Diverse and Value-Creating Ownership

Meld. St. to the Storting 27 (2013–2014) Report Meld. St. 27 (2013–2014) Report to the Storting (white paper)

Published by: Norwegian Ministry of Trade, Industry and Fisheries Diverse and value-creating Internet address: www.government.no

Photo: Olaf Schjelderup and UNINETT AS, Norsk Hydro, Flytoget, ownership Cermaq, Telenor, Hanne H. Christiansen and Unis, Øyvind Hagen and Statoil ASA, Yara International, Alan O’Neill and Statoil ASA

Printed by: DSS 03/2015 Diverse and value-creating ownership

E JØM RKE IL T M

2 4 9 1 7 3 Trykksak

Table of contents

1 Introduction and summary ...... 7 Part II Prerequisites for private 1.1 Background to the report ...... 7 ownership in Norway...... 25 1.2 Summary ...... 8 1.2.1 Ownership – significance for value 3 Ownership in Norway ...... 27 creation ...... 8 3.1 The Norwegian capital market – 1.2.2 Prerequisites for private ownership overview and figures ...... 27 in Norway ...... 8 3.1.1 The equity market ...... 28 1.2.3 The state’s ownership administered 3.1.2 The external capital market ...... 31 directly by the ministries ...... 10 3.1.3 Other characteristics ...... 31 3.2 Asset management and Part I Ownership – significance for ownership in Norway ...... 31 value creation ...... 13 3.2.1 Private ownership ...... 31 3.2.2 Public ownership ...... 37 2 Ownership – significance and development trends ...... 15 4 Private ownership as a 2.1 The significance of ownership for main rule ...... 39 value creation ...... 15 4.1 Why should private ownership 2.1.1 The importance of capital be the main rule? ...... 39 allocation ...... 15 4.2 The challenges of state ownership 40 2.1.2 The importance of the exercise 4.2.1 The state’s different roles ...... 40 of ownership ...... 15 4.2.2 Concentration of power ...... 41 2.1.3 Owner composition and owner 4.2.3 Limited industrial expertise ...... 41 types ...... 17 4.3 The government’s policy for 2.2 What characterises good strengthening private ownership .. 41 owners? ...... 17 4.3.1 Framework conditions ...... 42 2.2.1 Owners focused on capital 4.3.2 Tax ...... 42 allocation ...... 18 4.3.3 Other measures ...... 44 2.2.2 Long-term strategic owners ...... 18 2.2.3 Owners focused on operational Part III The state’s ownership involvement ...... 19 administered directly by the 2.3 Trends and developments in the ministries...... 45 exercise of ownership ...... 19 2.3.1 Polarisation between passive and 5 The present state ownership active owners ...... 19 administered directly by the 2.3.2 Faster global industrial and ministries ...... 47 technological developments ...... 20 5.1 Overview ...... 47 2.3.3 Growth in long-term state 5.2 Historical developments ...... 48 ownership with expansive agendas ...... 21 6 Why should the state own? ...... 50 2.3.4 Greater expectations of 6.1 Justifications for state ownership . 50 responsible ownership ...... 22 6.1.1 Correction of market failures ...... 50 2.3.5 Increased awareness of the 6.1.2 Maintaining important companies, long-term value trend of head office functions and key companies ...... 22 competences in Norway ...... 51 2.3.6 Increase in activist investors ...... 23 6.1.3 Management of common natural 2.3.7 Effective board work has become resources ...... 52 a more important competitive 6.1.4 Sectoral-policy and societal factor ...... 24 considerations ...... 52 6.2 Alternative instruments to state ownership ...... 54 6.3 Categorisation of the companies under direct ownership ...... 55 7 What should the state own? .... 57 8.2.8 Principle 7. The board assumes 7.1 Changes to the state’s ownership 57 executive responsibility for 7.1.1 Reduction in the state’s direct administration of the company, ownership over time ...... 57 including performing an independent 7.1.2 Value-increasing transactions ...... 58 supervisory function vis-à-vis the 7.1.3 Demergers and the creation of company’s management on behalf new state companies ...... 58 of the owners...... 72 7.1.4 Factors to be emphasised in the 8.2.9 Principle 8. The board should event of changes to the state’s adopt a plan for its own work, and ownership ...... 59 work actively to develop its own 7.2 Ministerial powers ...... 59 competencies and evaluate its own activities...... 73 8 How should the state own? ...... 60 8.2.10 Principle 9. Compensation and 8.1 Framework for the state’s incentive schemes shall promote ownership administration ...... 60 value creation within the companies 8.1.1 Constitutional framework ...... 60 and be generally regarded as 8.1.2 The minister’s authority within reasonable ...... 74 the company ...... 61 8.2.11 Principle 10. The company shall 8.1.3 Administration of the company .... 62 work systematically to safeguard its 8.1.4 Specifically concerning manage- corporate social responsibility ...... 74 ment of companies wholly owned 8.3 Details of the state’s corporate by the state ...... 62 targets and expectations ...... 75 8.1.5 Other frameworks ...... 63 8.3.1 Returns and dividends ...... 75 8.2 The Norwegian state’s principles 8.3.2 Board work ...... 77 of corporate governance ...... 67 8.3.3 Corporate social responsibility ..... 80 8.2.1 Introduction to the principles ...... 67 8.3.3.1 Overarching and general 8.2.2 Principle 1. All shareholders shall be expectations ...... 82 treated equally...... 68 8.3.3.2 Climate and environment ...... 83 8.2.3 Principle 2. There shall be 8.3.3.3 Human rights ...... 84 transparency in the state’s 8.3.3.4 Labour rights ...... 84 ownership of companies...... 68 8.3.3.5 Commitment to anti-corruption 8.2.4 Principle 3. Ownership decisions practices and transparency in and resolutions shall be made at financial transactions ...... 85 the general meeting...... 69 8.3.3.6 The Government’s follow-up of 8.2.5 Principle 4. The board is responsible corporate social responsibility ...... 85 for elaborating explicit objectives 8.3.4 Executive salaries ...... 85 and strategies for the company within 8.3.5 Research, development, innovation the constraints of its articles of and expertise ...... 86 association; the state sets 8.3.6 Diversity and equality ...... 88 performance targets for each 8.4 Contact with companies ...... 88 company...... 70 8.4.1 Particular about information 8.2.6 Principle 5. The capital structure exchange in companies wholly of the company shall be appropriate owned by the state ...... 88 given the objective and situation 8.5 The state’s various roles ...... 89 of the company...... 71 8.5.1 Organisation of the state’s 8.2.7 Principle 6. The composition of the ownership administration ...... 89 board shall be characterised by 8.5.2 Further development of the state’s competence, capacity and diversity exercise of ownership ...... 90 and shall reflect the distinctive characteristics of each company. . 71 9 A review of the state’s direct ownership interests ...... 91 9.1 Category I – Companies with commercial objectives ...... 91 9.1.1 Ambita AS ...... 91 9.1.2 Baneservice AS ...... 92 9.1.3 Cermaq ASA ...... 92 9.4 Category 4 – Companies with 9.1.4 Entra Holding AS ...... 93 sectoral-policy objectives ...... 109 9.1.5 Flytoget AS ...... 94 9.4.1 Andøya Space Center AS ...... 109 9.1.6 Mesta AS ...... 94 9.4.2 Avinor AS ...... 110 9.1.7 SAS AB ...... 95 9.4.3 Bjørnøen AS ...... 111 9.1.8 Veterinærmedisinsk 9.4.4 Eksportkreditt Norge AS ...... 111 Oppdragssenter AS ...... 96 9.4.5 Enova SF ...... 112 9.2 Category 2 – Companies with 9.4.6 Gassco AS ...... 112 commercial objectives and an 9.4.7 Gassnova SF ...... 113 objective of maintaining head office 9.4.8 Innovation Norway ...... 113 functions in Norway ...... 96 9.4.9 Kings Bay AS ...... 114 9.2.1 Aker Kværner Holding AS ...... 96 9.4.10 Nofima AS ...... 115 9.2.2 DNB ASA ...... 97 9.4.11 Norfund ...... 115 9.2.3 Kongsberg Gruppen ASA ...... 98 9.4.12 Norwegian Seafood Council AS .... 116 9.2.4 Nammo AS ...... 99 9.4.13 Norsk Helsenett SF ...... 117 9.2.5 Norsk Hydro ASA ...... 99 9.4.14 Norsk Rikskringkasting AS ...... 117 9.2.6 Statoil ASA ...... 100 9.4.15 Norsk samfunnsvitenskapelig 9.2.7 Telenor ASA ...... 100 datatjeneste AS ...... 118 9.2.8 Yara International ASA ...... 101 9.4.16 Norsk Tipping AS ...... 119 9.3 Category 3 – Companies with 9.4.17 Petoro AS ...... 119 commercial objectives and other 9.4.18 Simula Research Laboratory AS ... 120 specifically defined objectives ...... 102 9.4.19 SIVA SF ...... 121 9.3.1 Aerospace Industrial Maintenance 9.4.20 Space Norway AS ...... 121 Norway SF ...... 102 9.4.21 Statnett SF ...... 122 9.3.2 Argentum Fondsinvesteringer AS 102 9.4.22 Statskog SF ...... 123 9.3.3 Eksportfinans ASA ...... 103 9.4.23 UNINETT AS ...... 124 9.3.4 Electronic Chart Centre AS ...... 104 9.4.24 University Centre in Svalbard AS . 124 9.3.5 Investinor AS ...... 104 9.4.25 AS Vinmonopolet ...... 125 9.3.6 Kommunalbanken AS ...... 105 9.4.26 Regional health authorities ...... 126 9.3.7 NSB AS ...... 106 9.3.8 Posten Norge AS ...... 107 10 Financial and administrative 9.3.9 Statkraft SF ...... 107 consequences ...... 128 9.3.10 Store Norske Spitsbergen Kulkompani AS ...... 108

Diverse and value-creating ownership Meld. St. 27 (2013–2014) Report to the Storting (white paper)

Recommendation of the Ministry of Trade, Industry and Fisheries of 20 June 2014, approved in the Council of State the same day. (The Solberg Government)

1 Introduction and summary

1.1 Background to the report competitiveness, value creation and more secure and productive jobs. Against this background, the One of the government’s most important priority government will strengthen private ownership in areas is to boost competitiveness in Norwegian Norway. business and industry, to create more secure jobs The government believes that there are a and strengthen the financing of the welfare sche- number of good reasons why the state should mes. exercise ownership in different companies. These Our competitiveness is influenced by how effi- will vary from company to company, from an ini- ciently we utilise the country’s resources, and our tial premise that state ownership may help provide ability to innovate and restructure. The govern- economic and social safeguards. Accordingly, for ment aims to implement a broad set of measures the foreseeable future, Norway will have conside- to strengthen competitiveness and increase over- rable state ownership. all value creation in Norway. One of these measu- At the same time, state ownership in Norwe- res is to facilitate diverse and value-creating gian business and industry is currently very ownership. Good ownership, by both the private extensive. In order to contribute to a more diverse and public sectors, is important. Our competitive- and productive ownership, and to reduce the ness and value creation depend on the establish- potential challenges entailed by extensive state ment, development and operation of profitable ownership, the government wishes over time to enterprises, and the restructuring or phasing out reduce direct state ownership. of unprofitable ones. Good management and good The government believes that it is crucial for ownership are key contributors to this aspiration. state ownership to be administered professionally Diverse, well-developed and competent owner and predictably, and the government will conduct communities are a prerequisite for national its state ownership policy in a responsible manner competitiveness and value creation. that provides space for both diversity of owners- The government will shape the policy to make hip and value creation as a contribution to it possible for everyone to save and invest and, boosting Norwegian competitiveness. through their ownership, participate directly in Against this background and based on its poli- and reap the rewards of the value creation that tical platform, the government is submitting a takes place in Norway. The objective is increased report to the Storting on ownership in Norwegian 8 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 2013–2014 Diverse and value-creating ownership business and industry, with a main emphasis on between the participants. As a result, the capital the framework and policies relating to the state’s market streamlines the use of resources in the direct ownership. economy. Part I of the report is a presentation of how Ownership is important for how companies ownership and different types of owners can con- are governed and run. Owners can be involved in tribute to value creation; part II outlines the princi- companies in different ways and to different ple direction of the government’s policies for pro- extents, depending on the ownership model. At moting diverse ownership in Norwegian business one extreme are owners who allocate capital and industry; and part III, the main section of the through small shareholdings, and who are easily report, presents the government’s policy for able to liquidate positions if the company does not direct state ownership. perform and deliver returns as expected. At the The presentation in chapters 2 and 3 of the other extreme are owners who get involved in report and parts of chapter 8 are based on work operational activities with an aim to develop profi- performed for the Ministry of Trade, Industry and tability over time and exploit inter-company syner- Fisheries by the McKinsey & Company consul- gies. Good owners with a low level of active invol- tancy firm. vement will primarily ensure that companies follow principles of good corporate governance and management in order to protect their own inte- 1.2 Summary rests. With a greater degree of involvement, owners can create added value by supporting and 1.2.1 Ownership – significance for value following up the companies. creation The owner composition and owner types may Ownership can be highly significant for compa- be significant for value creation in companies in nies’ competitiveness and value creation. Owners that they may create different incentives for exer- and investors have a fundamental role in facilita- cising good corporate governance. Accordingly, ting profitable business activity by contributing different combinations of owner concentration, risk capital for the establishment of new compa- owner type and duration of ownership may affect nies or for expanding established companies. the quality of the exercise of ownership. What constitutes a good composition of enterpri- How ownership is exercised has changed in ses and owners will vary in line with market recent years. There has been a gradual trend trends, with an enterprise’s development and towards more fragmented ownership in listed nature, and with the owners’ prerequisites and companies. Companies must take into account attitudes to risk. A diversity of owners, owner increasingly more rapid changes in their surroun- types and owner communities will therefore be dings and greater uncertainty and volatility in the able to enhance the combination of enterprises global markets. This makes it more challenging to and owners, prompt desirable restructuring and sustain strategic competitiveness and the ability to innovation, and hence increase competitiveness. creating value over time, and makes greater An increased rate of change in business and demands of management, boards and owners to industry means that the importance of enterpri- make good decisions quickly. The focus on ses’ ability to adapt and innovate is increasing. owners’ and companies’ social responsibilities has This places greater demands on the owners, who also increased and, in the wake of the financial cri- set policies for the companies’ activities, and make sis, there has also been a trend towards increased critical decisions in the event of major changes in awareness of the long-term performance of the companies. For example, this would relate to companies, and the emergence of activist inves- restructuring, investments, business start-ups and tors. Another trend is recognition that good board to the acquisition, divestment and winding up of work has become a more important competitive businesses. In such a business climate, competent factor for the companies. owners, with the ability to understand markets and a company’s situation and opportunities, are important for realising the company’s potential for 1.2.2 Prerequisites for private ownership in value creation. Norway In the capital market, those who want to save In the government’s view, private ownership are connected with those who want to lend and should be the main rule in Norwegian business invest. In this way, capital is channelled to potenti- and industry. The government intends to boost ally profitable investments, and risk is distributed private ownership as part of its measures to 2013–2014 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 9 Diverse and value-creating ownership strengthen the competitiveness of Norwegian and the state’s limited industrial expertise as an business and industry. owner. Private ownership is a diverse concept cove- The government has an objective of strengt- ring different types of holdings, for example hening private ownership in Norway and organi- family ownership, employee ownership, institutio- sing policies to make it more profitable to esta- nal ownership and ownership by private individu- blish businesses, work, save and invest. The als. Owners have different expectations and can government aspires to reduce direct state owners- contribute to companies’ value creation in diffe- hip over time, which may help boost private rent ways, and the extent of owner involvement ownership. varies from highly active owners, taking an opera- The government will strengthen private tional role in the companies’ businesses, to pas- ownership through a broad set of measures. sive financial owners with small shareholdings. What is most important for ensuring healthy Although there is great variation between pri- economic growth in Norwegian business and vate owners, in the government’s opinion, private industry is for the general economic policy to con- ownership is characterised by certain fundamen- tribute to stable and predictable framework condi- tal factors that make it essentially well-suited to tions. The policy must therefore be structured so contributing to value creation and improving Nor- as to promote predictable and healthy trends in wegian competitiveness. prices, wages, interest rates, exchange rates and Private owners can often more directly look tax levels. This will also have the effect of redu- after their own preferences and assets, and exer- cing uncertainty in the economy, lowering capital cise more direct personal ownership than the costs and improving access to capital. Good, gene- state, which performs its role as an owner on ral framework conditions that are not biased behalf of the community. In the case of a personal towards individual industries benefit all enterpri- owner, there will normally be fewer decision- ses, employees and owners. This allows for a bet- making steps between owners and management ter functioning capital market, more vigorous than if ownership is administered by institutions. competition, strengthened private ownership, This indicates that personal (private) owners may healthy restructuring and innovation, improved have stronger incentives for safeguarding their competitiveness and better value creation. own ownership interests. This can produce better The tax system is a crucial economic fra- corporate governance, higher profit expectations mework condition having great significance for and more appropriate risk management in line Norwegian business and industry and for private with the owners’ interests. ownership. The government will use the tax and Private owners may often be closer to and bet- duties system to finance public goods, facilitate ter informed about the markets. This applies both social mobility, achieve more efficient utilisation to active private owners who are operationally of resources, and create better conditions for Nor- involved in the companies they own, for example wegian business and industry. Private ownership on the board, and to passive, more financial, must be strengthened and it must be profitable to owners who follow the companies’ developments work, save and invest, and start up, operate and closely on the basis of thorough financial and develop companies. industrial analyses. The government took the first steps in growth- Private owners are likely to have stronger promoting tax reductions which will strengthen incentives for efficient operation and high returns. private ownership, among other things, in the nati- This may be an argument for boosting private onal budget for 2014. Total tax reductions in the ownership. It may also be an argument for brin- adopted budget came to in excess of NOK 7 bil- ging private co-owners into companies where the lion. The general tax rate for individuals and state is a dominant owner and where there are companies was reduced to 27 per cent, the wealth good grounds for state ownership. tax rate was reduced to 1 per cent, while the mini- The government would also like to point to mum allowance was increased to NOK 1 million, some potential challenges associated with state and inheritance tax was abolished. The govern- ownership which suggest limiting the extent of ment also refers readers to the Scheel Committee direct state ownership in commercial companies which is reviewing corporate taxation. In line with and strengthening private ownership. These the boost to growth-promoting tax reductions and relate to potential conflicts between the state’s dif- a lower tax level, the Scheel Committee will also ferent roles, the risk of a concentration of powers, assess proposals for net tax reductions. 10 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 2013–2014 Diverse and value-creating ownership

Work on streamlining bureaucracy for busi- ple, to corrections of market failures, the maintai- ness and industry and private individuals is a key ning of important companies, head offices functi- area for the government. This may help busines- ons and key competence in Norway, the manage- ses and owners spend fewer resources on repor- ment of common natural resources and sectoral- ting and purchasing of administrative services. policy and societal considerations. Beyond there This will make it easier to start up, run and grow a being good reasons for state ownership, the state business in Norway. Over time, this will result in also possesses specific characteristics which may more private ownership. The government aims to make it a good owner in a broader perspective. reduce the annual cost of to business and industry These include the fact that the Norwegian state is of complying with statutes and regulations by a long-term and financially strong, owner which is NOK 15 billion by the end of 2017, compared with able to make a positive contribution to long-term the cost level in 2011, which represents a redu- ownership. Along with other long-term investors, ction of 25 per cent. The government also seeks to the state can contribute to stability and stimulate promote an entrepreneurial culture. Over time, growth of Norwegian companies and competence this will result in greater capacity for restructu- building over time. This means that, for the fore- ring and innovation, value creation and private seeable future, the state will have considerable ownership. direct ownership. The government will use the national budget In the government’s assessment, the gover- in the years ahead to implement further tax chan- nance of direct state ownership is handled in a ges to stimulate labour, saving, entrepreneurship, professional and responsible way. Through trans- business activity, private ownership and invest- parency concerning corporate governance princi- ment. The government will work for a simpler, ples, acceptance of the division of roles and more growth-promoting tax system and will conti- responsibilities in corporate legislation, gover- nue to prioritise tax cuts that enhance Norwegian nance through general meetings and an emphasis competitiveness and help secure productive and on choosing competent and independent boards value-creating Norwegian jobs. The government of directors, the exercise of Norwegian state will also assess other measures to strengthen pri- ownership can be seen as advanced, including in vate ownership, including measures to increase an international context. private savers’ ownership of Norwegian compa- Since 2006, the state’s portfolio of companies nies and measures to stimulate employee owners- has been divided into four different categories. hip. The categorisation has been based on the state’s Furthermore, the government is committed to justification and objectives for direct state owners- making it attractive for foreign investors to invest hip. The government believes that the categorisa- in Norway. Foreign owners add to the compe- tion system has helped clarify the state’s objective tency and diversity of ownership. They may also for ownership of the individual company and that boost knowledge transfer and expertise among the current four categories are an appropriate Norwegian companies and private owners. It is classification of ownership. The government the- therefore beneficial that foreign companies and refore intends to maintain this categorisation. investors want to invest in Norway, which is refle- Over time, the government wishes to reduce cted, for example, in the relatively high level of the state’s direct ownership. This will particularly shareholdings of foreign investors on the Oslo apply to companies where the state has no parti- Stock Exchange. This shows that Norwegian cular reasons for being an owner, but it may also employees, owners and industries are competi- be appropriate to reduce the state’s holdings in tive. other companies, assuming this can be done within a framework that safeguards the objective of the ownership. 1.2.3 The state’s ownership administered The government believes that the state should directly by the ministries not have a long-term ambition of ownership in In the government’s view, private ownership companies where the state’s objectives are purely should be the main rule in Norwegian business commercial. In the government’s opinion, over and industry. Direct state ownership should have time, other owners will often be better able to a special justification. increase the value of such companies. On this In the government’s view, there are a number basis, in the budget proposal to the Storting for of reasons why the state should exercise owners- 2015, the government will ask parliament for a hip of different companies. These relate, for exam- mandate to fully or partially divest the state’s 2013–2014 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 11 Diverse and value-creating ownership ownership of companies in category 1. For some active in acquiring new strategic positions in of these companies, the government already has companies subject to competition. Only in extraor- such authority. The government emphasises that dinary cases will the government consider under- even though the state should not have a long-term taking new state ownership positions. Such an ambition of owning such companies, any changes undertaking would have to be carefully assessed in the state’s holdings will be made only if it is con- and justified on the basis of economic profitability sidered to be financially beneficial to the state. and broader considerations. The government is Furthermore, there may be corporate or market- committed to state production activities being car- related factors entailing that the state should ried out efficiently, using an appropriate manage- delay use of these powers. ment and organisational structure. On this basis, The companies in category 2 are commercial the government may consider reorganisations of companies where the objective of state ownership, state-owned enterprises and the founding of new beyond a return on invested capital, is to retain companies. head office functions in Norway. This is achieved The government aims for the Norwegian through a holding that gives negative control, i.e. state’s ownership to be an example of best more than one-third. The government’s premise practice internationally. Ownership shall be admi- will therefore be that it will not be appropriate to nistered professionally, and the government will reduce the state’s holdings in these companies to conduct a responsible ownership policy characte- below 34 per cent. There may be special factors rised by predictability and established principles dictating why the lower threshold for the state’s for state governance. In executing its ownership, holding in individual companies in category 2 the state will emphasise areas as, where an owner, deviates from 34 per cent. In the budget proposal it has good premises for adding value to the to the Storting for 2015, the government accor- companies, including a continued emphasis on dingly intends to ask for a mandate to possibly strengthening strategic and financial follow-up of reduce the state’s holdings in Kongsberg Grup- the companies through analysis, strengthening pen ASA and Telenor ASA, down to 34 per cent. work on recruiting board members and systemati- Category 3 includes companies where the sing assessments of board activities. The state will state has a commercial objective in its ownership, place emphasis on being a leading owner when it and where there are other justifications for state comes to promoting good corporate governance. ownership than maintaining head offices in Nor- In this report, the government has made cer- way. The government believes that there are tain adjustments to the state’s principles of corpo- sound justifications for the state to have holdings rate governance, in line with developments in cor- in these companies. Nonetheless, for companies porate governance and established practice. in category 3, there may still be scope for adjust- The primary purpose in the commercial ments to and changes in the state’s ownership companies is the return on invested capital. The based on commercial considerations, and in a way government believes that various factors contri- that also takes into account the state’s rationale bute to this. Accordingly, the government has for ownership in these companies. clear expectations of the companies in terms of The state’s holdings in the sectoral-policy returns and dividends, board work, corporate companies in category 4 should, as a rule, remain social responsibility, executive remuneration, intact. This does not however prevent changes if research and development, and diversity and equ- the sectoral-policy interests no longer apply, or ality. can be fulfilled in another satisfactory manner Corporate social responsibility is an area that through the use of instruments other than has garnered increased attention and importance ownership. in recent years, both in business in general and As an owner, in principle, the government will for the state as an owner. The government expects take a positive view of strategic initiatives and companies in which the state has a holding to transactions that may be expected to contribute to work systematically on their corporate social value growth in the companies and that are also responsibility and to be exemplary in their respe- implementable within a framework that safegu- ctive fields. The government would particularly ards the objective of the state’s ownership. like to draw attention to developments in the cli- Only in very special circumstances will the mate and the environment, and to the impacts government assess increasing the state’s holdings these may have on society as a whole and on the in partly owned companies. Nor does the govern- development of companies in particular. The ment consider it relevant for the state to be pro- government expects companies to have a good 12 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 2013–2014 Diverse and value-creating ownership understanding of risk in terms of how climate the government believes that a more detailed change and climate policy initiatives may affect review is required before it puts forward its new their activities, and for them to be at the forefront guidelines. The Storting will be informed appro- of work on the climate and the environment in priately when the guidelines are in place. their sectors. The company review in chapter 9 details the In respect of the state’s attitude to executive state’s objectives of ownership in each individual remuneration, the government signals certain company, based on the justifications for state changes in this report. In some areas, however, ownership and the four ownership categories. Part I Ownership – significance for value creation

2013–2014 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 15 Diverse and value-creating ownership

