines on Corporate Governance, issued in March 2012 by the Iceland Chamber of Commerce, the Confederation of Icelandic Employers and NASDAQ OMX Iceland, in accordance with Clause 2.26 in the Rules for issuers of financial instruments on NASDAQ OMX Iceland, effective as of 17 December 2013. The Guidelines can be found on the Iceland Chamber of Commerce website, www.chamber.is.

THE BOARD

The Board consists of five to seven Directors which are elected annually at the Annual General Meeting. Currently the Board consists of seven Board Members. Thordur Magnusson is the Chairman of the Board and has served on the Board since the Company was founded in the year 2000. Other directors are: Hreidar Bjarnason, Ingolfur Gudmundsson, Jon Helgi Gudmundsson, Dr. Olafur Steinn Gudmundsson and Sigurjon Jonsson.

The Board of Directors has established written rules of procedure where the Board’s tasks, and its role in relation to the Managing Directors, are laid out. The current rules of procedure were adopted on 18 December 2009 and last reviewed in September 2017. Board Members’ rules stipulate among other things the convening of Board meetings, comprehensive rules on Board Members’ suitability to participate in handling matters concerning the Company’s operations, rules on confidentiality, information provided to the Board by the Managing Directors and further rules.

For the operational year 2013, the Board of Directors held ten Board meetings and two meeting of the Remuneration Committee. Audit Committee meetings coincide with Board meetings. On all occasions the majority of the Board members and Committee members were present.

According to the Board of Directors best knowledge the Company’s Financial Statements are in compliance with International Financial Reporting Standards (IFRS) and good accountancy practices. The Company prepares interim Financial Statements, monitors risk on a regular basis, secures the segregation of duties and dictates work processes in order to minimize risk in the Company’s operations.

External audit

An auditing firm is elected at the Annual General Meeting (AGM) for a term of one year. The auditor shall examine the Company’s annual accounts in accordance with international standards on auditing, and shall, for this purpose, inspect account records and other material relating to the operation and financial position of the Company. The auditors shall at all times have access to all of the Company’s books, minutes and documents. KPMG ehf. was elected as the Company’s auditor at the 2018 AGM. The auditor on its behalf is Matthias Thor Oskarsson, State Authorized Public Accountant.

Internal control

Risk management and internal controls, in relation to all processes, are designed to control the risk of material misstatements. The Company designs its processes to ensure that there are no material weaknesses with internal controls that could lead to a material misstatement in its financial reporting. The auditor’s evaluation of these processes is included in the Auditor’s Report.

Appointment of sub-committee members

Sub-committee members are appointed by the Board of Directors for a term of one year.

Audit Committee

The Audit Committee is composed of all Board Members, unless the Board of Directors decides otherwise. The majority of the Audit Committee shall be independent of the Company, Executive Management and the Company’s Auditor. At least one member shall be independent of major shareholders. The Members of the Audit Committee shall possess the knowledge and expertise needed to perform the tasks of the Audit Committee. At least one member shall have solid knowledge and experience in the field of financial statements or auditing.

Remuneration Committee

All Board Members except the Chairman comprise the Remuneration Committee. The Board of Directors evaluates, at least once a year, the performance of the Managing Directors.

It is Eyrir’s policy to attract highly competitive professionals and offer competitive compensation. Eyrir Invest encourages its employees to increase their knowledge consistently, particularly by continuous education.

Departures from the Icelandic guidelines on Corporate Governance

The Board of Directors has not issued a specific written code of ethics and social responsibility for the Company. The Board of Directors has not established a nomination committee as it deems it not necessary. The chairman of the Board’s day-to-day activities within the Company are exclusively related to the venture holdings in Eyrir Sprotar.

Independence

According to the Icelandic Chamber of Commerce Guidelines the majority of Directors must be independent of the Company and its day-to-day managers. The majority of the Board of Directors are independent of the Company and major shareholders. Thordur Magnusson, Chairman and co-founder of Eyrir, holds a major share in the Company and Hreidar Bjarnason is an employee at Landsbankinn hf. a major shareholder in Eyrir Invest hf.