2 Ownership – significance and development trends

This chapter describes the significance that The owner can contribute to the companies’ ownership may have for value creation. It gives a value creation in a number of ways. These are des- portrayal of what characterises good owners and cribed in more detail below. of key development trends in the exercise of ownership in recent years. The topics described relate primarily to commercial companies, but will 2.1.1 The importance of capital allocation be transferable to some extent to other types of Well-developed and competent owner communi- companies. ties are a prerequisite for value creation. Owners and investors have a fundamental role in facilitating profitable business activity by contributing 2.1 The significance of ownership for risk capital for the establishment of new compa- value creation nies or for expanding established companies. In the capital market, those who want to save Ownership can be highly significant for value cre- are connected with those who want to lend and ation. Different phases of a company’s develop- invest. In this way, capital is channelled to potenti- ment present different needs, and different ally profitable investments, and risk is distributed owners may have varying preconditions for contri- between the participants. In this fashion, the capi- buting to a company’s development. These relate tal market streamlines the use of resources in the to, for instance, expertise, controllability, objecti- economy. ves, access to networks, preconditions for contri- Sound decisions concerning financing are con- buting to restructuring and innovation, and for tingent on sufficient knowledge about expected contributing capital on the basis of risk appetite profitability, risk, markets, sectors, companies and and capacity. What constitutes a good combina- the position the company is in. Strong and compe- tion of company and owners may vary with the tent owner communities and professional commu- company’s phase of development, growth and nities can be crucial for analysing and understan- nature. A diversity of owners, owner types and ding risk and potential returns, and thereby owner communities will contribute positively to a ensuring the appropriate capital input. good combination of company and owners, sound business development and economic value creation over time. 2.1.2 The importance of the exercise of An increased rate of change in business and ownership industry means that the importance of the Ownership is important for how companies are company’s ability to adapt and innovate increases. governed and run. Owners can be involved in This places greater demands on the owners, who companies in different ways and to different set policies for the companies’ activities, and make extents, depending on the ownership model. At critical decisions in the event of major changes in one extreme are financial owners who allocate the companies. This may, for example, relate to capital through small shareholdings, and who are the setting up of new businesses and to the acqui- easily able to liquidate positions if the company sition, divestment and winding up of businesses. does not perform and deliver returns as expected. In such a business climate, competent owners At the other extreme are owners who get involved with the ability to understand a company’s situat- in companies’ operations and aim to develop profi- ion, challenges and opportunities are important tability over time and exploit inter-company syner- for realising the company’s potential for value cre- gies. ation. Good owners with a low level of active involvement will primarily ensure that companies follow principles of good corporate governance and 16 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 2013–2014 Diverse and value-creating ownership commercial management in order to protect their reflect the fact that the owners’ expertise has own interests. With a greater degree of involve- become more significant. ment, owners may try to create added value by The owners choose the company’s board. A supporting and following up the companies. Such competent board is important if a company is to owners may, for example, use networks and their be operated prudently and profitably. Some own industrial expertise in order to complement owners sit on the board themselves, and through the executive management, and also influence their board representation participate directly in who is on the board and thereby also on the mana- the company’s administration. Some owners also gement. They are more prone to impose require- participate in the executive management in ments on the board and management based on various ways. their own knowledge of relevant markets and The owners’ primary aim will essentially be to sectors, and may become involved in companies’ maximise the return on invested capital at the strategy formulation or giving direct operational desired level of risk. The company management support. may have incentives for pursuing other objectives. Private equity (PE) investors are an example This is normally referred to as the principal-agent of owners who have extensive involvement in the problem3. The relationship between the majority companies in their portfolios. These owners and minority shareholders, between management receive a lot of attention but they constitute a rela- and employees, and between management and tively small part of the overall ownership other stakeholders are other key agency dilem- community. mas in the corporate context. The diminution of The model for PE investors is to take over potential difficulties in such relationships is key to companies where they can realise a potential for various principles for sound corporate gover- running the company better or contributing to nance, such as those of the OECD4. Such difficul- further growth. PE investors are also liable to ties do not necessarily reduce value creation, but make changes to management and/or provide they may affect the risk and also redistribute the direct operational support. In many cases, they return between stakeholders. Conflicts of interest contribute to both organic growth and growth between the owners, where one or more owners through acquisition. Analyses indicate that attempt to enrich themselves at the cost of others, returns on PE funds have been higher than for the may however tend to reduce the total value crea- rest of the market, including when adjusted for tion in the company by wasting resources. The the gearing ratio. Since 1995, US PE funds have owner is often not able to observe or control the yielded returns three percentage points higher on management’s activities directly. The owners can average than the S&P 5001. There have typically also lack knowledge as to what the best operatio- been large differences in funds which perform nal decisions will be. Accordingly, the manage- well and those which perform badly, with traditio- ment often has an information advantage that they nally great stability in respect of which partici- can use to pursue their own objectives, in prefe- pants perform well. This indicates that skill in rence to the owners’ desire for the highest possi- exercising ownership creates value. The figures ble return on invested capital over time. for recent years also indicate that the PE investors There is a comprehensive literature on the as a whole have gradually become more professio- effect of good corporate governance on company nal, that there is now less difference in perfor- value creation, but due to the complexity of the mance between the participants, and somewhat subject, conceptual ambiguities and regional diffe- lower stability as to which investors perform well rences, it is difficult to point to unambiguous over time. What creates high returns for the PE results. There does however appear to be a broad investors has changed over time. Formerly, the sense that good corporate governance is impor- return was largely based on identifying and inves- tant for value creation, and the literature is ten- ting in the right companies and sectors («buying ding to provide empirical support for this view5. well»). In recent years, the trend is towards good ownership being increasingly taken to mean dri- 2 3 See, for example, Jensen, M. C. and Mecklings, W. H. ving value creation («owning well») . This may (1976): «Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure.» 1 Harris, R.S., Jenkinson, T. and Kapland, S. N. (2013): «Pri- 4 OECD (2004): «Corporate Governance Principles.» vate Equity Performance: What Do We Know?» 5 See, for example, Switzer, L. N. (2013): «Perceptions of 2 Ghai, S., Kehoe, C. and Pinkus, G. (2014): «Private equity: Board Alignment with Shareholder Interests and the Ope- Changing perceptions and new realities.» rational and Stock Market Performance of Firms.» 2013–2014 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 17 Diverse and value-creating ownership

Another distinction between owner types is 2.1.3 Owner composition and owner types between public and private sector. The literature The owner composition and owner types may be provides no clear answer as to whether private significant for value creation in companies by cre- ownership provides a better return than public ating different incentives for exercising good cor- ownership, but some research does support this porate governance. Accordingly, different combi- perception9. The mechanisms behind this poten- nations of owner concentration, owner type and tial phenomenon are unclear, but one possible duration of ownership may influence the quality of explanatory parameter may be that the public the exercise of ownership6. sector is an indirect owner10. Furthermore, a high The benefit of a high concentration of owners- public sector concentration of ownership in indivi- hip is that large owners are likely to be better pla- dual companies (which is often the case) may ced to assert their interests towards management have an effect by reducing liquidity, which in turn than owners in a more fragmented shareholder may affect market prices. It is important to note structure. A high concentration of ownership can that the conclusions will depend on factors such therefore reduce the agency costs. Conversely, a as which market the research was done in and high concentration of ownership can make it more when. difficult for the minority shareholders to assert The duration of the ownership will have conse- their interests. Furthermore, a high concentration quences for its exercise. Long-term owners can of ownership will reduce liquidity in the shares. create value by financing strategies that produce Liquidity is an important factor for investors, since long-term, but not necessarily short-term, gains. a high liquidity lowers the cost of exiting a On the other hand, long-term ownership can lead company. In addition, low liquidity provides poo- to less pressure on the management. Research rer pricing data. Good pricing data can help disci- performed on Norwegian stock exchange data pline company management and reduce agency gives some indication that indirect long-term costs, especially in the case of a fragmented ownership yields lower returns, while direct long- ownership structure or other circumstances term ownership yields higher returns. In listed where the owners have little direct control over companies, investors are typically divided into tra- the management. For example, the FTSE 100 ders, mechanical investors and value investors, index7 operates with a minimum requirement of according to how they allocate capital. Traders 25 per cent free float8, and it has been discussed attempt to achieve a return by picking the right increasing this further. On the Oslo Stock time to move in and out of shares. Mechanical Exchange, profitability of companies with high investors follow indexes and place capital passi- concentration of ownership appears to be lower vely in order to achieve the market return. Value than for companies with low concentrations of investors are investors who seek to place their ownership, whereas the relationship is more money in companies which they believe, over inconsistent internationally6. time, will produce a return due to the company’s A key distinction between owner types is bet- fundamental value. How the shareholder stru- ween indirect and direct owners. Indirect owners- cture is defined by the different shareholder cate- hip means that the ownership is administered gories may be significant for the company’s valua- through a third party, for example, a fund. Indirect tion, its liquidity and volatility, and may therefore ownership is therefore at two removes of agency affect the return. from management instead of one. Institutional ownership can have positive effects in that, as a rule, an institution will be larger and possess 2.2 What characterises good owners? more expertise than private individuals. On the other hand, direct owners, who administer their Value creation ensuing from capital allocation and ownership themselves, have greater incentives for corporate governance will vary between the diffe- managing their ownership well. rent types of ownership models. The distinction here is between owners who primarily perform 6 Bøhren, Ø. (2013): «Eierne, Styret og Ledelsen.» 7 The FTSE 100 is a share index of the 100 most valuable companies listed on the London Stock Exchange. The 9 See, for example, Wolf, C. (2009): «Does Ownership Mat- companies on the FTSE 100 represent around 80 per cent ter? The Performance and Efficiency of State Oil vs. Private of the market value of the exchange. Oil (1987–2006).» 8 Free float refers to shares that are actually available for tra- 10 Shleifer, A. and Vishny, R. W. (1997): «A Survey of Corpo- ding. rate Governance.» 18 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 2013–2014 Diverse and value-creating ownership

III. Owners focused on operational involvement

II. Long-term strategic owners I. Owners focused on capital allocation

Involvement in the portfolio Passive Active company

Examples of owners

Figure 2.1 Three models of ownership. capital allocation, long-term strategic investors crisis, «tactical investments» have increased in and owners with operational involvement; see scope. These are investments which try to eva- figure 2.1. The following expands briefly on what luate market timing more actively and achieve a characterises the main owners within each model. return on short-term investments.

2.2.1 Owners focused on capital allocation 2.2.2 Long-term strategic owners These are owners who primarily maintain a diver- These are owners who attempt to create value by sified portfolio, with small shareholdings in each adopting long-term strategic positions, and who company. They typically have investments of small support the portfolio companies’ management shareholdings in 100–5,000 companies. The and value creation. The typical long-term strategic value-creation logic is centred around dynamic investor usually has between 10 and 50 companies portfolio adjustments, with little involvement in in the portfolio, and shareholdings between 10 the companies invested in. In order to ensure and 100 per cent. The shareholding must be large good diversification, the portfolio may well be enough for the investor to have direct influence in spread over different geographical areas and dif- the companies, for example through board repre- ferent asset classes. sentation, so that it is possible to create added These owners create added value by perfor- value by taking part in defining the individual ming capital allocation based on profound exper- company’s direction. tise and insight into financial and capital markets. With their profound knowledge of the indus- The ownership is exercised by having clear crite- try and extensive familiarity with the individual ria and guidelines for the requirements they have companies, these owners seek to help improve of the companies they invest in. Voting rights at long-term returns from the portfolio. This requi- general meetings are used actively in order to pro- res an independent sense of companies’ strategies mote good corporate governance. These owners and business models. Good long-term strategic are often adept at working with other sharehol- investors work proactively to influence key strate- ders to achieve desired changes. If the companies gic decisions. These owners will typically be they invest in prove not to meet the defined crite- represented on the boards of the companies on ria or do not perform as expected, the sharehol- the portfolio. As part of their strategy follow-up, dings will be sold («voting with their feet»). In good owners will participate in promoting major recent years, especially as a result of the financial strategic initiatives in the portfolio companies and 2013–2014 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 19 Diverse and value-creating ownership will also provide support for strategy execution. depending on how they choose to be involved and The owners will typically set clear financial and will depend on the individual company’s situation strategic objectives and follow them up. and strategy. Some strategic owners have a selection of board members whom they follow up through board seminars and other forms of competence 2.3 Trends and developments in the building. Furthermore, the board representatives exercise of ownership may be rotated through the companies in the portfolio, both as part of capacity-building and 2.3.1 Polarisation between passive and knowledge-sharing, and also to ensure that at any active owners time the boards have the right expertise for the Over recent decades, there has been a gradual challenges which the particular companies face. trend towards more fragmented ownership in Typical examples of long-term strategic listed companies. Increased fragmentation of owners are Investor and Industrivärden of Swe- ownership means that the owners have fewer den and state holding companies such as Tema- incentives (and reduced opportunities) for exerci- sek (Singapore) and Khazanah (Malaysia). sing active ownership. To succeed with long-term strategic owners- The increasing level of passive owners is con- hip, it is necessary to have a broad range of exper- nected with the increase in institutional owners- tise, and it is crucial for the owners to have suffici- hip. Institutional owners, such as pension funds, ent industry knowledge to follow-up the portfolio insurance companies and mutual funds, own a companies properly. considerable share of the world’s listed companies. Companies with a fragmented shareholder 2.2.3 Owners focused on operational structure and a predominance of institutional involvement owners are often referred to as «ownerless» Owners focused on operational involvement try to companies, since they lack major direct owners create added value by concentrating on fewer with incentives for exercising active ownership. In companies and using their expertise to support such ownerless companies, a lot of power may be companies at operational level. In order to capita- concentrated with the management, and it may be lise on the expertise they bring to the companies, difficult to verify whether the management is such owners will primarily be sole owners or, as a acting on the basis of its own, potentially short- minimum, majority owners. The portfolio will typi- term financial incentives, or on the basis of long- cally consist of 10–50 companies. term value creation for the owners. Institutional Owners who are involved at operational level owners have fewer incentives to work for long- will actively undertake operational improvements term value creation due to generally shorter term in partnership with the management. The owners positions. will ensure that there are regular reviews of value It is natural to draw parallels between the creation in the portfolio companies, and they will development of ownerless companies and the develop ambitious plans which they follow up clo- emergence of very active ownership communi- sely. They will often drive functional thematic ties. Passive ownership and ownerless companies changes across the portfolio, for example through have also been suggested as a contributory factor initiatives aimed at cost control, recruitment and in the financial crisis. so forth. These owners will also seek to create and Active ownership requires resources and the- exploit synergies between the companies in their refore entails a cost. Passive owners can thereby portfolio, for example by having common procure- realise a gain by having other owners assume the ment functions, IT solutions and other shared ope- costs of active ownership. Problems associated rational solutions. The best of these investors are with passive ownership are reflected in a variety of good at building centres of excellence in different guidelines for corporate governance and company areas which the companies in the portfolio can management. The UK Stewardship Code, a set of benefit from. corporate governance principles aimed at instituti- Examples of such owners are the most actively onal investors in the UK, established in 2010, involved private equity investors and large conglo- requires that institutional investors have clear merates such as General Electric. guidelines for the use of voting rights and that The expertise required for good owners focu- they report on voting activity. The UK Stewards- sed on operational involvement will vary greatly, hip Code is monitored by the UK’s Financial 20 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 2013–2014 Diverse and value-creating ownership

22 15 5-10?

1935 1955 1975 1995 2005 2020E

Figure 2.2 Average life time of companies on the S&P 500. Implied life time in number of years based on average loss of tenure over a 20-year period. Source: McKinsey & Company.

Reporting Council which requires institutional rapidly. This means that innovations can quickly investors to report on whether or not they adhere alter the dynamics of a sector. Technological to the guidelines («comply or explain»). The pro- developments may make companies which are blems are also reflected in, for example, the Her- market leaders today unable to withstand compe- mes Responsible Ownership Principles from Her- tition tomorrow if the company does not adapt fast mes Fund Managers11, containing principles for enough and act innovatively. A well-known exam- what companies should be able to expect from ple is Nokia, which was the world leader in mobile investors, including a constructive dialogue with telephony but which saw the value of its share the board and management and a long-term view capital reduced from 110 billion Euro to 15 billion in the exercise of ownership, including the use of Euro over five years after Apple, with the introdu- voting rights. ction of the iPhone, changed the competitive landscape. Secondly, it is increasingly the emerging econ- 2.3.2 Faster global industrial and techno- omies which are driving growth in the global eco- logical developments nomy. The growth in demand in these markets is Companies must take into account increasingly making them increasingly important, including more rapid changes in their surroundings and for Western companies, and creating a need for greater uncertainty and volatility in the global new expertise and experience. At the same time, a markets. This makes it more difficult to maintain gradual dismantling of trade barriers and increa- strategic competitiveness over time. For example, sed integration in the global economy has ensu- the companies’ average life time on the S&P 500 red that more industries have been opened up to has fallen considerably over the last century; see competition. figure 2.2. This trend is powered by a number of Thirdly, the financial markets still bear the different factors. marks of the financial crisis of 2008, and the Firstly, technological changes are occurring ensuing debt crisis in Europe. In Europe especi- more rapidly than before, and new technologies ally, the financial sector remains weak, and with are gaining footholds in the market ever more low expected future growth, there are reasons to believe that Europe faces considerable challen- 11 Leading British investment firm established in 1983. ges12. 2013–2014 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 21 Diverse and value-creating ownership

5 999

+11 % p.a. 5 147 4 859

4 061 4 166 3 924

3 265

2003 08 09 10 11 12 2013

Figure 2.3 Sovereign wealth funds in the period 2007–2013. Capital under administration in USD billi- ons. Source: Sovereign Wealth Fund Institute.

In a world of keener competition and faster in China and the Middle East, state agencies own change, greater demands are made of manage- an increasingly larger proportion of the world’s ment, boards, and owners to make good decisions share capital. The extent of sovereign wealth quickly. The management should be able to eva- funds is shown in figure 2.3. luate operational opportunities and be more inter- State ownership has also grown nationally, nationally oriented. The boards should be closer powered to a great extent by state acquisitions in to the strategy process and have adequate interna- connection with the financial crisis. This applies in tional expertise and experience. The boards particular to the financial sector where a number should, moreover, be able to represent the long- of insurance companies and banks have been pla- term perspective in a world where CEOs are ced under state control. Moreover, a number of replaced more frequently, and where greater large, substantially state-owned, companies have unpredictability means that management has to expanded globally. This scenario is especially evi- concentrate more intently on short-term challen- dent among Chinese companies but is also ges. The owners should be prepared to assess illustrated through, for example, the expansions decisive strategic changes, acquisitions and other of Telenor and Statoil in the early 2000s. major investments with less delay. State investment and pension funds are fundamentally organised in the same way as large private funds and often operated under similar princi- 2.3.3 Growth in long-term state ownership ples. Many states also use state-owned enterprises with expansive agendas to protect national interests, for example by safe- Large distortions in the global balances of trade guarding access to commodities or for promoting have led to substantial national wealth accumula- industrial development in their own countries. In tion in individual countries and hence greater Norway, the national maintenance of key functi- state ownership in commercial companies. ons in the country is an important argument for Through large sovereign wealth funds, especially retaining majority or negative control (more than one third) in certain Norwegian companies. In many countries, there has been a professio- 12 IMF (2013): «World Economic Outlook.» nalisation of state ownership, with clearer division 22 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 2013–2014 Diverse and value-creating ownership

Capital under administration # signers 000’ billion USD

1 400 40

1 200 35

30 1 000

25 800 20 600 15 400 10

200 5

0 0 Apr-06 Apr-07 Apr-08 Apr-09 Apr-10 Apr-11 Apr-12 Apr-13

Figure 2.4 Number of investors who have signed up to the UN Principles for Responsible Investment. Source: Principles for Responsible Investment.

of responsibilities between regulatory authorities In 2006, the UN Principles for Responsible and the state’s exercise of ownership. Communi- Investment were formulated. Adherence to the cation with the international investor market, in UN principles has increased to more than 1,200 order to explain how state ownership functions, is investors who, combined, administer capital hugely important for trust in state ownership. valued at more than USD 34,000 billion; see figure Even if state owners act professionally and trans- 2.4. parently, it will still be increasingly more impor- The fact that owners are increasingly emphasi- tant for them to be open and clear about the guide- sing their social responsibility and associated lines which apply to their exercise of ownership improved routines for compliance, places more and how these are adhered to. pressure on other owners to follow suit, as the reputational risk of not following the best example increases. For owners, there is therefore an 2.3.4 Greater expectations of responsible increasing need to ensure they have good sys- ownership tems and routines for monitoring corporate social In recent years, increasing attention has been paid responsibility in different areas, and many trends to a number of problems associated with owners’ indicate that this may become a competitive and companies’ social responsibilities. Environ- advantage for companies and shareholders in the mental challenges, multinational companies’ role future. in developing countries and corruption cases are areas which have received great attention. At the same time, there has been a large incre- 2.3.5 Increased awareness of the long-term ase in funds and other investors focused on sustai- value trend of companies nable investments. Examples of such funds are Many people have argued that the focus on short- Osmoris MoRE World, Generation and GS term gains contributed to the financial crisis13. Sustain. In addition, many investors who do not This crisis and the ensuing debt crisis in Europe treat sustainable investments as a separate con- have put a critical spotlight on short-term market cept have introduced better systems for reducing risks relating to corporate social responsibility in their portfolios. 13 OECD Insights (2010): «From Crisis to Recovery.» 2013–2014 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 23 Diverse and value-creating ownership participants. Such turbulence also goes to under- implement16. The proposals might, for example, mine confidence in companies and owners. entail splitting of the business, the sale of subsidi- A survey14 of business leaders across a num- aries, larger dividends, arranging for acquisitions ber of countries shows that they experience pres- and other transactions of a clear commercial and sure to produce short-term results, and 63 per operational character. The proposals are often cent of respondents stated that the pressure has combined with communication campaigns, TV increased in the last five years. Nearly half repor- appearances, shareholder letters, newspaper ted that they worked to a strategy with a time hori- articles, etc. Calculations by FactSet17 show that zon of less than two years. At the same time, 73 activist shareholders succeeded fully or partially per cent of respondents stated that the planning in their campaigns in six out of ten cases in 2013. horizon should be three or four years or more. It According to The Wall Street Journal, this was the is therefore the case that a majority of business highest figure ever. leaders see the planning horizon as non-optimal The activist investor trend is strongest in the due to pressure from outside or from greater USA, but has also spread to Europe. However, competition. compared with the USA, the campaigns of activist The boards will therefore be increasingly investors in the EU and Norway have been less more important for guaranteeing a long-term plan- vocal. Activist investors have been active in the ning horizon. The best boards are also increas- Nordic region for a number of years; for example, ingly involved in strategy work and spend more Stockholm-based Cevian Capital took a 16 per than half their time on this. cent holding in Lindex in 2003 and replaced much of the management18. In the Nordic region, the frequency of activist actions looks set to increase, 2.3.6 Increase in activist investors and Cevian is now the largest activist investor in Activist investors represent a phenomenon that Europe19. Internationally, there have also been has grown strongly in recent years. Capital admi- cases where activist investors become involved in nistered by activist funds grew more than sixfold companies with few dominant owners. in the period 2003–2013, and activist investors are Activist investors are a controversial topic, the taking positions in increasingly larger compa- term often has negative associations and they are nies15. The growth has not shown any tendencies often criticised for taking short-term gains. Howe- to flatten out, so it is reasonable to assume that ver, analyses indicate that activist investors gene- this is a trend that will continue in the years rally have a positive effect on companies’ returns, ahead. including in the longer term20. For management Activist investors are commercially oriented and boards, attacks from activist investors are investors who acquire small shareholdings in a likely to be unwelcome since they imply that the company and attempt to increase the value of the management should have done a better job. For investment by trying to force through changes in other owners, this may potentially be a benefit. In the company’s governance. The objective for acti- some cases, activist investors will be invited in by vist investors is to buy into companies they beli- other long-term investors or by concerned eve have a large potential for improvement and employees who are dissatisfied with the manage- with clear plans for measures to boost the companies. If their plans fail to make an impact, they will attempt to force through their agendas by initia- 16 Mellbye A. (2014): «Aksjonæraktivisme – et gode eller ting a campaign against the management. The onde?» http://www.wiersholm.no/publikasjoner/Pages/ Aksjoneraktivisme.aspx value creation model of activist investors is to buy 17 FactSet Research Systems is an American company which into companies they believe lack good corporate offers financial information and analytical tools to professi- governance. onal investors. 18 Typically in the USA, activist investors often Becht, M., Franks, J. and Grant, J. (2013): «The Returns to Hedge Fund Activism: An International Study.» prepare an in-depth analysis (a white paper) of the 19 Activist Insight (2014): «Activist investing: An annual target company. Based on this analysis, detailed review of trends in shareholder activism.» proposals or requirements are put forward which 20 Bebchuk, L. A., Brav, A. and Wei, J. (2013): «The Long- the management and board are requested to Term Effects of Hedge Fund Activism.» Brav, A. Wei, J., Partnoy, F. and Randall, T. (2008): «Hedge Fund Activism, Corporate Governance, and Firm Performance.» The Jour- 14 Canada Pension Plan Investment Board and McKinsey & nal of Finance 63(4). Becht, M., Franks, J. and Grant, J. Company (2013): «Looking toward the long term.» (2013): «The Returns to Hedge Fund Activism: An Interna- 15 Hedge Fund Research Database. tional Study.» 24 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 2013–2014 Diverse and value-creating ownership ment21. In other situations, the threat of activist ness models have made the companies more action may itself prompt change. complex and therefore more difficult for the boards to control. More frequent changes to executive management mean that it falls to the boards 2.3.7 Effective board work has become a to safeguard the long-term prospects of the more important competitive factor companies to a much greater degree. Following Before the financial crisis of 2008, there was a the financial crisis, the media also scrutinised the long period of stability and high economic growth boards more carefully in the event of irregulari- in the global economy, often referred to as «The ties in a company, with ensuing discussions of the Great Moderation». Long periods under a favoura- boards’ qualifications and what they spent time ble economic climate placed relatively less pres- on. sure on the boards than is the case today. The McKinsey’s Global Board Survey 2013 indica- boards’ duties and responsibilities were therefore tes that many directors continue to find that they often limited, and many boards essentially restric- have insufficient time, knowledge and the appro- ted themselves to approving the executive’s pro- priate information to contribute effectively, but posals. The dot-com crisis, the financial crisis and that this is changing. Over the last five years, dire- a series of major bankruptcies contributed to con- ctors have found that the boards have become siderably increasing the demands placed on the more effective, and the time spent on strategy boards. In many jurisdictions, the formal require- activities has increased. Nonetheless, the survey ments have also been strengthened. The board is indicates that board members believe that a furt- increasingly being viewed as a crucial factor for her increase in the time spent on strategy would the company’s long-term success. The company’s produce greater value for the companies in the various support functions have gradually become years ahead22. more professionalised, and in many respects the The boards increasingly aspire to become board is the last link in this chain. more professional. At the same time, there are This development has been driven by a num- increased expectations of the boards taking an ber of factors. As previously mentioned, the pace active role in order to be able to add value to the of technological development, globalisation and organisation. High-functioning boards, which ope- financial market turbulence have meant that rate as effective sparring partners and challengers companies need to deal with greater uncertainty to the management, will be increasingly more and faster changes in the market than before. In important components of well-run companies. addition, digitisation, globalisation and new busi-

21 Financial Times: (2014): «Executives take note: activists 22 NYSE Governance Services (2014): «What Directors Think are sometimes right.» 2014 Survey.» Part II Prerequisites for private ownership in Norway

2013–2014 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 27 Diverse and value-creating ownership

3 Ownership in Norway

3.1 The Norwegian capital market – markets, enterprises can finance projects and the overview and figures risk can be spread across several investors and lenders. The capital market is a collective term for the The total capital stock of non-financial corpora- markets in equity and debt instruments (external tions1 in Norway was around NOK 9,600 billion in capital). The market for external capital can be 2012, of which NOK 5,600 billion was debt and divided in turn into bank debt and bonds. NOK 4,000 billion was equity; see figure 3.1. Nor- A well-functioning capital market contributes, wegian companies therefore have a larger share through different functions, to efficient resource of their capital financed by external capital than by allocation over time and increased value creation. equity2. This proportion has been stable in recent Among other things, the capital market facilitates years. There has been a moderate rise in the value the matching (of savings, consumption and invest- of total balance sheet items, but given inflation ments) over time, by linking those who want to save with those who want to consume or invest, 1 According to Statistics Norway, «non-financial enterprises» including in business and industry, and helps dis- includes all corporations and quasi corporations that undertake market-oriented non-financial activities. tribute risk between market participants. By 2 The figures for the listed share of equity represent market issuing shares and bonds in the securities value, while the unlisted share is book value.

Number of enterprises

Equity External capital

Balance sheet items for non-financial corporation Billion NOK Number of enterprises (000’)

+ 6 % p.a. 10 000 9 377 9 609 250 8 979 8 220 8 235 8 000 7 302 200 3 883 3 982 3 752 3 082 3 381 6 000 2 989 150

4 000 100

5 493 5 628 5 138 4 855 5 226 2 000 4 312 50

0 0 2007 2008 2009 2010 2011 2012 Share debt % 59 63 59 58 59 59

Figure 3.1 The allocation between equity and external capital among Norwegian corporations. Source: Statistics Norway 28 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 2013–2014 Diverse and value-creating ownership

Equity market size is around average compared ……while capital market for non-financial enterprises with other countries... is somewhat less

Stock market value in per cent of GNP, 1990-2013 External capital in per cent of GNP, 1990-2013 % % 300 240 220 250 200 180 200 160 140 150 120 100 100 80 60 50 40 20 0 0 1990 98969492 2000 1008060402 2013E 1992 94 96 98 2000 02 04 06 08 10 2013E

Sweden Finland Belgium Portugal Austria Netherlands Ireland Norway Greece Slovakia

Figure 3.2 The markets for equity and external capital in selected European countries. Source: Standard & Poor’s, Statistics Norway and equivalent national statistical offices for other countries in the analysis.

and economic growth in the same period, the ter may be due to the financial crisis in Norway annual growth is moderate (around 3 per cent in not being followed by a fiscal crisis and high long- real terms). term unemployment, and to the sectoral composi- Compared with some other European tion of the companies on the Oslo Stock countries, the size of the Norwegian equity mar- Exchange, among other things. ket, as a share of GDP, is around the average. Book equity comprised 53 per cent of GDP at the start of 20143, whereas similar values for Sweden, 3.1.1 The equity market Finland and the Netherlands, for example, were The equity market can be divided into private and more than 75 per cent. In addition, Norway has a public sector, and into listed and unlisted compa- relatively small external capital market for non- nies. Figure 3.3 shows an overview of the owners- financial enterprises compared with other Euro- hip structure of equity in Norway. The figures for pean countries; see figure 3.2. the listed share of equity represent market value The Norwegian capital market has tended to at the start of 2014, while the unlisted share repre- recover quickly in the wake of turbulent periods. sents book value at the start of 20124. Of total equ- Following the dot-com bubble in the early 2000s, ity, around 35 per cent is listed on the stock the capital market in Norway was affected to a exchange, while around 65 per cent is unlisted. small extent, and although the financial crisis of 2008–2009 almost halved the value of the Oslo 4 Listed values are based on data from VPS – the Norwegian Stock Exchange, Norway was one of the countries Central Securities Depository. Due to limited data availabi- which recovered fastest. To some extent, the lat- lity, the unlisted share of equity is estimated on the basis of a variety of data points from Statistics Norway, Proff and Bøhren, Ø. (2013): «Eierne, styret og ledelsen.» The stated values should therefore be taken as best estimates. As far 3 Figures for the period 1990-2012 were obtained from the as possible, attempts have been made to use publicly availa- national statistical offices of the countries included in the ble sources, and these may differ from private databases analysis. The figures for 2013 are estimated by McKinsey such as the ownership database of BI Norwegian Business MGI. School. 2013–2014 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 29 Diverse and value-creating ownership

Billion NOK

A Private listed 1 C Private unlisted 2

1 196 2 227 68 Others 71 Others 263 Institutional Households 169 263 206 Foreign 383 Institutional 2 227 479 Industrial Households Foreign 682 Industrial 838

1 196

B Public listed1 D Public unlisted 3

646 1 062 5 646 1 062 Public controlled Public 641 enteprises management 4 Public management

1 Based on the market value of all listed shares registered in VPS at the entrance to 2014. 2 Calculated as book equity to all corporations in Norway at the beginning of 2012, net equity to listed companies and equity of public unlisted companies. The distribution between ownership types are estimated based on Bøhren, Ø. (2013): «Eierne, styret og ledelsen.» 3 Calculated as book equity to all public-owned enterprises at the beginning of 2012 (excluding equity to public administrative units), less equity to listed public companies. 4 Public administration is considered here as all unlisted public equity. Figure 3.3 The equity market in Norway. Source: VPS, Statistics Norway, Proff and Bøhren.

This means that the majority share of equity in overall return of around 13 per cent, which is hig- Norway is not listed on the stock exchange5. Of her than the other Nordic stock exchanges. This the listed equity, around 35 per cent is publicly may reflect which industries are relatively over- owned, primarily within public administration6, represented and under-represented on the Oslo while 65 per cent is owned by the private sector, and other stock exchanges. The Oslo Stock by financial enterprises, non-financial enterpri- Exchange has, however, experienced higher vola- ses7, households, foreign investors and other tility. One reason for this may be that the stock- owners. Of the unlisted equity, 30 per cent is exchange-listed companies are relatively more publicly owned. The remaining 70 per cent is pri- exposed to commodity prices, such as the prices vately owned, and is distributed between instituti- of oil and gas. During the financial crisis, the Oslo onal, industrial and foreign investors, and family Stock Exchange had the highest fall in value of companies and households8. the Nordic stock exchanges9 (from September On average, the stock exchange listed share of 2008 to March 2009). Part of the fall may be the equity market has yielded high returns in the last decade. Between 2003 and 2013, the Oslo 8 The distribution between private owners of unlisted equity Stock Exchange produced an average annual is estimated based on Bøhren, Ø (2013): «Eierne, styret og ledelsen.», since this is the most up-to-date source available. Since information is not available about the extent to which ultimate or indirect owners are used, there may be a 5 The proportion of unlisted equity is probably under-estima- discrepancy between the stated distribution and other sour- ted since book values are generally lower than actual mar- ces which use ultimate owners, such as Grünfeld, L. A. and ket values. Jakobsen, E. W. (2006): «Hvem eier Norge?» Here, 6 According to Statistics Norway, public administration con- Bøhren's and Statistics Norway's categorisation of owner sists primarily of the different ministries. groups is used. 7 Hereinafter referred to as institutional and industrial enter- 9 Includes the Swedish, Danish and Finnish stock exchan- prises. ges. 30 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 2013–2014 Diverse and value-creating ownership explained by a considerable weakening of the equity market that is knowledgeable about their Norwegian krone in the same period. own sector. The Norwegian capital market is con- The above illustrates some of the difficulties sidered to be among the world’s largest as the Norwegian capital market faces from being a regards these three sectors, especially in terms of small market with many foreign investors. When analytical expertise. financial turbulence occurs in global markets, Activity in the secondary market closely refle- foreign owners often move capital back to markets cts the liquidity in the market. The liquidity of dif- with larger and more stable currencies. This wea- ferent investments is of great importance for the kens smaller currencies, and was a major contri- investors’ investment decisions. A liquid market butor to reinforcing the fall in value and increase for a share provides a better profit and risk assess- in volatility on the Oslo Stock Exchange during ment of projects and undertakings, since more the financial crisis. investors implicitly make such assessments In the stock market, continuous assessments through continuous pricing of the shares. Statis- are made of expectations of the market as a whole tics from the World Federation of Exchanges indi- and of the individual companies’ activities. This cate that a number of European markets12 have happens both in the primary market, i.e. as become less liquid in recent years, following a regards the price of new shares in connection peak just before the financial crisis. The annual with initial public offerings and capital increases trade in shares on the Oslo Stock Exchange has (issues), and in the secondary market, via the reduced from around USD 550 billion in 2007 to ongoing pricing of a company’s share capital. Both USD 140 billion in 2013, corresponding to a fall of the primary and secondary markets may yield 74 per cent. In the last two years, this fall has indications of activity on the stock market. moderated which may indicate that the market Activity in the primary market can be measu- has normalised. There has been a corresponding red by the total volume of issues on the Oslo trend in the turnover rate13, in which most Euro- Stock Exchange. Oslo was clearly the most active pean countries have experienced a market decline stock market in the Nordic region in the period since 2008. For Norway, in 2008, the average 2005–2013, with twice the issue value and more turnover rate was around 155 per cent. This figure than three times as many IPOs as the Copenha- reduced to around 50 per cent in 201314. The gen exchange, which was the second most active. downward trend was stronger for Norway than for In this period, 202 new companies were listed on the other countries12, and the turnover rate in the the stock exchange in Oslo, compared with 74, 56 last two years has moved below the level of both and 24 IPOs on the stock exchanges in Stock- the Nordic9 and Swiss exchanges. holm, Copenhagen and Helsinki respectively. In One of the reasons for the relatively strong 2013, the companies listed on the Oslo Stock decline in Norway is the introduction of the EU Exchange attracted more than three times as MiFID (Markets in Financial Instruments Dire- much capital as companies on the other Nordic ctive) in 2007, which allowed for the establish- exchanges. This is in spite of the fact that the ment of MTFs (Multilateral Trading Facilities). issue volume in Oslo has fallen considerably in MTFs are marketplaces which allow trading in the last two years, and in 2013 was well below the shares that are already listed on other exchanges. 15-year average. It should however be mentioned In recent years, Oslo Stock Exchange has there- that the market for issues on the Oslo Stock fore had competition from other marketplaces in Exchange has historically been highly volatile10. offering trade in Norwegian shares, and the other The high level of activity on the primary mar- Nordic exchanges in particular have taken some ket is powered by a number of factors, including of the trade which formerly took place on the Oslo the keen interest from foreign companies11. This exchange. Another reason is the increasing pro- relates in particular to offshore and oil and gas, portion of Norwegian shares traded via so-called the maritime industry and the seafood industry. «dark pools«15, where the volumes are not recor- These are three key sectors in Norway, and the ded on the Oslo exchange16. companies take a positive view of proximity to an

10 Based on data from the Oslo Stock Exchange and World 12 Federation of Exchanges. The Nordic countries, Austria, Hungary, Switzerland, Ire- 11 Oslo Stock Exchange (2013): «Oslo har Nordens mest land and Greece. 13 aktive kapitalmarked.» http://www.oslobors.no/Oslo- Measured as average turnover per month in relation to the Boers/Om-oss/Presserom/Nyheter-fra-Oslo-Boers/Oslo- market value at year end. har-Nordens-mest-aktive-kapitalmarked 14 Oslo Stock Exchange. 2013–2014 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 31 Diverse and value-creating ownership

second largest exchange for oil service compa- 3.1.2 The external capital market nies19. External capital is a collective term for debt The Norwegian capital market is dominated instruments which companies use for financing. by a small number of sectors. Beyond the energy Both turnover and issue activity on the Norwe- sector, the maritime industry and the seafood gian bond market have increased substantially in industry in particular are substantial. The Oslo the last decade. This has been driven primarily by Stock Exchange has grown to become the world’s two factors: firstly, market evaluations and regula- second largest shipping exchange and the world’s tory requirements have increased the costs of largest seafood exchange, which has made a sub- financing through credit institutions. The compa- stantial contribution to the high level of share nies have increasingly also used the stock issues in recent years. Since 2010, more than ten exchange to acquire loan capital. Secondly, the new shipping and seafood oriented companies bond market has become more accessible have been listed on the Oslo Stock Exchange20. through the creation of Nordic ABM (formerly Oslo ABM) as an alternative marketplace for listing and trading in bonds and certificates. Nor- 3.2 Asset management and ownership dic ABM was launched in 2005 as a self-regulating in Norway marketplace, not subject to the regulations in the Norwegian Stock Exchange Act, which means 3.2.1 Private ownership that the listing process is somewhat simpler and Private ownership includes all ownership that is that issuers have a greater flexibility in terms of not public, i.e. where the state, county authorities choice of accounting standards17. Nordic ABM or municipalities are not dominant owners. In has contributed to a significant increase in issue Norway, the majority of the capital invested in volume, and in 2013 had a 44 per cent share of the Norwegian companies is owned by private enti- Norwegian volume of bond issues18. ties, and according to Statistics Norway is primarily distributed between households, institutional owners, foreign owners and industrial owners. Pri- 3.1.3 Other characteristics vately owned companies can be either listed or Beyond the general descriptions above, there are unlisted. particular features that characterise the Norwe- Unlisted private ownership constitutes the gian capital market. majority, at around 65 per cent of private owners- The Norwegian capital market is largely hip; see figure 3.35. In contrast to listed compa- energy driven. As the world’s third largest gas nies, unlisted ownership is relatively little analy- exporter and fifth largest oil exporter, Norway is a sed, less transparent and may be difficult to find leading energy-producing and trading nation. This good up-to-date data on. This applies, for example, is also reflected in the capital market. For exam- to family ownership, which represents a substan- ple, energy sector companies represent more than tial proportion of private unlisted ownership. 40 per cent of the value of the Oslo Stock Private ownership constitutes around 65 per Exchange. Although this is predominantly driven cent of the value of the Oslo Stock Exchange. Of by a few large companies, notably Statoil, the Oslo this, the proportion of foreign ownership is high Stock Exchange is also large in terms of the num- (37 percentage points) in comparison with other ber of listed energy-related companies, with the countries. The share has gradually increased second highest number in Europe. Over the last since 1995 when the EEA Agreement allowed two decades, oil service has grown to become a foreign investors to own more than one third of key segment of the energy sector. By the number the voting shares in Norwegian companies. Fore- of listed companies, Oslo is currently the world’s ign owners are defined here as all investors registered outside of Norway with shareholdings in 15 «Dark pools» is a collective term for trading facilities which Norwegian-registered companies. Institutional offer trading without showing order information, i.e. where and industrial owners own roughly the same amo- market participants can buy or sell large volumes without risking other market participants finding out what is happening and pushing the price up or down. 19 Oslo Stock Exchange (2014): http://www.oslobors.no/ 16 Pareto Securities (2014): «Det Nye Børslandskapet.» Oslo-Boers/Notering/Energi-shipping-og-sjoemat/Energi 17 Oslo Stock Exchange (2011): «Nordic ABM. The Oslo Børs 20 Oslo Stock Exchange (2014): http://www.oslobors.no/ alternative marketplace for fixed income securities.» Oslo-Boers/Notering/Energi-shipping-og-sjoemat/Ship- 18 Oslo Stock Exchange. ping/De-nyeste-noteringene 32 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 2013–2014 Diverse and value-creating ownership

100 100 100 100 100 100 100 100 100 100 Others 4 7 7 Households 4 16 13 12 13 9 20 20 Institutional 27 29 19 Industrial 11 33 24 27 19 18 44 23 13 State 35 30 11 20 25 10 24 8 40 3 26 3 0 0 0 5

Foreign 41 10 38 38 2 39 40 37 31 37 21 14

Norway France Italy Sweden Austria Belgium Germany Iceland UK Spain

Figure 3.4 Listed shareholdings by type of owner in different countries. Measured by value. Data for Nor- way from 31.12.2013. All other data from 2007. Source: Federation of European Securities Exchanges 2007, Proff and VPS. unt of the value of the Oslo Stock Exchange at 9 and 11 per cent respectively, while households 3.2.1.1 Households and family companies. own only 4 per cent. Institutional investors are According to Statistics Norway’s definition, hou- those whose purpose is to undertake financial seholds include individuals or groups of persons investment activity, typically on behalf of clients. who share the same dwelling, combine all or parts Industrial ownership includes all non-financial of their income and assets, and are consumers limited companies and privately-owned enterpri- and who directly own part of a company registe- ses with the exception of households. Households red in Norway (listed or unlisted)22. There are are all private individuals who directly own part of large differences in the households’ shares of the a company registered in Norway. The different equity market between the listed and unlisted seg- groups of owners will be described in more detail ments. below. For the listed segment, households own only Norway has a low proportion of private around 4 per cent of the value of the Oslo Stock ownership of shares compared with many other Exchange, which represents low direct ownership European countries; see figure 3.4. This must be compared with other European countries. The low viewed against the fact that the share of public stock exchange holdings of households are due to ownership is higher in Norway than in other a number of factors. Firstly, the structure of Nor- countries. Like most other countries, Norway has wegian households’ financial assets differs consi- a considerable share of foreign and industrial derably from other countries, in that Norwegians ownership, but a considerably smaller proportion generally have little personal savings, in part of institutional owners and a low proportion of because the state is a considerable saver. In addi- owners among households compared with other tion, the fact that Norwegian households own European countries. their own dwellings to a much greater extent than When it comes to unlisted private ownership, in other countries must be taken into account. The the situation is different. Foreign owners own a 17 per cent share, while industrial owners and house- 21 Estimated based on data from Bøhren, Ø. (2013): «Eierne, holds own 38 per cent and 22 per cent respecti- styret og ledelsen.» In the book, households are denoted as «persons». vely21. 22 See Statistics Norway for a fuller explanation of who is included in households: http://www.ssb.no/a/publikasjoner/pdf/notat_201205/notat_201205.pdf 2013–2014 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 33 Diverse and value-creating ownership composition of savings must also be viewed in the Family ownership is considered to be stable light of the Norwegian tax system, and that diffe- and long term. A study by Menon Business Econ- rent assets are valued differently. omics from 2009 shows however that a low pro- For unlisted companies, households represent portion of change of ownership from persons a considerably larger proportion of total owners- owning more than 33.4 per cent is to the benefit of hip with a share of around 22 per cent21. The diffe- children or other relatives of the original rence in household ownership between listed and owners25. The study also points to surveys perfor- unlisted companies can essentially be explained med by Statistics Norway in 1997 and 2003, which by the fact that nearly all Norwegian family show that 27 per cent of family companies in 1997 companies are unlisted. A family company is defi- did not have this ownership status in 2003. Studies ned as a company where more than half of the from other countries show a similar pattern26. shares are owned by people who are married to, are in-laws of, or are related to each other. Family ownership is widespread in Norway23. In 2011, 3.2.1.2 Innovation and entrepreneurship around 65 per cent of all active Norwegian limited Entrepreneurs are part of the industrial owners- companies were unlisted family companies, i.e. hip landscape. There are many definitions of what where the family owned at least 50.1 per cent of an entrepreneur is27. Here it is defined as a per- the shares. By including companies where the son who establishes an enterprise, usually families owned at least 33.3 per cent of the shares, involving a considerable degree of risk. the proportion increases to around 80 per cent. One possible indicator of entrepreneurial acti- Although family companies represent a large vity is the number of start-ups as a proportion of share of the total number of limited companies in the total number of companies. This business Norway, the companies are relatively small since, start-up rate in Norway is relatively low compared in the same year, they accounted for only 36 per with other countries. For example, Norway has a cent of employment, 19 per cent of turnover and considerably lower business start-up rate than 13 per cent of assets24. other European countries such as Sweden, One characteristic of family-owned companies Luxembourg, Belgium and Austria; see figure 3.5. is their high concentration of ownership. For What is key for society and for value creation is example, the largest individual owner’s sharehol- however not the number of entrepreneurs and ding is on average higher in family companies (79 new enterprises, but rather the value they create. per cent) than in companies without family control In many cases, poor labour market opportunities (52 per cent). By combining the holdings of all the can lead many people to create their own compa- members of one family into one holding, the lar- nies, and it is therefore not obvious what a coun- gest owner has on average a shareholding of 93 try’s business start-up rate should be. per cent in family-owned companies20. In 2011, Menon Business Economics investi- For family companies, the high ownership con- gated the most important sources of capital for centration affects potential agency dilemmas. The start-ups28. In the very earliest stages, the entre- high ownership concentration causes high levels preneurs’ self-financing is the most important of occupancy of inside positions, such as seats on source of capital. This may be in the form of unwa- the board, chair of the board and managing dire- ged work or a direct capital injection, from savings ctor. In 74 per cent of family companies, the lar- or a private loan. Capital from the entrepreneur’s gest owner acts as both chair of the board and circle of acquaintances may also be important in managing director, compared to only 12 per cent in other companies. In this way, family companies 25 Menon Business Economics (2009): «Eierskifter i norsk avoid part of the potential agency dilemma of pos- næringsliv.» 26 sibly divergent goals between owners and mana- Harveston, P. D., Davis, P. S. and Lyden, J. A. (1997): «Succession Planning in Family Business: The Impact of gement, even though this presents other challen- Owner Gender.» The Family Business Institute (2014): ges, for example relating to the board’s gover- «Succession Planning.» nance function. 27 See for example Kirzner, I. M. (1973): «Competition and Entrepreneurship.» University of Chicago Press. Schumpe- ter, J. A. (1934): «The Theory of Economic Development: An Inquiry Into Profits, Capital, Credit, Interest, and the 23 Berzins, J. and Bøhren, Ø. (2013): «Eierne, styret og ledel- Business Cycle.» Harvard University Press. sen.» 28 Menon Business Economics (2011): «The need for govern- 24 Bøhren, Ø. (2013): «Norske familiebedrifter: Omfang, eier- ment supported capital measures in the market for early styring og lønnsomhet.» stage risk capital in Norway.» 34 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 2013–2014 Diverse and value-creating ownership

45 2001-03 2007-09 40 2004-06 2010 35

0 BRA ESP FRA LUX USA HUN NZL NLD PRT BEL AUT SWE NOR ITA JPN FIN

Figure 3.5 The business start-up rate in Norway. Business start-ups as a percentage of total number of companies in OECD countries. Source: OECD (2014): «Economic Surveys: Norway.»

the earliest phase. Loans can be an important land and Ireland. The venture capital investments additional source of capital for many start-ups. Of constitute around 0.3 per cent of GDP in Norway, the potential high-growth enterprises in Menon’s which is about the average of the OECD countries survey, 60 per cent received loan financing in their included in the survey. How the investments are second year of operations. Other sources of capi- divided into the different phases in Norway, as tal which may be important for a smaller selection defined by the OECD, are also roughly the same of companies with high growth potential may as the average of the other countries. include business angels and venture capital. In a review of the Norwegian economy, the There are few sources of reliable and compara- OECD points out that the business start-up rate ble international statistics on capital access for and the number of self-employed people in Nor- start-ups. Sources for data on venture capital way is low despite the low barriers to entry. investments are mainly based on national and Among possible explanations, they indicate low regional venture capital associations, sometimes unemployment, good welfare schemes and relati- in cooperation with commercial entities. This can vely high taxes. Since this is a result of deliberate lead to differing answers to apparently simple policies aimed to some extent to achieving other questions, depending on the data source used. positive political objectives, the OECD suggests International comparisons are difficult and even minor policy adjustments rather than major chan- the harmonised data from the OECD must be ges. The proposals the OECD highlights for a interpreted with caution29. Norwegian entrepreneurship policy are to main- According to the OECD’s figures, Israel, the tain the commitment to education in science, USA and to some degree Canada stand out from technology, engineering and mathematics, to other countries in terms of venture capital invest- assess whether a reduction in wealth tax might ments, both relative to population size and GDP. boost entrepreneurship, to enhance technology In 2012, Norway was the country with the world’s transfer offices (TTO) at Norwegian universities, fifth highest venture capital investments relative to continue targeting broad competitive arenas for to population size, behind the three above-mentio- innovation measures, to improve impact evaluati- ned, along with Sweden, Luxembourg, Switzer- ons of public subsidies and to evaluate whether competition policy should exclusively emphasise 29 OECD (2013): «Entrepreneurship at a glance.» the consumers’ interests30. 2013–2014 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 35 Diverse and value-creating ownership

thereby having the effect of boosting the share of 3.2.1.3 Institutional ownership institutional investors. Institutional owners consist primarily of banks, financing companies, insurance companies, mutual funds, pension funds, private equity funds, 3.2.1.4 Foreign ownership and other investment companies31. Even though Increased globalisation and ever-greater flow of the proportion of institutional investors in Norway goods, services and capital across national bor- is relatively small, measured by the value of ders have helped foreign owners become one of ownership, institutional owners are still an impor- the largest groups of investors in Norway. Foreign tant source of capital. ownership is often divided into two types of invest- Figures from VPS show that in 2012 institutio- ment: direct and indirect. Direct foreign invest- nal owners owned 9 per cent of listed company ment means foreign companies acquiring owners- value in Norway32. For comparison, in 2007 pri- hip-based control of activities in Norway. This vate institutional owners owned 27 per cent of the often involves creating subsidiaries in Norway. value of the Swedish Stock Exchange, and 44 per This is distinct from foreign indirect investment, cent of the value of the London Stock Exchange. or portfolio investment, which primarily relates to In addition, relative to GDP, Norway has limited short-term involvement in the capital market36. In institutional ownership compared with other the figures below, Statistics Norway’s sharehol- countries. In 2011, the value of the shareholdings ding limit of 20 per cent has been used to differen- of Norwegian traditional institutional owners33 tiate direct investments from portfolio invest- was measured at around 70 per cent of GDP, less ments. than one third of the equivalent figure for the UK, Direct foreign investment in Norway has and one quarter compared with Denmark34. roughly doubled since the early 2000s, and is One reason for the limited proportion of insti- more than ten times higher than in the early tutional owners is that Norwegian households 1990s. Historically, this major growth has occur- save relatively little as securities, and that savings red primarily in connection with oil and gas activi- are mainly made through investment in their own ties, and in sectors such as financial services, private houses. In particular, Norwegians have transport and manufacturing. In the 2000s, a lot of low pensions savings since these are largely provi- the growth was in other sectors such as buying ded by the state through the National Insurance and selling, and operating real estate; see figure scheme. Since the population can expect to enjoy 3.6. Although there has been considerable invest- beneficial National Insurance schemes in the ment in services relating to oil and gas extraction future, this may limit the present perceived need over a long period, this too has seen strong for independent savings35. This limits the use of growth over the last decade. Whereas formerly it institutional investors. In other countries, this type was access to Norwegian natural resources that of saving may well be done through institutions, brought about the high growth in foreign investment in the oil and gas industry, growth in recent years has been driven extensively by resources in 30 OECD (2014): «Economic Surveys: Norway.» the form of competence and technology, especi- 31 Bøhren, Ø. (2013): «Eierne, styret og ledelsen.» Definitions ally among Norwegian oil service companies. of different funds: pension funds are funds where capital is set aside in order to provide pensions for the investors; By value, Sweden has the largest proportion of mutual funds are group investments where many sharehol- direct foreign investment in Norway at 23 per ders join together to place their funds on the securities cent. This is followed by the Netherlands (14 per market; other investments funds might be, for example, venture capital. cent), France (8 per cent), USA (7 per cent), UK 32 Note that these proportions are assumed to increase if fore- (7 per cent), and Denmark (7 per cent). As a per- ign institutional owners are included, since they are consi- centage of total returns on all foreign investments dered to comprise a large share of foreign owners in Nor- in Norway, Sweden accounts for only 15 per cent, way. They are, however, included in «foreign owners» in Statistics Norway's classification. while the Netherlands (30 per cent), USA (16 per 33 According to the OECD, traditional institutional owners are cent) and France (12 per cent) have had relatively taken to be pension funds, investment funds and insurance high returns on their investments. This is proba- companies. bly because different countries invest in different 34 OECD (2013): «Institutional Investors as Owners: Who are they and what do they do?» 35 Modigliani, F. (1986): «Life Cycle, Individual Thrift, and the 36 See Ministry of Foreign Affairs: http://www.regjerin- Wealth of Nations.» The American Economic Review 76(3), gen.no/en/dep/ud/kampanjer/refleks/innspill/oeko- 297-313. nomi/benito.html?id=493175 36 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 2013–2014 Diverse and value-creating ownership

Foreign direct investment equity in Norway1

Billion NOK Annual growth rate % 1989–99 2000–09 450 Total 14 9 400 Oil and gas extraction 350 6 12

300 Financial Services 28 7 250 Retail fuel 12 7 200 Transport 26 14 150 Production 29 2 100

50 Turnover/operating property 11 21 Other 17 10 0 1989 9493929190 95 0908070605040302010099989796

1 Based on the most updated figures to SSB. Excludes direct investment in 2010, when industry affiliation for large parts was unknown to SSB. Note that the statistics range consists of the largest enterprises that have direct investments (SSB cutoff selection) Figure 3.6 Foreign direct investments in Norway. Source: Statistics Norway. sectors. Whereas Swedish and Danish-owned achieving specific company and sectoral companies have historically had most employ- exposure. In contrast to more active owners, ment in retail trade and service industries, the which largely exercise control by expressing their enterprises with investors from the UK, USA, opinions on the companies’ results at general France and the Netherlands have been more meetings, such foreign investors exercise their exposed to industry and especially the oil and gas control through frequent buying and selling of industry, where the return has often been higher shares. than in retail trade and other service industries37. Foreign owners and their capital have played a The extent of indirect foreign ownership can major role in Norway for a long time. From as far be more difficult to measure. One indicator may back as Norwegian industrialisation in the early be how active foreign investors are on the Oslo 1900s, foreign owners have been involved in Stock Exchange. Although foreign investors own developing business and industry in Norway, around 37 per cent of the market value of the often in the form of relatively large and capital stock exchange, they account for a full 89 per cent intensive enterprises linked to the export indus- of turnover38. The largest share of the foreign try. Examples of such companies are Orkla, Norsk indirect investors are international funds, which Hydro, Findus, Lilleborg Fabrikker and Hafslund. to a large extent view the Norwegian stock Today too, foreign ownership accounts for an exchange as an attractive opportunity for diversi- important and increasing share of both the Nor- fying their portfolios across countries39 and for wegian capital market and Norwegian business and industry. From 2000 to 2014, foreign inves- 37 Emberland, B., Totland, E. and Tveita, O. (2009): «Norge i tors’ stock exchange holdings rose from 34 per en globalisert verden – betydning av utenlandsk eierskap i cent to 37 per cent. The number of foreign-con- norsk næringsliv.» Statistics Norway's Økonomiske Analy- ser 6/2009. trolled enterprises in Norway has increased by 38 38 VPS ASA: http://www.vps.no/Om-oss/Statistikk/Utlendin- per cent, from 3,608 in 2000 to 4,979 in 2007. The gers-handel number of Norwegian-controlled enterprises 39 Bøhren, Ø. (2009): «Eierne, styret og ledelsen.» increased by only 20 per cent in the same peri- 2013–2014 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 37 Diverse and value-creating ownership od37. Within Norwegian industry, the number of contributions and government and municipal companies owned by foreign entities rose by 90 business operations. Public sector enterprises per cent, from 2003 to 201040. which are defined as administrative units are There are indications that foreign ownership excluded. This means that independent, commer- has positive effects. In a doctoral thesis at the Nor- cial companies where the state directly or indire- wegian School of Economics in 200641, Ragnhild ctly has a large holding are considered to be Balsvik analysed the effect of foreign acquisitions under public ownership. These are however inde- in Norway in the years 1979 to 2000. The study pendent legal entities which are not part of the indicates that industrial companies with foreign public sector and which also, to some extent, have owners are more productive on average than Nor- significant input from other owners. wegian industrial companies, and that enterprises The public sector owns a considerable propor- that are acquired by foreign owners on average tion of the country’s economic activity. In total, increase both productivity and employment fol- around one third of all equity in Norway is owned lowing acquisition. Other studies also indicate by the public sector, see figure 3.3, which is consi- positive effects. For example, research by Menon derable compared with other OECD countries. In Business Economics shows that foreign-owned recent years, many of these countries have been companies in Norwegian industry perform relati- undergoing extensive privatisation processes. vely well in terms of value creation and employ- Outside the OECD, the proportion of public ment40. ownership is often higher. For example, Brazil, India, Russia and China have substantial private ownership, in the case of the last two around 30 3.2.2 Public ownership per cent of the country’s total share capital42. The public sector has extensive ownership which The publicly-owned Norwegian equity is distri- includes both direct ownership in Norwegian buted between listed capital at around NOK 646 companies and indirect ownership in foreign and billion and unlisted capital at around NOK 1,062 Norwegian companies. The latter refers essenti- billion. The listed part is owned primarily through ally to the Government Pension Fund Global and the ministries and the Government Pension Fund the Government Pension Fund Norway which are Norway. The unlisted part of public equity consti- administered by the Norwegian Central Bank and tutes a relatively large proportion of the total the National Insurance scheme. In contrast to unlisted equity market (32 per cent43). The equity direct ownership, these investments are admi- owned by public administration is distributed nistered on the basis of a financial portfolio per- among governmental, county and municipal enter- spective, and not based on a strategic ownership prises (where more than 50 per cent of paid-up perspective in the individual companies. The value share capital are owned), and other governmental of the Government Pension Fund Global and and municipal business operations. Government Pension Fund Norway were respecti- Compared with other countries in the Nordic vely NOK 5,110 billion and NOK 172 billion at 31 region, Norway has a larger public ownership. March 2014. There are nonetheless greater similarities bet- In the following, only domestic public owners- ween the Nordic countries than with elsewhere in hip is discussed. This comprises primarily the Europe. For example in 2013, Sweden had 42 government’s, the municipalities’ and the county companies fully-owned by the state and 9 where authorities’ ownership. The ownership varies bet- the state was co-owner. The value44 of the Swe- ween different sectors and different types of busi- dish state’s direct ownership is around NOK 540 nesses. billion45. Finland also has considerable direct According to Statistics Norway, public owners- state ownership with 24 wholly-owned companies hip concerns all unlisted and listed, financial and and 36 companies where the state is a co-owner. non-financial companies where the state, municipalities and county authorities directly or indire- 42 Büge, M., Egeland, M., Kowlaski, P. and Sztajerowska, M. ctly own more than 50 per cent of the paid-up (2013): «State-Owned Enterprises: Trade Effects and Policy Implications.» OECD Trade Policy Paper 147. share capital, capital contributions or partnership 43 Estimated based on data from Statistics Norway. 44 This includes all holdings under direct state ownership. 40 Menon Business Economics (2012): «Industrielt eierskap i The value of the equivalent direct state ownership in Nor- Norge.» way was around NOK 665 billion at the end of 2013. 41 Balsvik, R. (2006): «Foreign direct investment and host- 45 Swedish Ministry of Finance (2013): «Rapport för bolag country effects.» med statligt ägande januari-december 2013.» 38 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 2013–2014 Diverse and value-creating ownership

The value of the Finnish state’s direct sharehol- prises. Since the early 2000s, there has been an dings in the listed companies came to around increase in the establishment of municipal and NOK 140 billion at the end of March 201446. county-level enterprises. From 2005 to 2010, for The public sector has ownership interests in example, the number of municipal enterprises companies operating in different industries. In increased by 10 per cent47. Although the start-up terms of turnover, mining and resource extraction rate has decreased in the last three years, this dominate, including the extraction of crude oil type of enterprise has become a larger part of the and natural gas, with Statoil and the state through public ownership spectrum. The control of these the State’s Direct Financial Interest (SDFI) as the companies has increasingly switched from admi- clearly largest entities. Companies which have a nistrative management to corporate governance. predominance of public ownership are also parti- According to KS (the Norwegian Association of cularly active in power supply, transport and infor- Local and Regional Authorities)48, this is an mation and communications services. undertaking that the municipalities have been less Municipalities and county authorities are sig- than successful with. According to KS, many nificant owners in the Norwegian context, both in municipalities lack control of their enterprises, in the form of county and municipal administration addition to lacking concrete ownership strategies. but also as owners of limited companies. Muni- cipalities and county authorities have a large degree of freedom to organise their services, 47 whether as part of administrative activities or KS (2010): «Anbefalinger om kommunalt eierskap.» Statis- tics Norway: https://www.ssb.no/statistikkbanken/Select- through the establishment of independent enter- Table/hovedtabellHjem.asp?KortNavnWeb=stoff&CMS- SubjectArea=offentlig-sektor&StatVariant=&PLan- 46 The Prime Minster’s Office of Finland: http://www.sta- guage=0&checked=true teownership.fi/ 48 KS (2010): «Anbefalinger om kommunalt eierskap.» 2013–2014 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 39 Diverse and value-creating ownership

4 Private ownership as a main rule

4.1 Why should private ownership be competitive markets, private owners will often be the main rule? best placed to be good owners. Private owners can often more directly look Private ownership is the main rule in Norwegian after their own preferences and property, and business and industry. According to Statistics exercise more direct personal ownership than the Norway, at 1 January 2014 there were 526,703 state, which performs its role as an owner on business enterprises in Norway. The predominant behalf of the community. In the case of a personal share of these are owned by private entities. owner, there will normally be fewer decision- The government believes that there are sound making steps between owners and management reasons why private ownership should be the than if ownership is administered by institutions, main rule in Norwegian business and industry, for example by being involved in the board of dire- and why state ownership should require special ctors or in the management. This indicates that justification. In the government’s view, there are a personal (private) owners may have stronger number of sound reasons why the state should incentives for safeguarding their own interests. exercise ownership of different companies. These This can produce better corporate governance, will vary from company to company, from an ini- higher profit expectations and more appropriate tial premise that state ownership may help provide risk management in line with the owners’ inte- economic and social safeguards. Accordingly, for rests. the foreseeable future Norway will have conside- Private owners can often be closer to the rable state ownership. An account of the justificati- markets and be better informed about the ons for this is given in chapter 6.1. markets’ needs and demands. This applies both to Private ownership is a diverse concept cove- active private owners who are involved in the ring different types of holdings, for example companies they own, for example on the board, family ownership, employee ownership, institutio- and to passive, more financial, owners who follow nal ownership and ownership by private individu- the companies’ developments closely on the basis als. Owners have different expectations and can of thorough financial and industrial analyses. contribute to the companies’ value creation in dif- Private owners are likely to have stronger ferent ways, and the extent of owner involvement incentives for efficient operation and high varies from highly active owners, taking an opera- returns1. Private owners’ strong incentives in tional role in the companies’ businesses, to pas- terms of both cost reductions and innovation are a sive financial owners with small shareholdings. fundamental argument for why private ownership Although there is great variation between pri- is more appropriate. This has been underpinned vate owners, in the government’s opinion, private by a number of empirical studies showing that, as ownership is characterised by certain fundamen- a rule, privatisation leads to lower costs and hig- tal factors that make it essentially well-suited to her quality2. contributing to value creation and improving Nor- Deficient and unevenly distributed information wegian competitiveness. between companies and their owners, and diffe- Private property is fundamental to a well- ring incentives between management and owners functioning society. This should also create a may also indicate that private ownership is funda- basic premise for the ownership of companies and mentally preferable. Those who set up and admi- enterprises. It is mainly private entities that initiate and 1 support the foundation, ownership and operation See for example Shleifer, A. (1998): «State versus Private Ownership.» Journal of Economic Perspectives, American of companies in Norwegian business and indus- Economic Association, vol. 12(4), pp. 133-150. try. In commercial enterprises in well-functioning 2 World Bank (1995): «Bureaucrats in Business.» Oxford University Press. 40 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 2013–2014 Diverse and value-creating ownership nister companies often have more information Norway, the owning ministries responsible try to about expected profitability and risk than external manage their different roles in an open, orderly capital providers (asymmetric information). There and deliberate manner. In exercising governmen- are reasons to expect that the challenges of asym- tal and supervisory functions, the state will nor- metric information will be greater for the state as mally not take account of its own ownership inte- an owner than they will be for private owners. rests. This is particularly the case where compa- This has to do with the fact that private owners nies under state ownership operate in competition may, for example, be closer to the management with private market participants. Even if the state (they themselves may sit on the board) or even is able to adopt sound mechanisms for dealing part of management, and because they may have with this issue, this is not necessarily sufficient for stronger incentives since they are investing their ensuring the state’s legitimacy and creating trust own assets. that competition takes place on fair terms. In order to avoid conflicts between roles, in areas where there are political objectives, it will be 4.2 The challenges of state ownership appropriate to try to achieve these objectives to the greatest possible extent through the use of In the government’s assessment, the governance instruments other than state ownership. Where of direct state ownership is handled in a professio- there are private market participants and well- nal and responsible way. Through transparency functioning markets, the primary task of the state concerning corporate governance principles, in respect of business and industry will be to facili- acceptance of the division of roles and responsibi- tate high levels of value creation in the economy lities in corporate legislation, governance through through stable, well-designed framework conditi- general meetings and an emphasis on choosing ons, rather than managing or owning business competent and independent boards of directors, activities on its own account. the exercise of Norwegian state ownership can be When the state owns companies, it needs to seen as advanced, including in an international organise itself in a way that creates confidence context. that the markets’ requirement for equal treatment However, there are particular challenges asso- of companies is respected. The roles can be refi- ciated with state ownership which tend to limit the ned in such a way that the ownership function is extent of direct state ownership in commercial lodged with separate entities that do not have companies in functioning competitive markets, other responsibilities which may conflict with the especially in areas where it is easy to distinguish ownership role. In order to help increase legiti- between the state’s use of regulatory instruments macy, supervisory activities are often delegated to and the producing enterprise. directorates and are thereby fundamentally sepa- Beyond the arguments in favour of private rated from central administration. A second factor ownership referred to in chapter 4.1, the govern- which promotes legitimacy is the EEA Agree- ment would like to draw attention to three parti- ment. Through the option of complaining to cular challenges associated with state ownership: EFTA’s surveillance authority, the markets have a – Conflicts between ownership of companies and tool which can be used in cases of doubt as to the state’s other roles. whether the state is favouring companies under – The risk of a concentration of powers which state ownership. This helps both to protect third- weakens the private sector. party interests (for example competitors of state- – Limitations in industrial expertise. owned companies) and to establish a process for dealing with cases where claims of favouritism of state-owned companies are made. 4.2.1 The state’s different roles Historically, when the state has engaged in There are potential conflicts between the exercise commercial activity, conflicts have also arisen bet- of the role of owner of a commercial activity and ween distribution policy concerns and corporate exercise of the state’s other roles. This may give profitability. In recent years, this has been counte- rise to adverse perceptions of the state’s roles and racted by the state having clearly communicated actions as an owner. When the state simultaneo- that its ownership will be exercised in a professio- usly occupies the role of owner, purchaser and/or nal and predictable manner in accordance with regulator, this may potentially weaken perceptions generally accepted principles for corporate gover- of the state’s legitimacy and effectiveness in its nance and company management, and through undertakings. In exercising state ownership in clear legislative delimitation of how the state as an 2013–2014 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 41 Diverse and value-creating ownership owner may act on the basis of competitive inte- 4.3 The government’s policy for rests. strengthening private ownership As long as the state has ownership interests, it is however effectively impossible for the state to A diversified, competent ownership can help be organised and to act in such a way as to pre- boost value creation; see chapter 2. With this in vent or discourage doubt being raised about its mind, the government has an objective of strengt- neutrality in exercising authority. It is therefore hening private ownership in Norway and organi- necessary to continuously evaluate the justifica- sing policies to make it more profitable to esta- tion and the scope of state ownership in commer- blish businesses, work, save and invest. Over cial companies. time, more new private enterprises and more private owners will contribute to the government’s objective. The government also aspires to reduce 4.2.2 Concentration of power direct state ownership over time, which may help In a democratic society, private initiative and wil- boost private ownership. The government will lingness to invest are the driving force for econo- make it possible for everyone to save and invest mic development. The government believes that and, through their ownership, participate directly this is a particular challenge in a small country in and reap the rewards of value creation that such as Norway, where the state owns a large pro- takes place in Norway. The objective is increased portion of the financial capital. The extent of the value creation and more secure and productive state’s direct ownership is considerable. The state jobs. owns around one third of the value of the Oslo The government seeks to conduct a forward- Stock Exchange through large holdings in some looking policy that facilitates value creation and of the biggest companies. At the same time, employment in the Norwegian economy. It is the through its other roles as policy maker, adminis- employees’, the companies’ and the owners’ abi- trative authority etc., the state exercises potenti- lity to restructure and innovate that has made the ally great power over citizens. Significant state companies competitive. The government will faci- ownership will therefore tend to increase the con- litate the continuation of this trend through pre- centration of power held by the public administra- dictable and advantageous framework conditions. tion at the cost of citizens. The government belie- This will help business and industry to achieve ves that this is a factor that should be highly emp- good competitiveness and the potential for more hasised and that there should be a trend over time value creation. towards the state reducing its ownership. It must also be attractive for foreign investors to invest in Norway. Foreign owners contribute to competent, diversified ownership and a value-cre- 4.2.3 Limited industrial expertise ating interaction between companies and owners. The state owns businesses in many sectors and They may also boost knowledge transfer and industries where the market conditions undergo expertise among Norwegian companies and pri- rapid change. Strong involvement of the owners in vate owners. It is therefore beneficial that foreign board and management positions is often impor- companies and investors want to invest in Nor- tant in such cases. This requires considerable way, which is reflected, for example, in the high industrial and market-related expertise. level of shareholdings of foreign investors on the Based on its different roles and in order to Oslo Stock Exchange, at around 37 per cent. This avoid political responsibility for commercial deci- shows that Norwegian employees, owners and sions, the state has chosen to refrain from partici- industries are competitive. pating on boards. Although, as a major owner, the For the foreseeable future, Norway will retain state has considerable influence on the election of considerable direct state ownership. How the board members and sets out clear expectations of state conducts itself as an owner is important for the companies, it can be difficult, solely on the the public’s and investors’ confidence in Norwe- basis of an ownership position, especially conside- gian companies and in the Norwegian capital mar- ring the sectoral diversification of companies ket. The government will therefore conduct its under state ownership, to meet the need for active state ownership policy in a responsible manner owner participation in such companies. This, too, that provides space for and contributes to both is an indication that direct state ownership should diversity of ownership and value creation. Profes- be limited. sionalism and transparency in state ownership are factors that may help strengthen confidence in the 42 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 2013–2014 Diverse and value-creating ownership

Norwegian capital market and improve the pre- be viewed in context. The key framework compri- conditions for private ownership. ses a predictable and effective tax system, effective infrastructure, opportunities for research and innovation, facilities for entrepreneurship, 4.3.1 Framework conditions access to skilled labour and access to capital. Sound and predictable framework conditions are The policy should be designed to make the crucial for business and industry and economic costs of restructuring as low as possible. Public value creation. Company start-ups and invest- policy instruments should facilitate changes in ments are often risk-prone and long term in corporate structure and production that yield bet- nature. Sound, predictable framework conditions ter profitability. If business subsidies, protection can reduce the risk of such decisions in general from international competition, use of market and reduce capital costs in particular, and thereby power or protective regulations prevent continued increase access to capital. Good framework condi- and profitable restructuring and innovation, the tions make Norway an attractive country for busi- restructuring processes may subsequently be far ness investments among both Norwegian and more costly to society. foreign private owners. From a business policy standpoint, it is desira- The government’s business policy is to be for- ble above all to reduce those taxes that most inhi- ward-looking and contribute to the greatest possi- bit value creation. However, account should be ble overall value creation in the Norwegian econ- taken of what the tax revenues are used for. Some omy. The policy shall facilitate both restructuring of the tax revenues are employed on growth-pro- and innovation. Over time, the ability to restru- moting measures which also benefit business and cture and innovate will contribute to efficient industry and the establishment of new enterpri- resource utilisation. This means that resources ses. Examples of this are the education system such as labour and capital are employed where which creates skilled labour; research initiatives they are expected to yield high returns. This in which provide access to new knowledge in Nor- turn will provide a sound economic basis for grea- way and from abroad; investment in entreprene- ter welfare. urship which contributes to the realisation of The government is working in many policy ideas as new goods and services; investments in areas in order to create a framework which, as a transport which provide access to markets; and whole, enhances the ability to restructure and inn- the welfare state which provides security for peo- ovate, and hence improve competitiveness in the ple and looks after those who bear the costs of Norwegian economy. Key to this work are the restructuring. economic policy, the Norwegian model which offers people security, including in the event of restructuring, and efforts to maintain well-functio- 4.3.2 Tax ning markets. The tax system is a crucial economic framework In its policies, the government will emphasise condition of great significance for Norwegian that what is most important for ensuring healthy business and industry and for private ownership. economic growth in Norwegian business and The government seeks to use the tax and duties industry is for the general economic policy to con- system to finance public goods, facilitate social tribute to sound, stable and predictable fra- mobility, achieve more efficient utilisation of mework conditions. The policy must therefore be resources, create better conditions for Norwegian structured so as to promote predictable and business and industry and strengthen private healthy trends in prices, wages, interest, ownership. It must be profitable to work, save, exchange rates and tax levels. This will also invest, and start up, operate and develop compa- reduce uncertainty in the economy. General fra- nies. mework conditions benefit all entrepreneurs, In order to achieve this, the tax system must companies, employees and owners; they facilitate be structured efficiently, and unnecessarily desired restructuring and innovation, more effe- complicated rules which entail extra costs for tax ctive markets, including the capital market, well- payers and the Norwegian Tax Administration functioning competition, strengthened private should be avoided. A broad tax base of low tax ownership and more value creation. rates offers more effective use of resources and The key to competitiveness is the overall fra- lower costs to society through taxation than hig- mework and its effect on the ability to restructure, her rates on a smaller tax base. Special schemes innovate and create value. This should therefore in the tax system aimed at specific types of invest- 2013–2014 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 43 Diverse and value-creating ownership ments, sectors or industries reduce the tax base knowledge generated abroad, and thereby contri- and hence tax revenues, and may come at the cost bute new insights and ideas to entrepreneurship of general growth-promoting tax reductions. This and innovation in new and established businesses. will reduce the overall return on capital and This can generate economic growth through new labour. Broad-based and diversified business and and improved goods, services and processes. The industry benefit from wide-ranging tax breaks. government aspires to stimulate an increase in The tax system thereby helps strengthen the R&D in business and industry, and in the 2014 basis for private ownership and, through this, hig- national budget substantially reinforced the Skat- her overall value creation in the Norwegian econ- tefunn scheme. The changes as of 2014 entail omy. increased options for tax allowances for busines- The government took the first step in growth- ses using the scheme. This should stimulate promoting tax reductions in the national budget increased R&D investment by reducing compa- for 2014. Total tax reductions in the adopted bud- nies’ R&D costs. Increased R&D investments may get came to in excess of NOK 7 billion. The gene- help strengthen private ownership by allowing ral tax rate for individuals and companies was innovation to spur the growth of new activities in reduced to 27 per cent, the wealth tax rate was new or existing companies. reduced to 1 per cent, while the minimum allo- The corporate tax rate is a significant part of a wance was increased to NOK 1 million, and inheri- company’s financial framework conditions, and tance tax was abolished. may be significant for where companies are loca- Lower taxes on ordinary income for individu- ted. In an increasingly more globalised economy, als and companies help make the economy more companies are more likely to move between expansive because they increase the return on countries than they were previously. The corpo- working, saving, investing and setting up, running rate tax rate in Norway should therefore not be and developing companies. significantly higher over long periods than the A lower wealth tax rate reduces the impor- rates in our neighbouring countries. In recent tance of the low taxable value for housing and years, several of our neighbours have reduced, or other real estate. This allows for a greater propor- decided to reduce, their corporate tax rate; see tion of savings to be channelled into investment in figure 4.1. A high corporate tax rate in Norway business and industry. The return on overall compared with other countries will make it less savings increases, and private Norwegian owners- attractive to invest in Norwegian business and hip is strengthened. A lower wealth tax may also industry, and increase the risk of Norway losing reduce any liquidity difficulties among private some of its tax base due to tax planning. Norwegian owners caused by taking out divi- The reduction of the corporate tax rate to 27 dends from a company in order to finance the per cent was a first step in the necessary adapta- wealth tax. In addition, in the long term, some of tion of corporate tax to international develop- the loss of revenue in income and wealth taxes ments. There may be a need for further tax redu- will be replenished due to more efficient use of ctions in order to strengthen the general fra- resources. mework conditions for business and industry in The inheritance tax was a challenge at genera- Norway, and make the Norwegian tax base more tional changes in family companies. The removal robust. The Scheel Committee has been asked to of this tax has therefore been long-awaited in this assess this in more detail. The Committee will segment of Norwegian business and industry in submit its proposal for changes in the autumn of particular. It facilitates the change of ownership in 2014. Because the government wishes to reduce family companies. The abolition of inheritance tax the tax and duty level, the Ministry of Finance has from 2014 onwards will ease the liquidity burden asked the Committee to also assess alternatives in the case of generational changes, simplify that produce net tax reductions. A reduction in the taxpayers’ obligations and reduce the Norwegian corporate tax rate will make it more attractive to Tax Administration’s administrative costs. The invest in business, and thereby help to strengthen change may strengthen private ownership due to private ownership in Norwegian business and more capital remaining in the hands of private industry. individuals and family companies. The government will use the national budget Through the Skattefunn scheme, business and in the years ahead to implement further tax chan- industry receive an extra tax allowance for rese- ges to stimulate saving, business activity, private arch and development (R&D) costs. R&D can ownership, investment and entrepreneurship. The bring new knowledge and provide access to government will work for a simpler, more growth- 44 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 2013–2014 Diverse and value-creating ownership

33 33

31 31

29 29

27 27

25 25

23 23

21 21

19 Denmark Sweden UK 19

17 Finland Norway 17 15 15 2000 2002 2004 2006 2008 2010 2012 2014 and stated goals ahead

Figure 4.1 Corporate tax rates in selected countries. Per cent Source: Ministry of Finance and International Bureau of Fiscal Documentation.

promoting tax system and will continue to priori- processes in existing and new enterprises. tise tax cuts that enhance Norwegian competitive- Through the public funding agencies, the state ness, private ownership, and secure productive can provide advice and financing, and facilitate the and value-creating Norwegian jobs. The govern- use of knowledge, expertise and networks for new ment will also assess other measures to strengt- ideas, innovations, new business and internationa- hen private ownership, including measures to lisation. By reducing the risk for private investors, increase private savers’ ownership of Norwegian in some cases, public capital can make it easier for companies and measures to stimulate employee start-ups and other companies to obtain further ownership. private capital and thereby stimulate private ownership. Public measures must often be financed 4.3.3 Other measures through increased tax revenues, which may repre- The work on simplifications for business and sent a loss of efficiency. It is also important that industry and private individuals is a key area for public funding does not displace private capital, the government. This may help businesses and reduce diversity of ownership, create adverse owners spend fewer resources on reporting and incentives, tie up resources in unprofitable activity purchasing of administrative services. This will or reduce the expected return on investments. make it easier to start up and run a business in One consequence of excessive public schemes Norway. The government aims to reduce the may be that companies do not gain access to the annual cost to business and industry of complying expertise that may accompany private investment. with statutes and regulations by NOK 15 billion by It is therefore crucial for the state, as for private the end of 2017, compared with the cost level in investors, to be aware of where the input provides 2011, which represents a reduction of 25 per cent. the greatest value creation and how public fun- Such measures will help reduce companies’ capi- ding can be used to stimulate private ownership. tal requirements and benefit new and small enter- The government will review the funding instru- prises in particular. This may spur increased ments and work towards an accurate and compre- investment and strengthen private ownership. hensive public funding system. The goal is a more The government will work for increased entre- effective use of resources and better impact from preneurship, which will also help new knowledge the business-targeted funding. to be employed in new goods, services and Part III The state’s ownership administered directly by the ministries

2013–2014 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 47 Diverse and value-creating ownership

5 The present state ownership administered directly by the ministries

5.1 Overview Western Norway RHA 100 % The state administers direct ownership in around 70 companies through ten different ministries1. South-Eastern Norway RHA 100 % The ownership varies in size, from large holdings Norsk Helsenett SF 100 % in some of the country’s largest listed companies to wholly owned companies with purely sectoral- Ministry of Local Government and policy purposes, and by the sector in which the Modernisation Holding companies operate. Under company law, these Kommunalbanken AS 100 % enterprises are organised as limited liability Ministry of Culture Holding companies, public limited companies, state enterprises, health enterprises and other types of spe- Norsk Rikskringkasting AS 100 % cial law companies. The State Ownership Report, Norsk Tipping AS 100 % issued annually, provides an overview of the state’s direct ownership as administered by the Ministry of Education and Research Holding ministries, and includes a review of most of the 2 Norsk samfunnsvitenskapelig data- companies . Readers are also referred to the tjeneste AS 100 % company review in chapter 9 of this report, which covers the commercial companies and the key Simula Research Laboratory AS 100 % companies with sectoral-policy objectives under UNINETT AS 100 % direct ownership, 55 companies in all. Universitetssenteret på Svalbard AS 100 %

Table 5.1 List of the companies reviewed in the Ministry of Agriculture and Food Holding report, grouped by which ministry administers Statskog SF 100 % ownership Veterinærmedisinsk Oppdragssenter AS 34 % Ministry of Defence Holding Ministry of Trade, Industry and Fisheries Holding Aerospace Industrial Maintenance Norway SF 100 % Aker Kværner Holding AS 30 % Ministry of Health and Care Services Holding Ambita AS 100 % AS Vinmonopolet 100 % Andøya Space Center AS 90 % Central Norway RHA 100 % Argentum Fondsinvesteringer AS 100 % Northern Norway RHA 100 % Bjørnøen AS 100 % Cermaq ASA 59.17 % DNB ASA 34 % 1 The ten ministries that administer the state's direct ownership are the ministries of: Defence; Health and Care Ser- Eksportfinans ASA 15 % vices; Local Government and Modernisation; Culture; Edu- cation and Research; Agriculture and Food; Trade, Indus- Eksportkreditt Norge AS 100 % try and Fisheries; Petroleum and Energy; Transport and Communications; and Foreign Affairs. Electronic Chart Centre AS 100 % 2 www.eierberetningen.no 48 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 2013–2014 Diverse and value-creating ownership

in terms of value, by Telenor, DNB, Yara Internati- Entra Holding AS 100 % onal, Norsk Hydro, Kongsberg Gruppen, Cermaq and SAS. At the same time, the state’s share of the Flytoget AS 100 % book value of equity in the unlisted companies Innovation Norway 51 % with commercial operations as their main pur- pose3, was estimated to be around NOK 113 bil- Investinor AS 100 % lion. This comes to a total estimated value of NOK Kings Bay AS 100 % 665 billion for the state’s direct commercial ownership at this time. It should however be Kongsberg Gruppen ASA 50.001 % noted that the book value of equity may vary con- Mesta AS 100 % siderably from the companies’ actual market values. In addition to this are the investments in Nammo AS 50 % the companies with sectoral-policy mandates. Nofima AS 56.84 % Norges sjømatråd AS 100 % 5.2 Historical developments Norsk Hydro ASA 34.26 % The justifications and purposes of Norwegian Space Norway AS 100 % state ownership have changed over time. This fact SAS AB 14.3 % must be seen in the light of changes in the markets, changes in policy, improved knowledge SIVA SF 100 % and economic trends. Historically, companies Statkraft SF 100 % have often come under state ownership as a result of assessments and decisions made at particular Store Norske Spitsbergen junctures. But a common denominator for state Kulkompani AS 99.94 % ownership has been the desire to safeguard the Telenor ASA 53.97 % public interest. This has led to state ownership, with different time frames, in a range of different Yara International ASA 36.21 % enterprises. As the motives and need for state Ministry of Petroleum and Energy Holding ownership as a policy instrument have changed, a number of liquidations of state holdings have Gassco AS 100 % been undertaken. There has been a trend towards Gassnova SF 100 % sectoral-policy objectives being increasingly separated from the actual exercise of ownership. Petoro AS 100 % However, ownership in a number of companies Enova SF 100 % still retains a sectoral-policy grounding. The post-war era saw the creation of a number Statnett SF 100 % of public corporations in the industrial sector. Statoil ASA 67 % Access to foreign capital was limited, notably due to restrictions on the movement of capital bet- Ministry of Transport and Communications Holding ween countries. A limited private capital market in Avinor AS 100 % Norway and political aspirations for industrial expansion were instrumental in the state’s contri- Baneservice AS 100 % bution of long-term capital for industrial develop- NSB AS 100 % ment. The state’s role in companies such as Årdal og Sunndal Verk (1947), Norsk Jernverk (1955) Posten Norge AS 100 % and Norsk Koksverk (1960) must be viewed in Ministry of Foreign Affairs Holding this light. Norfund 100 % When oil and gas extraction began on the Nor- wegian Continental Shelf in the 1970s, the aspiration of substantial ownership of the exploitation of The market value on the Oslo Stock Exchange of natural resources was the rationale for state the state’s direct ownership was in the region of ownership of Statoil and increased holdings in NOK 552 billion at year-end 2013. Ownership of Statoil constituted more than half of this, followed, 3 The companies in ownership categories 1, 2 and 3. 2013–2014 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 49 Diverse and value-creating ownership

Norsk Hydro. Ownership also secured public tralisation of major parts of the directly commer- access to large revenues in the form of resource cial holdings under state administration. Additio- rent. nally, a number of companies were privatised, A political desire to safeguard activities consi- such as Arcus (2001/2003), BaneTele (2006/ dered to be strategically important has led to state 2009) and Secora (2012). The state’s holdings ownership in a number of cases. Security and were also reduced through stock-exchange listing emergency preparedness concerns lay behind of Telenor (2000), Statoil (2001) and Cermaq state involvement in Raufoss Ammunisjonsfabrik- (2005). Furthermore, structural changes were ker (later Raufoss ASA which demerged its made both in companies with commercial objecti- ammunition activities in 1998 to create the Nordic ves and those with sectoral-policy mandates. ammunition group, Nammo), Kongsberg Våpenfa- A number of sectoral-policy companies were brikk (wound up in 1987, but the company’s created, through separation of activities, or mer- defence activities were continued and are now gers, or as new entities. Some of these enterprises part of Kongsberg Gruppen) and Horten Verft are economic policy instruments, including Enova (insolvency in 1987). (created in 2001), Innovation Norway (2004) and During the banking crisis of the 1990s, the Gassnova (2007). Other companies created in state took over the shares in a number of Norwe- order to cater for sectoral-policy concerns are gian banks, with the purpose of averting a more Simula Research Laboratory (2001), Universitets- serious banking crisis with unpredictable and senteret på Svalbard (2002), Nofima (2008) and potentially major negative economic consequen- Norsk Helsenett (2009). Petoro was founded in ces. The banks were later privatised through flota- 2001 to manage the State’s Direct Financial Inte- tions, but the state has retained a 34 per cent hol- rest (SDFI) in petroleum activities on the Norwe- ding in DNB. gian Continental Shelf. At the same time, Gassco Many of the companies owned by the state was established as an operator of gas pipelines were previously organised as governmental agen- and transport-related gas processing facilities. cies or public sector enterprises. The conversion Eksportkreditt Norge AS was established in 2012 to companies or independent enterprises has to administer a government export credit scheme. most frequently occurred through extensive regu- The regional health enterprises and their latory reforms. Examples of this are Statkraft and subordinate health trusts were set up from 2002 Statnett (1992, formerly Statkraftverkene) and onwards. The intention was to employ the corpo- Telenor (1994, formerly Televerket). rate form to achieve more efficient resource utili- In the 2000s, ownership policy was characteri- sation in the hospital sector. The hospitals had sed by reorganisation of ownership through cen- previously been linked to the county authorities, but with extensive state financing. 50 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 2013–2014 Diverse and value-creating ownership

6 Why should the state own?

6.1 Justifications for state ownership bility. Such failures can lead to poor functioning markets, lack of useful production of goods and In the government’s view, private ownership services and financial loss to the economy. Market should be the main rule in Norwegian business failures may have different causes, including and industry; cf. chapter 4. Direct state ownership entry barriers, economies of scale and scope, should have a special justification. external impacts on the supply and demand side, The state exercises ownership for a number of deficient competition and deficient or asymmetric reasons. These will vary from company to information. Market failures may also be due to company, from an initial premise that state regulatory omissions (such as a lack of property ownership may help provide economic and social rights), defective regulation that inhibits market safeguards. entry and creates adverse incentives and desired Beyond there being good reasons for state regulations (in some areas markets are not desira- ownership, the state also possesses specific cha- ble or not permitted). State ownership may serve racteristics which may make it a good owner in a as a viable instrument for correcting market failu- broader perspective. These include the fact that res. the Norwegian state is a long-term and financially For a society, it may be the case that some strong owner which is able to make a positive con- goods and services should or must be produced tribution to long-term ownership in the Norwe- other than through a freely competitive market. gian capital market. Along with other long-term This may be true, for instance, for the production investors, the state can contribute to stability and of public goods or production in areas with natural stimulate growth of Norwegian companies and monopolies. The electricity grid is an example competence building over time. The state has a where there are considerable benefits of scale cre- keen interest in the financial development of the ating a natural monopoly. Additionally, the central companies, and has short-term expectations in electricity grid is regarded as critical national this regard. Equally though, the state can take a infrastructure where state control is desirable. longer term view of its ownership than private sta- This is achieved through state ownership. keholders, and therefore also emphasises the Through Statnett, the state owns the majority of sound development of the companies over time. the central electricity transmission grid. The cen- Where there are investment opportunities with tral grid connects power producers and consu- anticipated returns and acceptable risk, the state mers in different parts of the country, safeguards has the capacity to contribute to the necessary central power exchange hubs in all regions and capital increases even in times of financial turbu- also covers international connections. lence. Accordingly, the state’s long-term owner- External effects arise when one participant’s ship can act as a stabilising force in the Norwe- decisions impact, either positively or negatively, gian capital market. other participants’ costs without this having been The following is a review of the justifications taken into account during decision-making. For on which the government believes state owners- example, the benefit to society of research and hip should be founded. The formulations of obje- development may be greater than the private ctives for the state’s ownership in each individual financial benefit. Another example is the potential company are set out in the company review in for cluster effects which may affect the profitabi- chapter 9. lity of the (geographical) siting of a business. Pro- fitability may be lower for both the individual enterprise and society at large if the individual 6.1.1 Correction of market failures participant does not take account of overall profi- Market failures are characterised by a discre- tability, but only his own activities. These exam- pancy between private and socio-economic profita- ples show that there are various forms of market 2013–2014 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 51 Diverse and value-creating ownership

Figure 6.1 Through Statnett, the state owns the majority of the central electricity transmission grid in Norway. Photo: Statnett.

failure where intervention can be used in order to of several means of safeguarding and developing seek to increase the national economic benefit. In desirable business activity and competence in cases of market failure, precise and targeted mea- Norway, and thereby contributing to increased sures should be designed to provide better incen- overall value creation for society. The develop- tives, help increase the coherence of private and ment of Statoil from 1972 until today being a good public profit and thereby also contribute to better example. functioning markets, more efficient resource utili- The knowledge capital represented by employ- sation and greater value creation. The state has a ees, owners, organisations and research instituti- variety of instruments for stimulating research in ons is important for the competitiveness of Nor- business and industry and rectifying other forms wegian business and industry over time. Key of market failure. State ownership should only be parts of a company’s competence, including its used to correct external effects or other forms of research and development function, have traditio- market failure when other, more accurate, instru- nally been located in connection with its head ments are unavailable. office. State ownership can be used as a means of keeping head office functions in Norway. This is ensured by owning at least one third of a 6.1.2 Maintaining important companies, company, which means that the state, in its head office functions and key ownership role, can oppose changes to the competences in Norway company’s statutes. From society’s perspective, it may be desirable to Strategic decisions at corporate level will keep certain types of business in Norway. For always be taken by the company’s governing example, some businesses may be considered or bodies, which are normally located at the head expected to have (external) positive effects on the office. Maintaining head office functions is there- rest of the economy. State ownership may be one fore desirable both in Norway and in many other 52 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 2013–2014 Diverse and value-creating ownership countries. For Norwegian business and industry, it is important that many small and large enterpri- 6.1.3 Management of common natural ses are run from Norway. Norwegian head offices resources in important companies can help to safeguard and There has been broad political consensus for develop specialised industrial, technological and securing for the common good a large share of financial expertise and can also contribute to the the wealth creation from the exploitation of natu- development of Norwegian leadership skills. State ral resources such as fisheries and aquaculture, ownership can contribute to the development of hydroelectricity and petroleum. Over a long Norwegian business and industry as a whole if it period, frameworks and institutions have been helps Norwegian businesses and technology to be developed in order to achieve this. retained in and developed from Norway. A sub- In some areas, other public means than state stantial contribution from the state in retaining, ownership has not been considered suffisient to attracting and developing such knowledge ensure control over and income from the coun- environments will be through a coherent policy try’s major natural resources. The necessity of for making Norway an attractive country to con- state ownership for achieving these objectives is duct business in. This will also help generate tax however subject to debate, since much has chan- revenues. ged since these different resources were first Companies are generally listed on the stock exploited. It is not feasible to move location-speci- exchange of the country where their head office fic natural resources abroad. Thus, regardless of is located, which is also where most of the trade in ownership, the state is able to retain a degree of the company’s shares will occur. This is one control over the resources and regulate their potential positive outcome of making it more management in various ways, as well as secure a attractive for companies to locate their head reasonable share of the return and economic rent offices in Norway. from the resource through taxation. Direct state Another reason for state ownership may be to ownership should therefore be evaluated over guarantee continued production of goods and ser- time against other options, especially where the vices of importance for national security, security preconditions are subject to change. of supply or the protection of national sovereignty. State ownership has been used as an instru- Concern regarding strategic production has ment for securing Norwegian control of a variety brought about state ownership involvement in a of natural resources. Statkraft SF and Statskog SF number of different enterprises. Security and are examples of state ownership being used as an emergency preparedness considerations were instrument to safeguard the management of natu- behind the state’s involvement in Raufoss Ammu- ral resources in line with public demand and the nisjonsfabrikker, Kongsberg Våpenfabrikk and common good. It may be the case, for example, Horten Verft. The state retains its ownership that private commercial exploitation of individual involvement in enterprises that emerged from natural resources has a short-term perspective these companies through Kongsberg Gruppen that is at odds with sound national economic and Nammo, and it is considered appropriate for exploitation over time. In order for the manage- the primary activities of these companies to be ment of such resources to be for the common kept in Norway. These companies are now co- good, consideration must be given to future gene- owned with private shareholders. rations. State ownership can be used as an instru- On Svalbard, state ownership will be maintai- ment to accommodate such concerns. State ned in companies which make a specific contribu- ownership may also play a role in ensuring that tion to supporting Norway’s Svalbard policy, with the revenues from natural resources benefit the reference to White Paper no. 2 (2008–2009). This common good rather than individual stakehol- applies for example to Store Norske Spitsbergen ders. Kulkompani, which is to be operated on a commercial basis and help maintain and develop the Longyearbyen community in a way which 6.1.4 Sectoral-policy and societal conside- underpins the overall objectives of Norwegian rations Svalbard policy, and Kings Bay, which is a key State ownership can, in some cases, be justified on player in achieving the objective of developing sectoral-policy grounds. This is especially relevant Svalbard and Ny-Ålesund as a platform for Norwe- in areas where the state particularly wishes to gian and international polar research. exercise management and control, including having the option to amend framework conditions 2013–2014 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 53 Diverse and value-creating ownership

Figure 6.2 Since its establishment in 1972, Statoil has developed into a leading global petroleum company. Photo: Kim Laland and Statoil ASA.

rapidly. Private owners may be wary of establis- There are, for example, sectoral-policy con- hing businesses in such areas, since the potential cerns behind state-owned hospitals. The objective for changes in framework conditions (the political is to lay the foundation for cohesive management risk) may be considered too great. State-owned of the specialised health service, through, for companies may be used as potential instruments example, legislation of an explicit governmental in particular policy areas. Specific sectoral-policy responsibility. State ownership also aims at facili- objectives may impose requirements on the indivi- tating better utilisation of the resources invested dual company concerning, for example, its sphere in the sector, thereby securing better health ser- of activity and products, availability, quality, services for the entire population. In parts of the vice and prices of goods and services. Vinmono- health, education and transport sectors, the obje- polet, for example, is used as an instrument in ctive has been to provide an fair basic service to alcohol policy to restrict and control the availabi- all citizens, regardless of ability to pay. Through lity of alcohol. The state also has a special respon- its ownership of, for example, Norsk Rikskring- sibility for safeguarding dependable national infra- kasting and theatre enterprises, the state has structure such as airports and power grids. This is aimed to secure cultural-policy objectives. currently achieved through ownership of Avinor State ownership can also be seen in the light of and Statnett. There has been a trend towards a commitment to equal access and secure provi- more differentiation of the state’s different types sion of certain services regardless of demand, of responsibility, e.g. responsibility for financing place of residence, willingness and ability to pay and for production. In some cases, responsibility and other status. Such justifications for state can be shared, with the state taking on the finan- ownership must be viewed in context with the cing liability, while production is put out to tender ambition of meeting sectoral-policy concerns, and and performed through public procurement. a case-by-case assessment must be made of whether state ownership is the most appropriate of the 54 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 2013–2014 Diverse and value-creating ownership

Figure 6.3 Statkraft is Norway’s largest power producer, with around one third of total national production. Photo: Statkraft.

instruments available. Even if the state sees it as take ownership of banks as a result of various cri- its role to safeguard a service, and potentially ses. In the wake of the last financial crisis, measu- secure its financing, there may still be alternatives res have been implemented, and prepared for to state ownership. These may include public pro- implementation, in many countries to enhance the curement by tender and public-private partners- solidity of the financial industry. These measures hips. Technological and societal advances may reduce the risk of finance institutions and the however alter the preconditions, as has happened financial markets in general and might reduce the in the telecommunications sector, for example. need for last-resort state intervention during cri- In the event of certain crises, state ownership ses. might be the only suitable means of protecting the interests of the society. Such interventions will be the exceptions. Any state intervention will have to 6.2 Alternative instruments to state comply with the provisions concerning state aid ownership under the EEA Agreement. In individual instances of crisis, the state has intervened on the owners- Each case should be individually assessed to hip side. During the banking crisis of the early determine whether ownership is the most effe- 1990s, the state became the sole owner of the ctive instrument for the state in order to achieve three largest commercial banks, following the goal in question. Such assessments can be attempts at solutions using private capital. The made by weighing benefits and costs against purpose was to avert a more serious banking cri- policy objectives. They should be performed regu- sis. Shareholdings were subsequently disposed of, larly, as preconditions may change over time. two banks were sold, one part-privatised, and the There has been a trend that safeguarding certain state is currently left with a 34 per cent sharehol- objectives through ownership has been replaced ding in DNB. Other countries have also had to by regulatory instruments such as licensing rules, 2013–2014 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 55 Diverse and value-creating ownership

in the same way as with private companies. Con- tract management may entail production of specific types of goods or services, or fixed prices to users, in return for payment from the state. Such agreements can be signed on a commercial basis with commercial companies, concurrently with the state’s pursuit of its sectoral-policy objectives. Tendering regulations can define requirements for tenders, seeking to achieve cost efficiency and efficient allocation of resources. An example of this is a number of air and bus routes being regularly put out to tender to ensure a broad transport service in all parts of the country. This approach provides a clearer distinction between the supplier role (for example, as a sectoral-policy instrument) and the owner role. Furthermore it enables privatisation of companies as the pursuit of the policy concerns is no longer linked to ownership.

6.3 Categorisation of the companies under direct ownership

Since 2006, the state’s portfolio of companies has been categorised into four different categories. The categorisation has been based on the state’s justification and objectives for direct state ownership; cf. chapter 6.1. The government believes that Figure 6.4 Vinmonopolet is used as an instrument the ownership categorisation system has helped in alcohol policy to restrict and control the availa- clarify the state’s objective for ownership of the bility of alcohol. individual company and that the current four cate- Photo: Erik Thallaug and AS Vinmonopolet. gories are appropriate. As such, the government intends to maintain the current categorisation. The specific categorisation and the formulation of the state’s objectives in each company are stated legal acts and regulations. As sectoral-policy justi- in chapter 9. fications for state ownership can change over The four categories are: time, the pursuit of policy objectives can be diffe- 1. Companies with commercial objectives. rentiated from the actual exercise of ownership. 2. Companies with commercial objectives and The importance of ownership for regulating the objective of maintaining head office functions market through management companies is redu- in Norway. ced and in some sectors ceased. Licensing provisi- 3. Companies with commercial objectives and ons can ensure, for example, that requisite ser- other specifically defined objectives. vices are made available to all, even without public 4. Companies with sectoral-policy objectives. ownership. Incentives, new technology and increased competition in larger and more integrated Category 1 – Companies with commercial objectives markets mean that the various objectives can now be achieved more effectively through such This category includes companies where the avenues as the market, legislation, regulation and state’s ownership objective is purely commercial. licensing terms than through state ownership of The administration of ownership of the companies the supplier. in this category has the sole purpose of maxi- Other options include linking subsidies and mising the value of the state’s investments, nota- charges to specific patterns of action, contract bly through contributing to sound commercial management and public procurement. The state development of the companies. Whether the state can manage its companies by signing agreements 56 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 2013–2014 Diverse and value-creating ownership should remain an owner of these companies is the For most of the companies in category 3, the subject of continuous commercial assessment. situation will be rather similar to category 2, with no need for special follow-up in the administration of ownership in order to achieve the specifically Category 2 – Companies with commercial objectives defined objectives. The objectives are achieved and objective of maintaining head office functions in through the company running its business on a Norway commercial basis within the sector in question. This category includes companies where the state Based on the state’s objective for its owners- has a commercial objective with its ownership, hip, individual guidelines for activities may be set and an objective of maintaining the companies’ out for some companies. To obviate doubt that head offices and associated head office functions these companies are operated on a commercial in Norway. To achieve this last objective, a share- basis, the sectoral-policy administration will pri- holding of more than one-third is (normally) suffi- marily be provided through regulations, licensing cient. rules and public procurements from the companies on commercial terms.

Category 3 – Companies with commercial objectives and other specifically defined objectives Category 4 – Companies with sectoral-policy This category includes companies where the state objectives has a commercial objective in its ownership, and The state’s ownership of the companies in cate- where there are other societal justifications for gory 4 has primarily sectoral-policy objectives. state ownership than maintaining the head office The objectives for these companies should be in Norway. adapted to the purpose of ownership in the indivi- A common feature of the companies in cate- dual company. As an owner, the state will strive to gory 3, as of the companies in categories 1 and 2, achieve its sectoral-policy objectives as efficiently is that they operate in competition with other busi- as possible. nesses on a commercial basis1. 1 For some companies, certain parts of their activities may be exempt from competition. 2013–2014 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 57 Diverse and value-creating ownership

7 What should the state own?

The government aspires to facilitate diversifica- proposal to the Storting for 2015, the government tion and value-creation in Norwegian business will ask the Storting for a mandate to fully or parti- and industry, and to strengthen private owners- ally divest the state’s ownership of companies in hip; see chapter 4. This will help improve Norwe- category 1. For some of these companies, the gian competitiveness. Accordingly, over time, the government already has such mandate. government wishes to reduce the state’s direct The government emphasises that, even ownership interests. This will particularly apply to though the state should not have a long-term companies where the state has no particular rea- ambition of owning such companies, any changes sons for being an owner, but it may also be appro- in the state’s holdings will be made only if it is con- priate to reduce the state’s holdings in other sidered to be financially beneficial to the state. companies, assuming this can be done within a Furthermore, there may be corporate or market- framework that safeguards the objective of the related factors entailing that the state should ownership. delay use of these powers. The government points to the fact that the The companies in category 2 are commercial ambition of reducing the state’s direct ownership companies where the objective of the state’s over time is not a budgetary matter, but relates to ownership, beyond a return on invested capital, is the factors described in chapters 4.1 and 4.2. The to retain head offices in Norway. This is achieved allocation of capital freed up from any reductions primarily through a holding that ensures negative in the state’s holdings must be understood on the control, i.e. more than one-third. The govern- basis of the frameworks drawn up for the adminis- ment’s premise will therefore be that it will not be tration of the state’s financial assets. appropriate to reduce the state’s holdings in these A desire to secure control of natural resour- companies to below 34 per cent. To the extent that ces, maintain the presence of key companies in the boards or others suggest value-creating indus- Norway and safeguard sector-policy interests sug- trial solutions that may only be realised through a gests that the state will retain a substantial portfo- reduction in the state’s holding to below 34 per lio of holdings for the foreseeable future. The cent, this would be subject to a detailed assess- government will administer its holdings in a pro- ment of the commercial benefits and potential for ductive and professional manner, and will be open safeguarding the state’s ownership objective. Any to transactions that may enhance the value of the matters of this nature will be brought before parli- commercially oriented companies. ament. The changes that the government wishes to There may be special factors dictating why the implement over time in the state’s direct owners- lower threshold for the state’s holding in indivi- hip are detailed below. Please also refer to the dual companies in category 2 deviates from 34 per review of companies in chapter 9. cent. This applies to, for example, Statoil ASA, Aker Kværner Holding AS and Nammo AS. The first of these relates to Statoil’s sale of the state’s 7.1 Changes to the state’s ownership oil and gas along with its own, while for the other two, the state has signed shareholder agreements 7.1.1 Reduction in the state’s direct with industrial partners. Another relevant factor is ownership over time also whether or not the companies are listed on a The government believes that the state should not stock exchange. In companies where ownership is have a long-term ambition of ownership in compa- not diversified, it may be necessary to have a lar- nies where the state’s objectives are purely ger holding to retain sufficient ownership influ- commercial. In the government’s opinion, over ence. time, other owners will often be better at develo- Category 3 includes companies where the ping such companies. On this basis, in the budget state has a commercial objective in its ownership, 58 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 2013–2014 Diverse and value-creating ownership and where there are other justifications for state ownership. On this basis, and in order to reduce ownership than maintaining head offices in Nor- the state’s direct ownership over time, the govern- way. The government believes that there are ment will be open to possibly reducing the state’s sound justifications for the state to have holdings holdings in two of the companies in category 2. in these companies. Nonetheless, for companies On this basis, in the budget proposal to the in category 3, there may still be scope for adjust- Storting for 2015, the government will ask the ments to and changes in the state’s ownership Storting for a mandate to possibly reduce the based on commercial considerations, and in a way state’s holdings in Kongsberg Gruppen ASA and that also takes into account the state’s rationale Telenor ASA, down to 34 per cent. for ownership in these companies. Any specific Any changes in the state’s holdings that may matters will be brought before parliament. increase value to the state and improve the indus- The state’s holdings in the sectoral-policy trial foundations of the companies in category 2 companies in category 4 should, as a rule, remain and where there are shareholder agreements intact. This does not however prevent changes if regulating the state’s ownership, i.e. Aker Kvær- the sectoral-policy interests no longer apply, or ner Holding AS and Nammo AS, must be assessed can be fulfilled in another satisfactory manner in light of these agreements. It is therefore not through the use of instruments other than proposed to adopt such mandates; see chapter ownership. Telenor and Statkraft are examples of 7.1.1. In DNB ASA, Norsk Hydro ASA and Yara large businesses that have transitioned from state International ASA, the state’s holdings are pre- enterprises to companies subject to commercial sently very close to 34 per cent, and it is not consi- competition. A more recent example of a transi- dered appropriate to propose having a mandate to tion from category 4 to category 1 is Ambita (for- reduce the state’s ownership in these companies. merly Norsk Eiendomsinformasjon). As concerns the government’s assessments relating to the companies in categories 3 and 4, readers are referred to chapter 7.1.1. 7.1.2 Value-increasing transactions Only in very special circumstances will the The primary objective of the administration of government assess increasing the state’s holdings ownership in the commercial companies is a high in partly owned companies. Nor does the govern- return on invested capital over time. ment consider it relevant for the state to be pro- As an owner, in principle, the government will active in acquiring new strategic positions in take a positive view of strategic initiatives and companies subject to competition. The experien- transactions that may be expected to contribute to ces from the state’s attempts at industrial develop- value growth in the companies and that are also ment during the second half of the last century do implementable within a framework that safegu- not indicate that the state is the best actor for furt- ards the objective of the state’s ownership. hering economic growth through direct owners- In a global economy where complexity is on hip. Only in extraordinary cases will the govern- the rise and where innovation and advances in ment consider undertaking new state ownership technology are fast-paced, it is challenging for positions. Such an undertaking would have to be companies to maintain and strengthen their carefully assessed and justified on the basis of competitive positions over time. Successful economic profitability and broader considerati- companies need to be agile and to have a good ons. understanding of strategic and competitive oppor- The government would also draw attention to tunities that arise as the business climate evolves. the state’s other instruments and policies for facili- Such reorganisation may also require participa- tating diverse and value-creating business and tion from the owners, for example, through inje- industry in Norway. ction of capital, mergers and acquisitions, or through the addition of new types of expertise on the owner side. 7.1.3 Demergers and the creation of new The government emphasises that, as an state companies owner, the state should conduct itself so as to The government is committed to state production allow the companies to exploit good commercial activities being carried out efficiently, using an opportunities, and will therefore actively assess appropriate management and organisational stru- any initiatives proposed by the companies, provi- cture. Against this background, the government ded they are judged to be commercially beneficial may consider reorganisations of state enterprises and take into account the objective of the state’s and the establishment of new companies, predica- 2013–2014 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 59 Diverse and value-creating ownership ted on new state ownership being established on ment no. 7 (1972–1973) in Recommendation no. the basis of economic profitability or certain speci- 277 (1976–1977). fied objectives. For example, since the change of Given the government’s ambition to reduce government, the Ministry of Transport and state ownership and contribute to value-creating Communications has worked to facilitate a num- transactions, the government will, as mentioned, ber of major reforms in the transport sector. For in connection with the national budget for 2015, the roads, the government is working to set up a ask the Storting for the following mandates: development company, with the object of underta- – Mandate to fully or partially divest the state’s king more road projects and making road expansi- holdings in all companies in category 1. ons more efficient. The reform activities also aim – Mandate to possibly reduce the state’s share- to reorganise Jernbaneverket (the Norwegian holding in Kongsberg Gruppen ASA and National Rail Administration) and NSB (Norwe- Telenor ASA down to 34 per cent. gian State Railways) in order to achieve an appropriate administrative structure, a commercial As mentioned, any use of these powers must be organisation and clear goals. commercially justified. Any use of these powers may also relate to different types of solutions, such as sales of the state’s shares to industrial or 7.1.4 Factors to be emphasised in the event financial entities, public offerings or as part of of changes to the state’s ownership industrial solutions. The government stresses that it is crucial for any The government has also assessed the need for changes in state ownership to be carried out in a other powers, based in particular on the concept manner that is professional, commercially justifia- that the state, in commercial companies, should ble and which protects the value of the state’s have the opportunity to act in a professional man- assets. ner in the same way as other good owners do. In deciding on changes in the state’s owners- As described in chapter 2.3.2, the accelerating hip, the government will assess both market-rela- pace of change in business and industry means ted and company-specific factors. The govern- that companies have a greater need to restructure ment will not make any changes to the state’s than was previously the case. This may require ownership or support any transactions that are participation from the owners, for example not considered financially beneficial for the state through the injection of capital, through acquisiti- in each individual case. This implies, among other ons, mergers, divestments, etc. things, that reduction in the state’s direct owners- The government is aware of the increased hip will take place over time. requirements for rapid and effective decision- The powers that may be given to the govern- making processes, but believes that there are no ment in companies in categories 1 and 2 must also grounds for diverging from the fundamental divi- be understood on the basis of the government’s sion of responsibilities between government and ambition of being amenable to supporting value- parliament in matters of ownership, and will conti- creating transactions through adjustments to its nue adhering to this policy. In the government’s holdings in these companies. opinion, this division of responsibilities has wor- When assessing such transactions, the ked well and has not prevented companies in government will normally also employ external which the state has a large holding from exploi- advisors. ting commercial opportunities on an equal footing with other companies. The government also believes that there are 7.2 Ministerial powers no reasons for departing from the established practice of the state being reticent to grant powers Under Section 19 of the Constitution, it is not wit- to the board of directors in cases which in law are hin ministerial powers to alter the state’s capital vested with the annual general meeting. investments in companies with state ownership, As described in chapter 8.3.1, the government for example through the purchase or sale of sha- will also continue supporting the state contribu- res, participation in rights issues or funding indus- ting to buyback programmes (whereby the trial transactions through share settlements that company buys its own shares on the market in change the state’s holdings. For such actions, the order to annul them, as a supplement to divi- government must hold special mandate from par- dends), on condition that the state’s shareholding liament; see the Storting’s discussion of Docu- in the company is not thereby altered. 60 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 2013–2014 Diverse and value-creating ownership

8 How should the state own?

Through direct ownership exercised by the minis- clear understanding of the need for board tries, the state is patently the largest owner in Nor- expertise in each individual company, and has way, and also a major owner in the international in recent years strengthened its efforts in rela- arena. Norway and the other Nordic countries are tion to board member recruitment and evaluat- regarded as being exemplary in their exercise of ion. These efforts will be continued. state ownership. This is to a great extent attributa- – Effective corporate governance strengthens ble to the political consensus achieved on the market confidence in companies and boosts main frameworks for the exercise of state owners- value creation over time. The state will place hip, which have been conducive to predictability emphasis on being a leading owner when it for the companies and the capital markets. The comes to promoting good corporate gover- constraints of these main frameworks entail that nance. state ownership must be exercised professionally in line with corporate and other legislation; in line The following discusses the state’s exercise of with generally accepted corporate governance ownership. principles; that the state’s influence as an owner must be exercised exclusively at general meetings; and that a clear distinction must be maintai- 8.1 Framework for the state’s ned between the state’s role as an owner and its ownership administration other roles. The government aims for the Norwegian 8.1.1 Constitutional framework state’s ownership to be an example of best Article 3 of the Constitution of the Kingdom of practice internationally. In exercising its owners- Norway prescribes that executive power is vested hip, the state emphasises areas in which the state in the King, which, in practice, means the govern- has positive prerequisites for adding value to its ment. However, the Storting (Parliament) may holdings: issue general guidelines and instruct the govern- – Within the established frameworks for corpo- ment in individual cases by means of plenary reso- rate governance, including the distribution of lutions of the Storting or passing of bills. roles and responsibilities between the board State ownership of enterprises is also regula- and owner, as prescribed by corporate legisla- ted by Article 19 of the Constitution: «The King tion, the state will continue to emphasise shall ensure that the properties and regalia of the improving strategic and financial supervision state are utilised and administered in the manner of its portfolio. This will be achieved by means determined by the Storting and in the best inte- of analytical follow-up, by elaborating on strate- rests of the general public.» It is thus the govern- gic approaches to company performance, and ment that administers the state’s shares and by maintaining explicit expectations regarding ownership in state-owned enterprises, and special company performance. For each company in law companies etc. This provision vests the Stor- isolation, there is strength to be drawn from ting with express legal authority to instruct the engaging in strategic dialogue with a deman- government in matters pertaining to state owner- ding owner within the scope and constraints ship. outlined above. Administration of state ownership is delegated – The state is not represented on corporate to the ministry under which the company sorts, in governing bodies. One of the main tasks of the accordance with Article 12(2) of the Constitution. state as an owner is to establish competent The Minister’s administration of ownership is boards that are duly capable of dealing with the exercised under constitutional and parliamentary strategic challenges faced by the companies responsibility. they oversee. As an owner, the state must have 2013–2014 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 61 Diverse and value-creating ownership

The Storting’s funding mandate entails that following, the term «general meeting» is used as a the consent of the Storting must be obtained in common term to refer to both forms of meetings. the event of changes in the state’s holdings in a A general meeting is a meeting conducted in company (acquisition and divestment of holdings) compliance with detailed rules laid down in Nor- and resolutions regarding capital injections entail- wegian corporate law. A company’s general mana- ing disbursements by the state. ger, board members, members of the corporate Companies in which the State has ownership assembly and the company’s auditor shall be sum- will usually be able to purchase and divest shares moned to attend and are entitled to be present and in other companies and acquire or dispose of to voice their opinions at the general meeting. parts of business operations where this is a natu- Attendance by the chair of the board and the ral step in the realignment of the company’s general manager is mandatory. In addition, the object-specific operations, without the approval of Office of the Auditor General of Norway shall be the Storting being required. For companies where notified of general meetings and has the right to the state is the sole shareholder, the consent of attend. Minutes shall be taken of the general mee- the Storting must be obtained regarding decisions ting. A general manager or member of the board which would significantly alter the state’s commit- of directors or corporate assembly member who ment or the nature of the business; see p. 18, disagrees with the resolution adopted by the Recommendation no. 277 to the Storting (1976– representative of the company’s shares may have 1977). When the State is a joint shareholder, the his dissenting vote entered in the minutes. question of whether the case should be prediscus- The rules regarding minutes-taking and notifi- sed in the Storting arise for matters of such scope cation of the Office of the Auditor General of Nor- that they must be brought before the general mee- way provide the basis for constitutional supervi- ting (company demergers or mergers, for exam- sion of the administration of state ownership. ple). Depending on the State’s holding in the The provision in Section 5–1 of the Limited company, it may be necessary to bring such mat- Liability Companies Act entails that the minister ters before the Storting; see p. 19 Recommenda- via the general meeting assumes supremacy over tion to the Storting no. 277 (1976–1977), but the the board in state limited liability companies and main rule is that matters concerning acquisition may issue instructions which the board has a duty and divestment of shares, including acquisition to comply with. These might be general instructi- and divestment of subsidiaries, sort under the ons or special instructions on individual matters. company’s management. By tradition, the state has exercised caution in The Office of the Auditor General of Norway instructing the enterprises on individual matters. conducts audits of the minister’s (the ministry’s) This is due firstly to the fact that it conflicts with, administration of the state’s ownership, and and undermines, the strict separation of roles and reports to the Storting accordingly. responsibilities laid down in corporate law; see chapter 8.1.3. An instruction issued at a general meeting might cause the board to resign from 8.1.2 The minister’s authority within the office rather than accede to the instruction. company Secondly, active use of the instructing mandate at The legal basis for ministerial ownership authority a general meeting may affect the constitutional in a limited liability company is laid down in responsibility vested in the minister vis-à-vis the Section 5–1 of the Limited Liability Companies Storting in the event that the minister assumes Act which states: «Through the general meeting responsibility, through a resolution of the general the shareholders exercise the supreme authority meeting, for actions that are customarily the pre- in the company.» A similar provision applies to serve of the board. Active use of the instructing public limited liability companies, state enterpri- mandate might also carry implications as regards ses and the majority of special law companies1. As third-party damage liability. regards the state-owned enterprises, the term Another consequence of Section 5–1 of the «general meeting» is replaced with «enterprise Limited Liability Companies Act is that the minis- meeting» but effectively denotes the same. In the try in its role as owner, has no authority within the company in the absence of the general meeting structure2. In jointly owned companies, in addition to the 1 One exception is Vinmonopolet, which does not hold a general meeting; see the Vinmonopolet Act no. 18 of 19 constraints described above, further limitations June 1931. are placed on ministerial authority out of regard 62 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 2013–2014 Diverse and value-creating ownership for the other shareholders and in conformance with the limited liability companies legislation’s 8.1.4 Specifically concerning management parity principle; see Section 5–21 of the Limited of companies wholly owned by the Liability Companies Act/Public Limited Liability state Companies Act. This means that the state, even as Ownership in companies in which the state owns a majority shareholder, is not permitted to favour all the shares (state limited liability companies3, its own interests at the expense of the other share- state enterprises or special law companies4) is holders in the company. The requirement for sha- exercised as it is for other companies, by means of reholder parity has the effect, for example, of limi- general meetings or trust/enterprise meetings5. ting the scope for free exchange of information One exception is Vinmonopolet, which does not between the company and the ministry. The hold a general meeting6. public limited liability companies legislation also By law, for state enterprises, matters assumed lays down explicit guidelines regarding the state’s to be of material significance for the company’s supervisory interaction with listed companies. objectives or which to a significant degree would This, however, does not prevent matters of wider alter the nature of the undertaking shall be put to societal relevance from being addressed by the the owner before a decision is made7. A similar state in supplement to its ordinary ownership dia- rule applies to the health enterprises8. For certain logue with companies in line with what is exerci- state limited companies, rules have been incorpo- sed by other shareholders and stakeholders. rated in the articles of association requiring the board to bring before the owner any matters assumed to be substantive, setting a precedent or 8.1.3 Administration of the company having political or societal implications for the Company management is composed of the board owner. According to this same rule in the articles of directors and the general manager. The limited of association, some companies also have a duty to liability company form and other company forms regularly present the owner with a plan for the employed for state companies are based on a company’s activities. Such plans form the basis for strict separation of roles between the company’s ministerial ownership reports to the Storting on owner and its management. Pursuant to Section the activities of these companies. However, this 6–12 of the limited companies legislation and cor- does not alter the fact that the state exercises its responding provisions in the other company acts, authority as an owner at the general meeting or management of a company pertains to the board enterprise general meeting. of directors and the general manager. This entails For state-owned enterprises and state limited that day-to-day commercial management of a liability companies, certain rules accord greater company and responsibility for it rests with powers to the enterprise meeting and the general company management. Management shall be meeting than is otherwise laid down in law for exercised by the board of directors and the gene- other types of limited liability companies, such as ral manager in the best interests of the company the right to set a higher dividend than that propo- and its owners. Within the general and specific frameworks determined for the company by the 3 See Sections 20-4 to 20-7 of the Limited Liability Companies Storting, the state as an owner pursues its inte- Act. 4 rests through the general meeting. By virtue of Special law companies denotes companies governed by their own dedicated statute, which typically also lays down their management of the company, the members specific organisational rules. Examples of special law of the board and the general manager are subject companies include Vinmonopolet, Norfund and the regio- to personal and criminal liability as laid down in nal health enterprises. 5 the limited liability companies legislation. See the consultative memo from the Ministry of Local Government and Modernisation: «Sektorselskaper, virke- midler og effektiv måloppnåelse. Vurdering av virkemiddel- bruk overfor statlig heleide sektorselskaper» (Sectoral enterprises, policy instruments and effective goal attainment) of February 2014, in which Section 4.3.2 refers to a survey conducted by Difi confirming that formal ownership is exercised by the ministries through the general meeting or enterprise general meeting. 6 See the Vinmonopolet Act no. 18 of 19 June 1931. 7 2 In special law companies, other arrangements may be in See Section 23 of the State-Owned Enterprises Act. place; see, for example, the Gaming Act, which regulates 8 See Section 30 of the Health Authorities and Health Trusts the activities of Norsk Tipping. Act. 2013–2014 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 63 Diverse and value-creating ownership sed by the board of directors or corporate assem- ters are not treated differently on account of the bly9. state ownership10.

8.1.5 Other frameworks 8.1.5.3 Regulations for financial management Apart from the frameworks ensuing from the Con- within the state stitution, the law of public administration and cor- One decisive constraint on the state’s exercise of porate law, it is mainly competition law and stock ownership derives from the «Regulations on exchange trading and securities law which impose Financial Management in Central Government»11. legal requirements on the State’s corporate gover- The Regulations apply to matters such as manage- nance. Other principal legal frameworks ensue ment and follow-up of the state’s ownership interests from EEA regulations such as the rules regarding in state limited companies, state-owned enterprises, state aid. special law companies or independent legal entities wholly or partially owned by the central government, including the purpose that central govern- 8.1.5.1 Public-sector ownership and the EEA ment assets shall be properly managed. Agreement Section 10 of the Regulations on Financial The EEA Agreement is essentially neutral as Management in Central Government state that: regards public and private ownership; see Articles «Agencies with overall responsibility for state limi- 125 and 59 (2). The prohibition against state aid in ted companies, state-owned enterprises, companies Article 61 (1) of the EEA Agreement thus also established by special statute or other independent applies to undertakings held by the State or other legal entities wholly or partially owned by the cen- public instances. This restricts the government’s tral government, shall draw up written guidelines scope for favouring non-commercial interests in on how management and control powers shall be the exercise of ownership. In determining whet- executed for each individual company or for groups her public funds furnished to an enterprise consti- of companies. A copy of the guidelines shall be sent tute state aid, the European Court and European to the Office of the Auditor General. Commission have elaborated the Market Econ- The central government shall, within the fra- omy Investor Principle. If a public authority injects mework of applicable laws and rules, manage its capital on terms other than those that would be ownerships in accordance with general principles of acceptable to a comparable private investor, the corporate governance with special emphasis on: investment might be construed as holding a finan- a) that the chosen organisation of the company, cial advantage for the enterprise and as such con- the company’s articles of association, the financing travenes the rules regarding state aid. This entails and the composition of the management board are that the state must demand normal market-rate appropriate given the company’s purpose and returns on capital invested in an enterprise opera- ownership ting in competition with others. The EFTA Super- visory Authority (ESA) supervises Norwegian compliance with the state aid regulations. 10 The Ministry of Trade, Industry and Fisheries is responsible for competition policy, including competition law governing enterprises and the state aid regulations. The Minis- try is also the appeals body for matters pursuant to the 8.1.5.2 Competition rules Competition Act pertaining to either private-sector or public-sector companies. An acting councillor of state is In principle, any changes in state ownership will appointed for the Minister for Trade, Industry and Fis- also comprise circumstances that are supervised heries for the hearing of complaints pursuant to the by Norwegian or other competition authorities. Competition Act in which companies in which the state has a holding are indirectly or directly affected by the outcome These would include enterprise mergers and of the complaint, and in which the Minster, owing to his or acquisitions, which the competition authorities, her responsibility for management of the state’s ownership pursuant to the competition rules applicable to interests in the company in question is disqualified or so borderline to disqualification for the Minister in the role of enterprises, are to monitor. In such matters, the Councillor of State to wish to step down. In general, rulings government will propose to the Storting that in respect of competition policy in which the Minister for reservations be made regarding the supervisory Trade Industry and Fisheries is responsible for management of the state’s ownership interests will, depending on procedure of such bodies to ensure that the mat- the circumstances, necessitate appointment of an acting councillor of state. 9 See Section 20-4 of the Limited Liability Companies Act and 11 Prepared by the Ministry of Finance and adopted by Royal Section 17 of the State-Owned Enterprises Act. Decree, 12.12.2003. Last revised 18.9.2013. 64 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 2013–2014 Diverse and value-creating ownership

b) that the execution of ownership ensures equal Oslo Stock Exchange requires companies treatment of all owners and supports explicit distri- listed on its exchange to prepare an annual conso- bution of authority and responsibility between the lidated report on their corporate governance. owners and the management board Under the same rules, an explanation shall be pro- c) that the objectives established for the company vided of any deviation from the Norwegian Code are achieved of Practice for Corporate Governance. Section 3– d) the proper functioning of the board 3b of the Accounting Act also requires reporting Governance, monitoring and control including by companies on their corporate governance prin- appropriate guidelines shall be adjusted to the size of ciples and practices. the central government shareholding, the distinctive characteristics of the company, risk profile and significance.» 8.1.5.5 OECD Guidelines on Corporate Section 16 goes on to state that: «Governance, Governance of State-Owned Enterprises monitoring and control including appropriate In 2005, the OECD published a set of guidelines13 guidelines, shall be adjusted to the size of the central for management of state-owned companies, government shareholding, the distinctive characte- complementing the OECD principles of corporate ristics of the company, risk profile and significance. governance14. The then Norwegian Ministry of The evaluations shall focus on the appropriateness Trade and Industry (now the Ministry of Trade, of for instance ownership, organisation and instru- Industry and Fisheries) contributed actively to ments, including grant schemes. The frequency and the drafting of the guidelines. The rationale for scope of the evaluations shall be based on the the guidelines is that good corporate governance agency’s distinctive characteristics, its risk profile of state-owned enterprises results in better finan- and its significance.» cial development and the expedience of applying a A central principle in limited liability compa- common standard of best practice for corporate nies, state-owned enterprises and special law governance by the state. In 2010, the OECD companies is that the state’s financial liability is published a practical guide to the guidelines in limited to its invested capital. selected areas15. Both the OECD Guidelines and the OECD Principles for corporate governance are currently undergoing review and new versi- 8.1.5.4 Norwegian Code of Practice for Corporate ons are expected to be adopted by the OECD in Governance 201516. The Norwegian Corporate Governance Board The main purpose of the guidelines has been (NUES) is composed of different interest groups to provide advice that contribute to state-owned representing, owners, the issuers of shares and enterprises attaining a clearer legal status and a Oslo Stock Exchange12. The objective of NUES is form of governance equal to that of equivalent pri- to prepare and update the Norwegian Code of vate-sector enterprises. Further, the guidelines Practice for Corporate Governance to promote recommend the strict division of the state’s diffe- maximum value creation within listed companies rent roles as a political authority, regulatory body in the best interests of shareholders, employees, and its role as a corporate owner. A third aim is to other stakeholders and the wider public interest. strengthen the role of the board of state-owned The Code shall contribute to enhancing confi- enterprises, in which competence and integrity dence in Norwegian companies and the Norwe- are central. Transparency surrounding the gian stock market. On 21 December 2012, NUES ownership, and its principles and policies and published a revised version of the Code. The Nor- respect for minority shareholders are likewise key wegian Code of Practice for Corporate Gover- areas addressed by the Guidelines. nance supplements the state’s own principles of good corporate governance; see chapter 8.3. 13 OECD (2005): «Guidelines on Corporate Governance of State-Owned Enterprises.» 14 12 The Norwegian Shareholders Association, the Norwegian OECD (2004): «Principles of Corporate Governance.» 15 Institute of Public Accountants, the Institutional Investor OECD (2010): «Accountability and transparency – a guide Forum (in which the Ministry of Trade and Industry and to state ownership.» Fisheries is also represented), Finance Norway, the Nor- 16 The Ministry of Trade, Industry and Fisheries is actively wegian Society of Financial Analysts, the Norwegian Asso- involved in the review work through its membership of the ciation of Private Pension Funds, the Confederation of Nor- OECD Corporate Governance Committee and Working wegian Enterprise, Oslo Stock Exchange and the Norwe- Party on State Ownership and Privatisation Practices; see gian Fund and Asset Management Association. chapter 8.5.2. 2013–2014 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 65 Diverse and value-creating ownership

The Norwegian state’s ownership practices ted liability companies. In addition, certain special and the state’s principles for good corporate rules provide the state with extended control of its governance (see chapter 8.3) essentially corre- ownership; see Sections 20–4 to 20–7 of the Limi- spond with the recommendations of the OECD ted Liability Company Act/Public Limited Liability Guidelines on Corporate Governance of State- Company Act. Certain wholly owned state under- Owned Enterprises. The board and management takings are also organised as state-owned enter- of companies with state ownership also benefit prises or special law companies. To all intents and from actively applying the recommendations in purposes, the state-owned enterprises are gover- the OECD Guidelines. ned in the same way as state limited liability companies. The main differences for state limited liability 8.1.5.6 How owner control is affected by differing companies, as compared with ordinary limited shareholdings companies, are firstly that the general meeting Once the Storting has decided that the state is to elects the shareholder-elected members to the engage as an owner in a company with the status board, even if the company has a corporate assem- of an independent legal entity, this then has impli- bly; see Section 20–4 no. 118 of the limited compa- cations for how political policies and other objecti- nies legislation. In addition, the King in Council of ves are communicated and how and to what State may overrule resolutions of the corporate extent the state may intervene in the running of assembly or resolutions of the board if major the company. social considerations so indicate; see 20–4 no. 2 of The management of a state-owned enterprise, the Limited Liability Company Act/Public Limited limited liability company or special law company Liability Company Act. In state limited liability is distinct from the management of agencies wit- companies, the general meeting is also not bound hin the public administration system. The owners by any proposal by the board of directors or cor- (including the state as a shareholder) are requi- porate assembly on the distribution of dividends; red to comply with the statutory division of roles see 20–4 no. 4 of the Limited Liability Company between the general meeting, the board and gene- Act/Public Limited Liability Company Act. ral management. In organising undertakings as There is an obligation for both genders to be independent legal persons, as state-owned enter- represented on the board of directors of state limi- prises, special law companies or limited liability ted liability companies and their wholly-owned companies, from the outset, the state waives its subsidiaries; see Section 20–6 of the Limited Lia- opportunity to directly influence day-to-day activi- bility Companies Act. The same applies to state- ties. owned enterprises and public limited liability However, by participating in nomination companies generally; see Section 19 of the State- processes and election to governing bodies, deter- Owned Enterprises Act and Sections 6–11a and mining the company’s objectives and other clau- 20–6 of the Public Limited Liability Companies ses in the articles of association, and by setting Act. The Office of the Auditor General also has an out the frameworks for the enterprise at the gene- extended right to exert control over the minister’s ral meeting, the state may still exert influence on management of state holdings; see Section 20–7 the company’s activities. The state’s influence will of the Limited Liability Companies Act/Public depend on the size of its shareholding. Limited Liability Companies Act. The following discusses what an owner achie- In wholly-owned companies, the owner may, ves in the way of influence in a company with dif- through resolutions adopted at the general mee- ferent typical shareholdings, and how this affects ting, impose obligations on the company that corporate governance. might lower the company’s financial performance without contravening Section 5–21 of the Limited Liability Companies Act/Public Limited Liability Wholly owned companies Companies Act (Abuse of the general meeting’s Limited liability companies wholly owned by the authority); see also Section 6–28 of the Limited state are referred to as state limited liability Liability Companies Act/Public Limited Liability companies (or state public limited liability compa- Companies Act (Abuse of position in the company nies)17. The ordinary rules in the limited liability etc.). companies legislation also apply to the state limi- 18 Of the state’s wholly-owned companies, only a minority 17 At present the state has no state public limited companies. have a corporate assembly or other representative body. 66 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 2013–2014 Diverse and value-creating ownership

The state’s financial liability in limited liability companies, state-owned enterprises and special 2/3 law companies is in principle limited to its A holding of more than two thirds of the shares invested capital. However, if an owner transgres- and a corresponding proportion of the voting ses in instructing the company in business mat- rights in a limited liability company guarantees ters, creditors might claim damages from the control over decisions requiring a corresponding state pursuant to the law of tort or the doctrine of majority under the limited liability companies corporate law concerning piercing of the corpo- legislation. A resolution to amend a company’s rate veil. For this reason among others, the princi- articles of association requires at least two thirds ple is that companies are to be compensated if of the votes and the share capital. The same they are ordered to make investments or under- applies to resolutions regarding mergers or take other activities which the board does not find demergers, decisions to raise or reduce the share commercially prudent; see chapter 8.2.4. This capital, the raising of convertible loans, resoluti- must be accomplished within the constraints ons to convert the company and resolutions to imposed by relevant statutes and other regulati- wind up companies. ons.

1/2 Jointly owned companies A shareholding of more than half of the share Where the state is the joint owner of a company, capital in a limited liability company ensures con- the Limited Liability Companies Act/Public Limi- trol over resolutions requiring an ordinary majo- ted Liability Companies Act impose restrictions on rity of the votes cast at the general meeting. These the types of resolutions that may be adopted by resolutions include approving the annual accounts the general meeting; see Section 5–21 of the limi- and resolutions regarding the distribution of divi- ted companies legislation on abuse of the general dends. Election of members to the board or corpo- meeting’s authority. The purpose of this provision rate assembly also requires an ordinary majority. is to protect the rights of minority shareholders The board, however, is elected by the corporate versus majority shareholders. This provision pro- assembly if such a body exists. hibits the general meeting from adopting resolutions that are likely to give certain shareholders or others an unfair advantage to the detriment of 1/3 other shareholders or the company. This is especi- A holding of more than one third of the shares ally pertinent in companies where state ownership and a corresponding proportion of the voting may be justified by interests other than purely rights in a limited company provides negative con- commercial ones, but also where the state impo- trol over resolutions requiring a two-thirds majo- ses undertakings on a company that are not in rity. This size of shareholding enables the owner that company’s ordinary line of business. Strict to oppose major decisions such as relocation of limitations thus apply regarding which political the company’s head office, a change in share capi- objectives may be pursued by means of corporate tal, amendments to the articles of association etc.; governance of jointly owned companies. see the section on two-thirds majority. However, depending on the size of the state’s holding in a company, a number of objectives may nonetheless be pursued, such as retention of a Mandatory bid obligation head office in Norway. The following limit-values Under Section 6–1 (1) of the Securities Trading are key in the limited liability companies legisla- Act20, any person who through acquisition beco- tion: mes the owner of shares representing more than one third of the voting rights in a Norwegian listed company is obliged to make a bid for the 9/10 purchase of the remaining shares in the company. A holding of more than nine tenths of the shares A recurrent mandatory bid obligation applies for and a corresponding proportion of the voting any person who through acquisition gains a hol- rights in a limited liability company entitles the majority shareholder to acquire the remaining 19 See Section 4-26 of the Limited Liability Companies Act and shares by way of a compulsory buyout of the Section 4-25 of the Public limited Liability Companies Act. other shareholders in the company19. 20 Act no. 75 of 29 June 2007 on securities trading. 2013–2014 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 67 Diverse and value-creating ownership ding representing 40 per cent or more of the the constraints of its articles of association. Princi- company, and similarly 50 per cent or more21. ple 5 specifies that the capital structure shall be This means that a decision to increase the state’s aligned with the company’s objectives (as stated holding above these threshold values is subject to in the articles of association) and not only with the the mandatory bid obligation, thus entailing that state’s objectives for its ownership. Principle 7 the state might acquire a larger shareholding than (formerly Principle 8) specifies that the role of the intended. board of directors comprises more than supervision of the company’s management by specifying that the board holds executive responsibility for 8.2 The Norwegian state’s principles of administration of the company. Mention of the corporate governance board’s evaluation in Principle 8 (formerly Princi- ple 9) is limited to solely apply to the board’s eva- The state’s conduct as an owner has great influ- luation of its own performance and not the ence on public and investor confidence in Norwe- owner’s evaluation of board members (the latter is gian companies under state ownership and in the commented on in reference to Principle 6). In Norwegian capital market. Broad political consen- Principle 10 on corporate social responsibility, the sus prevails that state ownership shall be exerci- wording has been amended to emphasise the sed professionally within the constraints of Nor- state’s expectation that companies shall work sys- wegian corporate law and based on generally tematically to safeguard their corporate social accepted principles of corporate governance22, responsibility. In addition, technical adjustments including that companies in which the state’s have been made to Principle 1 and Principle 3, and ownership is largely driven by commercial inte- the order of some of the principles has been chan- rests shall be operated in the same way and sub- ged so that the former Principle 7 is the new Prin- ject to the same constraints as well-run private- ciple 9, the former Principle 8 is the new Principle sector enterprises. 7 and the former Principle 9 is the new Principle 8. In 2002, the Bondevik II Government As was done by the Bondevik II Government developed ten principles of good corporate gover- in Report to the Storting no. 22 (2001–2002) nance defining how the government will conduct (White Paper) Reduced and improved state ownership and what it expects of the companies. ownership, a supplementary commentary is provi- These principles have provided a predictability in ded for each of the principles in turn. An introdu- the state’s exercise of ownership that has been ction has also been included as part of the welcomed by participants in the Norwegian capi- commentary on the principles. The state’s expec- tal market. tations of the companies have in some areas been The state’s principles of corporate governance elaborated on in chapter 8.3. As and where rele- have not been amended since 2002. In the present vant, the manner in which the principles apply to report, the government has made certain amend- wholly-owned companies and companies with ments to the original principles to ensure, as far as sectoral-policy objectives has been clarified. possible, that they are aligned with current practices and generally accepted corporate governance principles. The most important amend- 8.2.1 Introduction to the principles ments are as follows: Principle 2 specifies that the State ownership shall be exercised professionally requirement for transparency also applies to the and predictably within the constraints of Norwe- company’s activities; see the discussion of the gian corporate legislation and other law, based on requirements for transparency in previous state generally accepted corporate governance princi- ownership reports and the recommendations of ples and in observance of the strict separation of the OECD Guidelines on Corporate Governance the role as owner from other roles assumed by the of State-Owned Enterprises. Principle 4 specifies state23. The state’s principles of corporate gover- that the board is responsible for setting explicit nance are aimed at all companies in which the objectives and strategies for the company within state has a holding, whether wholly or jointly owned by the state, and encompass both compa- 21 See Section 6-6 (1) of the Securities Trading Act. nies where the activities are commercial in nature 22 Generally accepted principles of corporate governance are and companies in which the state is seeking to principles as cited in, for example, the Norwegian Code of Practice for Corporate Governance, the OECD Principles of Corporate Governance and the OECD Guidelines on 23 See chapter 8.5 for a detailed discussion of the state’s diffe- Corporate Governance of State-Owned Enterprises. rent roles. 68 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 2013–2014 Diverse and value-creating ownership

8.2.2 Principle 1. All shareholders shall be Box 8.1 The Norwegian state’s treated equally. principles of corporate governance A company’s ability to attract capital is dependent 1. All shareholders shall be treated equally. on investor confidence that other shareholders 2. There shall be transparency in the state’s are not given unfair opportunities to promote their ownership of companies. interests at the expense of investors. As a majority 3. Ownership decisions and resolutions shall shareholder in several companies, it is imperative be made at the general meeting. that the state, in its capacity as owner, seeks to 4. The board is responsible for elaborating ensure the parity of shareholders in companies in explicit objectives and strategies for the which the state is one of multiple shareholders. company within the constraints of its Unequal treatment might entail that the state articles of association; the state sets perfor- in its role of owner acts unlawfully on the basis of mance targets for each company. information about the company not generally 5. The capital structure of the company shall known to other shareholders. Another type of be appropriate given the objective and unequal treatment arises if the state exercises its situation of the company. power as an owner of the company via informal 6. The composition of the board shall be cha- channels. The state as a shareholder does not racterised by competence, capacity and automatically have, and must not demand, access diversity and shall reflect the distinctive to more information than may be provided to characteristics of each company. other shareholders. 7. The board assumes executive responsibi- The companies, for their part, must have atten- lity for administration of the company, tion on not discriminating among shareholders, including performing an independent for example, as regards the sharing of informa- supervisory function vis-à-vis the tion. The board should ensure that the company company’s management on behalf of the maintains extensive transparency towards all the owners. company’s shareholders. 8. The board should adopt a plan for its own Under special circumstances where a require- work, and work actively to develop its own ment exists for the state in its capacity as an competencies and evaluate its own activi- owner (and any other major owners) to cast a vote ties. at the general meeting in order to conduct transa- 9. Compensation and incentive schemes shall ctions such as a merger, demerger and similar promote value creation within the compa- restructuring, it may at times be necessary to pro- nies and be generally regarded as reasona- vide major owners with information in advance of ble. the plans being released to the public domain. 10. The company shall work systematically to Such information may be provided at the discre- safeguard its corporate social responsibi- tion, and on the initiative, of the company itself. In lity. such circumstances, the state is governed by the ordinary rules on non-disclosure/or insider trading. See also chapter 8.4 for details of contact with realise various sectoral-policy and societal objecti- the companies. ves. For commercial undertakings in which the state has a holding, the state’s principal objective 8.2.3 Principle 2. There shall be transparency is to maximise the value of its investments. For in the state’s ownership of companies. state-owned companies with sectoral-policy obje- As an owner, the state manages major assets for ctives, the principal aim is for the objectives to be the common good. Transparency strengthens achieved in a manner that ensures efficient use of confidence in state ownership, and, owing to the resources. large scale of state ownership in Norway, in the Norwegian capital market. Transparency also upholds the democratic ethos in that the public is given access to information. A high degree of transparency counteracts misunderstandings and enhances the predictability of state ownership 2013–2014 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 69 Diverse and value-creating ownership conduct. Transparency is crucial out of regard for publish a consolidated account of the company’s any other shareholders and potential investors in corporate governance, including accounting for companies in which the state is one of several any non-compliance with the Code. For state owners, and in reassuring the competitors of ownership, the most relevant items of the Code companies under state ownership that they are are: Reporting on corporate governance (topic 1); competing on equal terms. Both the state as an clear definition of business, objectives and strate- owner and the companies themselves are subject gies (topic 2); composition of governing bodies to a responsibility to maintain transparency. (topic 8); requirements for the work of the board As an owner, the state demonstrates transpa- (topic 9); requirements for risk management and rency in various ways. Reports to the Storting internal control (topic 10); remuneration of the (White Papers) on state ownership account for board and executive personnel (topics 11 and 12); why the state owns, what the state should own and and information and communications (topic 1327). how the state exercises its ownership, including The corporate governance report is published as what goals the state has for its ownership interest part of the annual report or in documents cited by in individual companies. For certain companies in the annual report. which the state has sectoral-policy objectives for its ownership, reports are also published on the companies’ activities. The Ministry of Trade, 8.2.4 Principle 3. Ownership decisions and Industry and Fisheries publishes an annual resolutions shall be made at the ownership report on the state’s portfolio of general meeting. companies managed by the ministries, and trends The legal basis for ministerial ownership authority over the preceding year24. It is also possible for in a limited company is laid down in Section 5–1 of the public to request disclosure of the public the Limited Liability Companies Act which states: administration’s work and case documents. Howe- «Through the general meeting the shareholders ver, in a number of circumstances, it is necessary exercise the supreme authority in the company.» to exempt documents from disclosure to the A similar provision applies to public limited liabi- public domain in the interests of prudent manage- lity companies, state enterprises and to the majo- ment of state ownership25. rity of special law companies28. As regards the The state expects companies under sole or state enterprises, the term «general meeting» is joint state ownership to be open about important expanded to «enterprise general meeting» but matters concerning their activities. Timely access effectively denotes the same. The ministry in its to relevant information allows the state, other role as an owner has no authority within the owners and stakeholders generally (including the company in the absence of the general meeting public/society at large) to assess company activi- structure. Use of the general meeting as the sole ties, performance, growth and goal attainment on decision-making arena where the state operates an ongoing basis. Access to relevant information as an owner ensures documentability. See also is a key criterion for best ownership practices. chapter 8.1.2 detailing ministerial authority within Wholly-owned state enterprises with commer- companies. cial objectives that are not defined as «small enter- The above constraints present no barrier to prises» as per Section 1–626 of the Accounting Act contact between an owner and a company outside should strive to be as transparent as listed compa- of the general meeting, just as this is customary nies unless special circumstances dictate other- practice in the capital market generally. This is a wise. All wholly owned state companies should fol- criterion for obtaining information about business low the Norwegian Code of Practice for Corporate activities and is thus an important element in the Governance where it applies, and, as part of this, ordinary performance of supervision and control under state ownership. Similarly, the constraints 24 www.eierberetningen.no do not prevent the state from raising matters that 25 See, for example, sections 13 and 23 (4) of the Freedom of should be considered by the companies in the Information Act. interests of their business and growth. Any opini- 26 Small enterprises are defined as enterprises with a duty to keep accounts but which do not sort under Section 1-5 of 27 the Accounting Act and which on the balance sheet date do Notably the part of the principle covering guidelines for not exceed the thresholds in respect of the following three company reporting; see Section 13 (1). criteria: 1. sales revenue: NOK 70 million, 2. total balance 28 One exception is Vinmonopolet, which does not hold a sheet: NOK 35 million, 3. average number of employees general meeting; see the Vinmonopolet Act no. 18 of 19 over the financial year: 50 full-time equivalents. June 1931. 70 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 2013–2014 Diverse and value-creating ownership ons conveyed by the state at such meetings are to and permit efficiency and performance to be eva- be regarded as suggestions regarding the luated31. company’s administration and governance. Mat- The owners shall monitor goal attainment and ters requiring the endorsement of the owner must hold the board accountable for such attainment. be addressed at the general meeting29. See also The owners must assess the extent to which any the discussion of Principle 1 and chapter 8.4 for failure in goal attainment is attributable to the details of contact with companies. board or to factors beyond the board’s control. Corporate legislation is based on an assumption of mutual trust between the owners and a company’s 8.2.5 Principle 4. The board is responsible for board. A failure in goal attainment may constitute elaborating explicit objectives and a breach of that mutual trust. Requirements regar- strategies for the company within the ding the competence of the board in a given situa- constraints of its articles of association; tion faced by a company may also be amended. In the state sets performance targets for such situations, the customary practice is for the each company. owners to replace the entire board or those indivi- One main principle governing management of the dual board members who no longer enjoy the state’s portfolio is that such management is limi- trust of the owners or are no longer deemed to ted to an overarching general level. The state’s possess the requisite competence. ownership must be exercised in such a way that Where the state instructs companies to render the board and general management are given fre- certain services, such instructions should be edom of scope within certain constraints. It accompanied by financial compensation to cover ensues from corporate legislation that a the costs of services rendered. Such compensa- company’s objectives (business activities) shall be tion may be awarded solely within the constraints defined in its articles of association. For its wholly- of EEA regulations regarding state aid, including owned companies, the state seeks to assign the the rules on services of general economic inte- company a well-defined objective consistent with rest. The costs and financing of rendering such the state’s ownership objectives. In jointly owned services should to the greatest possible extent be companies, the company’s objective will be defi- disclosed in financial statements or other corpo- ned jointly with the other shareholders at the rate itemisation of such activities. This serves to general meeting. clarify the appurtenant responsibilities, to prevent For the majority of companies with sectoral- cross-subsidisation and unlawful state aid and faci- policy objectives, state supervisory requirements litates efficient owner-side supervision. In addi- may justify the need for the scope of businesses to tion, it discloses the costs of fulfilling sectoral- be more explicitly delimited than is customary for policy objectives. In this way, sectoral-policy obje- companies with commercial objectives. This ctives are not compensated for by reduced expe- might, for example, entail constraints to prevent ctations for return on investment. the companies expanding their business activities The owners of a company are permitted to pro- into areas that are not conducive to realising mote value creation by setting explicit perfor- sectoral-policy objectives. Such constraints should mance targets for the company. For companies be incorporated in the company’s articles of asso- with commercial objectives, the state in its capa- ciation30. city as an owner will impose targets regarding The board is expected to elaborate explicit returns and dividends. To that end, the state will objectives and strategies for the company within the constraints of its articles of association, and to 31 See the consultative memo from the Ministry of Local report on these. In companies with sectoral-policy Government and Modernisation: «Sektorselskaper, virke- objectives, the aim should be to set goals that ena- midler og effektiv måloppnåelse. Vurdering av virkemiddel- bruk overfor statlig heleide sektorselskaper» (Sectoral ble the companies to report to the owner on the enterprises, policy instruments and effective goal attain- level of attainment of sectoral-policy objectives ment) of February 2014, in which Section 1.3 translates as «proper performance reporting supports the ministry’s ongoing corporate governance and monitoring vis-à-vis the board of directors, but also provides a crucial platform for 29 In special law companies, other arrangements may be in evaluation of policy instrument usage overall. This form of place; see, for example, the Gaming Act, which regulates evaluation of policy instruments such as regulation, finan- the activities of Norsk Tipping AS, a state limited company cing and organisation should be performed on a regular under the Ministry of Culture. basis to ensure that business activities are organised in 30 See topic 2 in the Norwegian Code of Practice for Corpo- such a way as to be sufficiently adaptable to changes in rate Governance. remit and externalities.» 2013–2014 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 71 Diverse and value-creating ownership apply principles for assessment of returns in line company’s revenue prospects, investment track with standard market practices. Targets for record, investment needs, maturity, expansion returns and dividends are notified to the company plans, yield prospects, cash-flow and capital and normally discussed with the management or expenditure form part of the assessment activi- board. See also chapter 8.3.1 in which state tar- ties. gets for returns and dividends are detailed. In It may be appropriate to adjust a company’s companies with sectoral-policy objectives, the capital structure if deemed expedient. state, in its capacity as an owner, will seek to set As in other areas, state supervisory require- explicit performance targets and performance ments regarding capital structure may justify the indicators32. need for the scope of businesses to be more expli- See also Principles 7, 8, 9 and 10 and chapters citly delimited for companies with sectoral-policy 8.3.2–8.3.6 in which the state’s expectations regar- objectives than is customary for companies with ding board work, corporate social responsibility, commercial objectives. This would be the case, for executive remuneration, research, development, example, in relation to restrictions on borrowing. innovation and competence together with diver- Any such constraints should be incorporated in sity and gender equality are discussed. the company’s articles of association33. See also chapter 8.3.1 in which state targets for returns and dividends are detailed. 8.2.6 Principle 5. The capital structure of the company shall be appropriate given the objective and situation of the 8.2.7 Principle 6. The composition of the company. board shall be characterised by The capital structure of a company reflects its competence, capacity and diversity financing. Each company should maintain an and shall reflect the distinctive charac- appropriate capital structure arranged for long- teristics of each company. term value-creation, effective goal achievement and Ensuring sound composition and competence of as low capital costs as possible. This entails that the boards of companies in which the state is a share- capital structure should be adapted to the indivi- holder is of crucial importance and is one of the dual circumstances of the company in line with the state’s prime responsibilities. company’s objectives, strategy and risk profile. The The preparatory work preceding the election board has a superior responsibility for this. of governing bodies in listed companies is perfor- Equally, in its capacity as an owner, the state med by dedicated nomination committees elected should have its own assessments of company capi- at the general meeting at which representatives of talisation and thereby promote an expedient capi- the state, jointly with the rest of the shareholders, tal structure enabling companies to realise sound seek to arrive at the best possible composition of commercial growth over time and contributing to the company’s governing bodies. The preparatory efficient operations. This also applies to compa- work preceding the election of governing bodies nies with sectoral-policy objectives. An inexpedi- in other companies in which the state is a share- ent capital structure may result in inefficient ope- holder proceed in a structured manner and sub- rations, misinvestment and weak returns on ject to the same goal. In wholly owned companies, investment or impaired goal attainment. these activities are conducted internally within the As an owner, the state continuously assesses ministries. The ministries responsible for exerci- the capital structure of commercial companies sing state ownership have established systematic based on commercial parameters. This is an ele- and diligent procedures in support of board eva- ment in the assessments entailed in defining luation and nomination. returns targets, follow up on returns targets (see The state places emphasis on competence, Principle 4 and chapter 8.3.1) and decisions on the capacity and diversity based on the company’s need for capital injections etc. Factors such as a special characteristics in nominating and electing individuals to serve on company boards. The aim is for the board of each individual company to 32 See the consultative memo from the Ministry of Local Government and Modernisation: «Sektorselskaper, virke- represent, in its totality, the requisite competence midler og effektiv måloppnåelse. Vurdering av virkemiddel- given the company’s objectives, business area, bruk overfor statlig heleide sektorselskaper» (Sectoral enterprises, policy instruments and effective goal attainment) of February 2014, Section 1.3.2 (on operationalisa- 33 See topic 2 in the Norwegian Code of Practice for Corpo- tion of targets and performance indicators). rate Governance. 72 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 2013–2014 Diverse and value-creating ownership challenges and the state’s objectives for its the limited companies legislation. However, the ownership. composition of the board should be assessed on For companies with commercial objectives, an ongoing basis in respect of factors such as the the emphasis is on electing representatives with company’s performance and requirements. Repla- wide-ranging business and industry experience. cements outside of the two-year term may there- In companies with sectoral-policy objectives, the fore be necessary. number of board members competent in the rele- In its capacity as an owner, the state will eva- vant sectoral-policy remits should be balanced by luate the board with the aim of ensuring the ideal the members competent in company management composition of board members. Prior to board and commercial undertakings. In any event, rele- elections, the state will assess factors such as the vant competence, rather than political affiliations composition of a board, its procedures (internally or activities, is the sole criterion for board eligibi- within the board and with company management), lity. That being the case, political experience may competence, performance, goal attainment and still be useful on a widely representative board. whether contributions to the company’s value cre- Based on the basic competence requirements, ation are satisfactory or whether changes may be the state will seek to ensure that each individual needed to the board. For its wholly-owned compa- board represents an appropriate diversity in nies, the state typically interviews members of the respect of geographical affinity, age, cultural and board as part of its appraisal. In companies with a experiential background. The state will strive for dedicated nomination committee elected by the equal representation of the sexes in nominating general meeting, this body conducts the board board members, and aims to increase the propor- member appraisals. The state’s appraisal of the tion of female chair of the board in companies in board’s performance will also be based indirectly which the state has a holding. Boardroom exper- on annual reports and other available information. tise, if lacking, may be readily acquired by practi- As part of the process of nominating new can- cal service on a board. There is consequently a didates, the state will aim to discuss assessments need to maintain continuity on many boards to with the chair of the board concerning changes to ensure retention of acquired expertise. the board. The commitments entailed by paid employ- The above-mentioned guidelines are in princi- ment or positions of trust held by prospective can- ple also applicable to the composition of other didates should be compatible with the time governing bodies such as corporate assemblies commitment that may be reasonably expected for and nomination committees. board duties. This will be assessed on a case-by- case basis. The Storting has decided that parliamentary 8.2.8 Principle 7. The board assumes representatives should barred from serving on executive responsibility for adminis- the boards of companies subject to parliamentary tration of the company, including supervision except on the understanding that performing an independent such representatives do not run for re-election. supervisory function vis-à-vis the There is also an unwritten rule that new ministers, company’s management on behalf of on taking up office in government, are to resign the owners. from service on any board and are not eligible for Administration of the company is the responsibi- new positions of trust of this kind. The same lity of the board. The board shall ensure the pro- applies to state secretaries. per organisation of the enterprise, appoint the Rules have also been laid down for govern- chief executive officer and supervise general ment officials and civil servants employed by a management and the company’s activities gene- ministry or in central government, who attend to matters concerning an enterprise as part of their 34 See Section 10.14.1 of statens personalhåndbok 2014 work or who are employed by a ministry or other (handbook for the Norwegian Civil Service). The rationale central government entity, and who regularly for this rule is that state board representation would entail increased responsibility on the part of the minister for the attend to matters relevant for the enterprise or its company’s commercial commitments, which could be sector, stating that these are not eligible to serve expected to result in stricter state control of companies, on the board or have other similar positions wit- which would scarcely be conducive to realising a value- 34 maximisation objective. See, for example, chapter 9.6.2, pp. hin that enterprise . 91-92. Official Norwegian Report 2004: 7 «Statens forret- Election to the board is customarily for a term ningsmessige eierskap» (the state’s commercial owners- of two years in accordance with the main rule of hip). 2013–2014 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 73 Diverse and value-creating ownership rally. The board shall also undertake the strategic bility for decisions made. If a board committee is management of, and administer, the company in utilised, the committee will solely draft decision- the interests of the company and its owners within support material for the final decision to be made the constraints laid down by the general meeting. by the board itself. In order to ensure adequate The board shall determine the company’s risk preparation of key topics, the use of a board profile and ensure that the company has put in committee may be expedient. Examples of board place effective internal controls, adequate sys- committees are audit committees (a statutory tems and resources for ensuring compliance with requirement for many companies), a remunera- statutory provisions and effective systems for risk tion committee/emoluments committee and a risk management. The objective for risk management management committee. and internal controls is to manage, rather than eli- The chair of the board should coordinate effe- minate, exposure to risks related to successful ctive use of the board’s collective competence, conduct of the company’s business. The work of including encouraging its productiveness as a col- the board should be performed in such a manner legial body. Globalisation, technological advances as to maximise the company’s value creation. and other changes in framework conditions and The board should be a resource, discussion regulations have increased the complexity of partner and aide to the company’s management. board work. The board, and the chair especially, Equally, the board must oversee the work of the should make arrangements to ensure that board company management and as such act impartially. members at all times possess the requisite compe- In extension of its supervisory function, the board tence for serving on the board, and if necessary, must assess the company’s management and the initiate measures to raise the level of compe- need for replacements. This includes drawing up tence36. plans for internal competence development to The work of the board should be evaluated37. ensure that up-and-coming management resour- The state expects the boards of companies to eva- ces are nurtured on an ongoing basis. luate their activities and competence on an annual See also chapter 8.3.2 in which state expectati- basis establishing a basis for ongoing impro- ons regarding board work are detailed. vements in board work (progress evaluation), and ideally by retaining an external facilitator. A summary of the evaluation and its outcomes should be 8.2.9 Principle 8. The board should adopt a made available to the nomination committee (or plan for its own work, and work actively the ministry in companies wholly owned by the to develop its own competencies and state) unless circumstances dictate otherwise38. evaluate its own activities. An overview should also be provided concerning In order to promote systematic and efficient board any measures initiated to improve the work of the work, the board should draw up an annual sche- board. dule of activities, and timetable its meetings at a See also chapter 8.3.2 in which state expectati- frequency to ensure that the board is able to fulfil ons regarding board work are detailed. its obligations. The chair of the board has a particular responsibility for ensuring the effectiveness 36 See Huse, M. & Søland, A. I. (2009): p. 147 of «Styreledelse of the board. – styret som team og prosessorientert styrearbeid» in which the authors state that in order to maintain board Serving on a board requires substantial capacity for value creation, the chair should ensure that the commitment. The effort put into serving on the members continually update both their competence and board by its members is a key element in the qua- their insights into the company. They also point to the 35 company’s responsibility for attending to the updating and lity of board work . development of board member competence. The trend has been in the direction of more 37 A board evaluation procedure is customarily split into three extensive use of board committees. Under Norwe- main types: reporting evaluation, progress evaluation and gian law, the board members retain joint accounta- recruitment evaluation; see, for example, Huse, M. & Ras- mussen, J. L. (2009): «Styreevaluering – hva er det og hvor- dan brukes de?» Magma 3/2009. 35 McKinsey’s Global Board Survey, a survey from 2013 of 38 Rasmussen, J. L. (2010): «Corporate Governance in Nor- 772 board representatives, reveals that effective boards way; the development of a board evaluation model with spe- spend more than 40 days annually per board representative cial emphasis on large listed companies.» Doctoral Thesis, on board work, more than twice that of less effective Cass Business School, London. Rasmussen points out that boards; see McKinsey & Company (2014): «Statlig eier- if board members are aware that the outcomes of a self-eva- skap, Rapport til Nærings- og fiskeridepartementet.» (State luation are to be shared with the nomination committee ownership, report to the Ministry of Trade, Industry and then this may influence and even distort the board evaluat- Fisheries). ion process or outcome. 74 Meld. 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position on the company’s executive remunera- 8.2.10 Principle 9. Compensation and tion policy. Responsibility for drawing up and con- incentive schemes shall promote value cluding contracts with executive employees rests creation within the companies and be with the board. generally regarded as reasonable See also chapter 8.3.4 in which state expectati- Properly structured compensation and incentive ons regarding executive salaries are detailed. schemes can promote value creation within the Remuneration of governing bodies within the company and the alignment of shareholder and companies is determined by the general meeting company interests. The structure of pay packages or corporate assembly. In its assessment of board and incentive schemes also determine the scope emoluments in companies under state ownership, for recruitment and retention of desired compe- the state attaches importance to the emoluments tence. reflecting the board’s responsibility, competence, From a wider perspective, salary increments time commitment and the company’s comple- should not have the effect of weakening Norwe- xity42. The state will also place emphasis on the gian competitiveness. Executive salaries in board emoluments being conducive to appropri- companies in which the state has a holding are ate and sound competence within the board. The significant factors in this wider context. chair of the board should be remunerated separa- Since 2001, the state has applied guidelines for tely in keeping with the larger scope of duties nor- remuneration of senior executives in companies in mally entailed by this position. For board mem- which the state has a holding39. Here, ‘senior exe- bers who serve on board committees, a separate cutives’ denotes chief executive officers and other fee for such service will be given consideration, executive leaders; see Proposition to the Odels- and the state will usually vote in favour of such ting no. 55 (2005–2006), which cites the Accoun- additional fees. As a basis for its vote, the state will ting Act and Public Limited Liability Companies decide, in each individual instance, whether it is Act’s rules regarding «senior executives». more expedient to pay a fixed fee or a fee per mee- The purpose of the guidelines is to set out the ting or a combination of the two. In conformance factors emphasised by the state in casting its vote with the Norwegian Code of Practice for Corpo- regarding determination of executive remunera- rate Governance, the board members of listed tion at the company’s general meeting or enter- companies should be encouraged to hold shares prise general meeting. The overriding concern in in the company43. The state takes a positive view the state’s guidelines has been for executive of board members holding shares. salaries in companies in which the state has a hol- Remuneration for other governing bodies ding to be competitive, but not above those of (corporate assembly/representative body, nomi- other similar companies, and that any deviation nation committee etc.) will also be assessed on the from the guidelines shall be accounted for in acco- basis of the above-mentioned criteria. rdance with the «comply or explain» principle. See also chapter 8.3.2 in which state positions Since the financial year 2011, the boards of all on board remuneration are discussed in more wholly owned companies or those in which the detail. state is a major shareholder, with the exception of those defined as «small enterprises» under the Accounting Act, have presented a statement in 8.2.11 Principle 10. The company shall work respect of the remuneration of senior executives systematically to safeguard its at their general meetings40. This has been a statu- corporate social responsibility tory requirement for listed companies since All Norwegian companies should demonstrate 200741. The underlying aim is transparency surro- corporate social responsibility, whether under pri- unding remuneration, and for the owners, though vate-sector or public-sector ownership and regard- their vote at the general meeting, to convey their less of whether their undertaking is located in Norway or abroad. Since 2001, the state has had 39 These rules apply to state-owned enterprises, health trusts in place explicit expectations for companies under and special law companies, together with public limited companies and limited companies in which the state has a direct holding. 40 This is prescribed in the individual company’s articles of 42 See topic 11 in the Norwegian Code of Practice for Corpo- association. rate Governance. 41 See Section 5-6 (3) of the Public Limited Liability Compa- 43 See topics 8 and 11 in the Norwegian Code of Practice for nies Act. Corporate Governance. 2013–2014 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 75 Diverse and value-creating ownership state ownership to practice corporate social mum return on invested capital. In sectoral-policy responsibility (CSR). companies, the objectives of state ownership shall CSR covers a number of different issue-areas be fulfilled with maximum efficiency. concerning the impacts of corporate conduct on The government is committed to companies people, society and the environment, including maintaining and extending their competitiveness human rights, employee and worker rights, the and efficient operations in both the short and long climate and the environment, anti-corruption and term. Various factors facilitate this. transparency. By tradition, the intention is for the The government expects companies to main- concept of CSR to embrace a commitment over tain awareness of the facilitating factors for their and above statutory compliance. Meanwhile, the individual development. The state’s principles of field of CSR is continually evolving, and certain corporate governance prescribe the state’s expe- issue-areas have now been incorporated into ctations for the companies in its portfolio; see law44. chapter 8.2. The present chapter presents a detai- The premise for the state’s ownership policy is led discussion of the government’s expectations that companies in which the state has holdings for companies under state ownership in areas shall contribute to value creation and that determinative for corporate value creation. commercial companies shall be profitable over time. A company’s commitment to fulfilling its corporate social responsibility should support the 8.3.1 Returns and dividends commercial development of the company. Compa- The main objective of the state’s commercial nies fulfilling their CSR in a robust and visionary ownership (companies in categories 1–3) is to manner should adopt a strategic approach to CSR achieve the highest possible return on invested that embodies both risk management and the capital over time. The return is made up of the exploitation of new business opportunities. Such sum total of the increase in market value of a companies will have easier access to a competent company’s equity and yield in the form of divi- workforce, loyal customers and supportive local dends and any share buybacks. communities. This serves to strengthen a By setting explicit targets regarding returns company’s competitiveness and underpins long- and yield, the state, like other owners, can pro- term value creation. mote a focus on profitability and efficient operati- The board holds the responsibility for the ons in its holdings. company’s conduct, including CSR, and for Listed companies are valued daily in the stock ensuring that the enterprise is operated in compli- market, and the market value of company equity ance with statutes and rules. is thus observable. For unlisted companies, there Companies with sectoral-policy objectives will is usually no ongoing market valuation. For such often need to fulfil specific societal mandates wit- companies, valuation exercises are a tool for hout having an explicit commercial objective. assessing the performance of the portfolio. Such societal mandates are usually distinctly sepa- The government expects companies in cate- rate from what is referred to as corporate social gories 1–3 to generate market returns in line with responsibility. Such companies shall also work the objective to achieve the highest possible systematically to fulfil their corporate social return on investment over time. responsibility. The EEA Agreement imposes constraints on See also chapter 8.3.3 in which state expectati- how return targets are set in order to prevent dis- ons regarding corporate social responsibility are tortion of competition; see chapter 8.1.5.1. detailed. Here, return targets denotes the return on investment an investor can expect to achieve over time, given the risk. The return targets are set 8.3 Details of the state’s corporate specifically for, and communicated to, each targets and expectations company individually. The return targets generally apply on average For commercial companies, the objective of the for a period of three to five years and are usually state in its capacity as an owner is to achieve maxi- revised every three to five years. The targets are intended to provide a basis for discussion with the companies on their value creation, and must be 44 Examples include the anti-corruption provision in the Nor- wegian Penal Code, introduced in 2003 and the UK Bribery used, in conjunction with the company’s ongoing Act of 2010. Both of these have extraterritorial applicability. financial performance and benchmarking against 76 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 2013–2014 Diverse and value-creating ownership

1000

900

800

700

600

500

400

300

200

100

0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 OSEBX Aker Solutions Cermaq DNB Kongsberg Gruppen Kværner Norsk Hydro SAS Statoil Telenor Yara International

Figure 8.1 Dividend-adjusted growth in value of companies on the Oslo Stock Exchange under state ownership1. Figures sourced from FactSet. 1 The shares in Aker Solutions and Kværner are owned indirectly, through Aker Kværner Holding.

comparable companies, for assessment of In addition to their ordinary business, some company value creation over time. wholly owned companies are required to fulfil Return targets are not set for non-commercial sectoral-policy objectives which may be unprofita- companies or those that are dependent on state ble from a company perspective. In such cases, subsidisation. Such companies follow the parlia- the companies will usually be reimbursed for ite- mentary subsidisation rules. The government mised added costs, and not indirectly by means of expects such companies to be run efficiently. reductions in their dividends. For certain sectoral- policy companies, non-distribution of dividend is prescribed by their articles of association. Compa- 8.3.1.1 Dividends nies that are dependent on state subsidies do not Dividends from a company often represent a sub- normally pay dividends. stantial portion of the return on invested capital. The state communicates both long-term and In companies with commercial objectives, the annual dividend targets to the companies. government generally endorses dividend policies The long-term targets generally apply as an conducive to long term return on investment. average for a period of three to five years. In many Commercial companies in which the state is a sha- cases, the targets are set on the basis of the reholder should be able to conduct business on company’s annual net income after tax and mino- the same market terms as competitors in which rity interests. There may also be cases in which the state is not a shareholder. targets are based more on cash measures, as a This entails, among other things, that the result, among other factors, of a trend in accoun- state’s dividend targets for commercial companies ting rules and substantial unrealised value chan- are based on commercial considerations. Within ges affecting reported profits. When setting long- these parameters, the state, like other commercial term dividend targets, an assessment will be made owners, may make independent commercial of factors such as the company’s financial position assessments concerning company dividend policy and earnings prospects, including elements such based, for example, on the state’s perspective as a as the company’s strategy, capital structure, long-term industrial owner, or based on the state’s industry and market conditions, maturity, divi- objectives for its ownership. dend policy, liquidity and yield. 2013–2014 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 77 Diverse and value-creating ownership

In setting annual dividend targets, essentially its ownership, measured as a percentage of sha- the same elements as the above will be conside- res. These agreements are publicly available. red. The government will continue to apply the The state may determine dividends through established framework when entering into new resolutions at general meetings/enterprise gene- share buyback agreements. ral meetings in wholly-owned state companies and state-owned enterprises. Importance will be atta- ched to aspects such as the enterprise or company 8.3.2 Board work retaining adequate equity and liquidity levels after According to company law, the board is responsi- dividend distribution45. For jointly owned compa- ble for management of the company. Consequ- nies, the main rule in the limited companies legis- ently, the government believes that one of the lation prescribes that the general meeting may not state’s most important responsibilities as an adopt a dividend higher than that proposed by the owner is to ensure competent boards. The govern- board. The state’s dividend targets in jointly ment expects boards to manage companies in the owned companies are communicated to the board best interests of the company, its owners and its ahead of the board submitting its dividend pro- employees, and is committed to ensuring that posal so that the board is apprised of the state’s boards seek actively to improve their own perfor- targets before making its decision. mance. The government wishes to draw attention to recent years substantial developments regarding 8.3.1.2 Share buybacks how the board best can contribute to value crea- Company repurchases of shares for deletion (sha- tion for companies. The following presents some res buybacks) combined with dividend distribu- perspectives to serve as inspiration on best tion can be an effective means of achieving an practices for the boards of companies in which the appropriate capital structure. They may also serve state has holdings. to generate a competitive yield. Much has been written about best practices in As in the case of dividends, a share buyback board work. One of the main concerns is how the programme is a form of allocating profits and board can best add value46. The emphasis is less should be seen in the context of the overall finan- on identifying appropriate board duties, and more cial position of the company. Equity capital for about how boards can support value creation. which companies see no appropriate use is retur- This will vary from one board to the next and from ned to shareholders via owners who opt to sell one board member to the next. Many experts their shares. Because the shares purchased are assert that the chair and the working procedure of permanently deleted, the value underlying each of a board are determinants of best use of board the remaining shares is unaffected. member competence, and that this should be a The government maintains that listed compa- core element of board evaluations. The principal nies under state ownership should have the same duty of the chair is to be a motivator and leader opportunity as other companies to perform share who ensures that the resources of all board mem- buybacks. Usually, share buybacks will and bers are put to best use. should be regarded as a supplement to dividends. The role of the board in supervising day-to-day Inquiries from companies as to whether the state management and the company’s ongoing activi- wishes to participate in a share buyback pro- ties is one of the board’s principal duties. Effective gramme will be assessed on their individual boards which serve as a sounding board for mana- merits. gement, and which are proactive over and above For listed companies in which the state has a their supervisory role, are gaining prominence in holding, the state’s policy is to ensure that share company performance. Boards are increasingly buybacks with subsequent deletion do not entail a regarded as a critical success factor in the long- change in the percentage of shares owned by the term success of the companies they serve. state. Consequently, an agreement framework has Many board members lack the time, expertise been established in consultation with the compa- and the right information to enable them to make nies concerned entailing that the state maintains

46 See, for example, Huse, M. (2013): «Styreutvikling, styre- evalueringer og verdiskaping.» Magma 7/2013. Huse, M. 45 See Section 3-4 of the Limited Liability Companies Act and & Søland, A. I. (2009): «Styreledelse – styret som team og Section 17 of the State-Owned Enterprises Act. prosessorientert styrearbeid.» 78 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 2013–2014 Diverse and value-creating ownership an effective contribution to company success. The set aside time for addressing strategic topics at best and most value-adding boards are composed board meetings; that the board has the requisite of individuals possessing the right competence background knowledge (for example, detailed given that company’s challenges, who apply their insights into the sector, the company’s different expertise effectively, and devote sufficient time to business areas, macro-trends and competitive board work47. Such boards are forward-looking conditions) and that the board is involved throug- and provide a long-term perspective, which is hout the process. Some successful boards have a important in a world where upheaval is happening list prepared of viable strategies detailing the con- faster and the company’s management are tent and risk factors of each alternative so that the employed in shorter periods than previously. In board can consider the full scope of options availa- addition, the best boards play an active role in ble47. In the implementation phase, the board their company’s strategy formulation, risk mana- should ensure that the strategy is rolled out to gement and succession planning. best effect.

Competence development for board members The board’s role in the company’s risk-management The board should make arrangements for the activities board members to gain the requisite competence By virtue of their executive responsibility for for discharging their board duties and put measu- company management, boards are expected to res in place to raise the level of competence as and define the company’s risk profile and ensure that when required. It will often be appropriate to run the company has put in place effective internal an induction programme for new board members control procedures, adequate systems and resour- to provide, for example, a detailed introduction to ces for ensuring legal compliance. This includes the company and its strategy, and a description of effective systems for risk management reflecting its sector, competitors and suppliers48. As part of the scope and nature of the company’s activities; the induction programme, board members should see Principle 7. meet key individuals within the company such as Effective risk management entails in-depth management, employee representatives, major familiarity with the company’s main risk exposure shareholders and any key accounts. Successful through, for example, management’s reporting to boards often arrange for competence develop- the board, and ongoing dialogue with company ment for the board members to reinforce the management on the company’s risk appetite. Risk board’s identified competence requirements should be an integral element of corporate stra- going forward. Often, major shareholders will be tegy formulation to ensure that the board and the able to assist as and when appropriate by making management are fully apprised of the types of risk main guidelines and recommendations of rele- posed by different strategies47. vance for corporate governance available or by For management, the simplest approach is to creating arenas for knowledge-sharing between maintain awareness of the commercial risk faced boards47. in day-to-day conduct of business. For this reason, it is crucial for boards to be aware of fundamental and long-term company risk. The board’s role in the company’s long-term strategy The best boards ensure that risk assessments work are integrated in the company’s core business, The board shall undertake strategic management and that risk is a key component of decision- of the company. It ensues from the state’s princi- support for the company and board47. The board ples of corporate governance (Principle 4) that the should ensure that the company has governance board is expected to elaborate explicit objectives systems and a risk-management culture aligned and strategies for the company within the con- with the company’s established risk mitigation straints of its articles of association, and to report strategy. on these. In order to contribute actively to the Board appraisal of the effectiveness of risk- company’s strategy formulation it is important to management systems should include organisational factors. This entails questions of whether to 47 McKinsey & Company (2014): «Statlig eierskap, Rapport til assign roles such as a compliance officer, chief Nærings- og fiskeridepartementet.» risk officer and internal auditor with specific 48 Huse, M. & Søland, A. I. (2009): «Styreledelse – styret som team og prosessorientert styrearbeid.» responsibility for, and a direct board reporting 2013–2014 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 79 Diverse and value-creating ownership

Average total compensation to board members in Europe

000’ Euro

Switzerland 171 Spain 116 United Kingdom 110 Germany 93 Italy 84 Denmark 71 Portugal 70 Netherlands 64 Sweden 56 France 55 Belgium 51 Finland 48 Poland 46 Norway 37 Austria 22

Average 77

Figure 8.2 Board member remuneration in different countries. Source: Heidrick & Struggles.

duty regarding compliance, due diligence and risk ning47. Boards tend to have a less direct contact management49. with individuals with leadership potential than the chief executive, who may be keen to retain a talen- ted middle manager for longer than is ideal for the The board’s role in succession planning middle manager’s professional development. The Effective boards place added emphasis on fol- board will also be familiar with the company’s stra- lowing up on long-term talent nurture within the tegy and should ensure that talent nurture is alig- company as part of company succession plan- ned with strategy considerations. Early identification and mentoring of executive candidates boosts 49 See OECD (2014): «Risk Management and Corporate organisational resilience and facilitates long-term Governance.» The report covers risk management practice succession planning. and corporate governance in the 27 countries that participate in the OECD Corporate Governance Committee. The The best boards in this area perform regular section on practices in Norway (see, for example, the con- assessment and follow-up of multiple talents in clusions of pp. 45 and 46 of the report), indicates that the order to determine which candidates have the recommendations regarding risk management and internal controls in the Norwegian Code of Practice for Corporate potential to take up key positions in the future. Governance (Topic 10) does not appear to have taken on Candidate screening might, for example, be car- board the lessons from Enron and other major corporate ried out by each executive presenting three to five scandals and the global financial crisis in 2008. Areas that should be addressed by national codes of practice for cor- up-and-coming talents, providing background porate governance include how companies address risk information and achievements over the last three management, how risk assessments should be linked to years and proposing a discussion within the board strategy, the creation of a risk management framework and the appointment of a chief risk officer reporting directly to on further follow up of the candidates. The board the board. The OECD also points to how few companies in should also seek to meet with the talent group at Norway have an internal auditor (10 per cent) as compared regular intervals. with Norway’s European counterparts. 80 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 2013–2014 Diverse and value-creating ownership

sector ownership, and regardless of whether their Board remuneration activities are located in Norway or abroad. The One factor conducive to optimal board composi- government expects companies in which the state tion is remuneration commensurate with the has a holding to work systematically on their CSR board’s responsibility, competence, time commit- and to be exemplary in their respective fields. The ment and corporate complexity. Appropriate reason why the state, in its capacity as an owner, remuneration may be important in attracting rele- sets out expectations for company commitment to vant competence to the company and ensuring CSR is that the government believes that sound that board members devote sufficient time to management of such matters helps to safeguard board work, although this should not be the main the state’s shareholder assets and that companies motivation for serving on a board. in which the state is a shareholder are to demon- A survey conducted by Heidrick & Struggles strate duly ethical conduct. (2011) indicates that board remuneration in Nor- CSR in the present White Paper is understood way is at a low level compared with European as the responsibility companies are expected to counterparts; see Figure 8.2. assume for people, society and the environment Since 2010, the Norwegian Institute of Dire- where these are impacted by the company’s activi- ctors has published an annual comparative survey ties; see the State’s principles of corporate gover- of board remuneration adopted at general mee- nance, chapter 8.2.11. tings in companies listed on Oslo Børs and compa- The government has both general and more nies in which the state has a holding. The 2013 specific expectations of companies in the field of survey50 reveals that Statoil, Telenor, DNB, Yara CSR. The specific expectations relate to four the- International and Norsk Hydro, for example, in all matic key areas: climate and environment, human of which the state is a major shareholder, and rights, employee and worker rights and anti-cor- which are among the largest companies in terms ruption. The government’s expectations are infor- of market value on the stock exchange, do not med by, and based on, national and international rank among the top ten companies for chair of the standards, conventions and reporting norms. board or board member remuneration. Company boards are responsible for assessing The government’s declared aim is to maintain how expectations from the state in its capacity as board remuneration at a moderate level. However, an owner may best be honoured and implemented it is equally important for board remuneration to effectively. be at a level conducive to appropriate and reliable The government would point to the wide-scale board competence, and which is commensurate progress made in the area of CSR in recent years. with the board’s responsibility and workload. The following outlines some of the key trends in the field before it presents the government’s expectations of companies under state ownership. Owner assessment of board performance The trends concern aspects such as increased Prior to board elections, the state will assess enactment of requirements in law, and the emer- factors such as the composition of a board, its gence of internationally agreed standards adopted procedures (internally within the board and with by Norway. Increasing awareness, appreciation company management), competence, perfor- and expectations are also observed among market mance, goal attainment and whether contributions participants. to the company’s value creation are satisfactory or whether changes may be needed to the board; see Principle 7 of the state’s principles of corporate Developments in the field of CSR governance. In the climate and environmental domain, there is increasing awareness of national and international climate targets and the means of achieving them. 8.3.3 Corporate social responsibility In this context, the role of business and industry The government expects all Norwegian compa- is focal, as is the question of how each individual nies to demonstrate corporate social responsibi- company can contribute to achieving the targets. lity (CSR), whether under private-sector or public- A debate is currently ongoing concerning the nature of future changes in company framework conditions as a result of potential new climate 50 See Aftenposten of 16 February 2014 where the 2013 board remuneration survey (Styrehonorarundersøkelsen 2013) is measures in Norway, the EU and globally. The EU discussed. 2030 framework for climate and energy policies 2013–2014 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 81 Diverse and value-creating ownership may potentially have great impact on economic activity both within and outside Europe. The plan Box 8.2 UN Guiding Principles on is for the international climate change summits Business and Human Rights conducted under the aegis of the UN to result in a (UNGP) global treaty to reduce emissions in line with the two-degree target. If realised, this will alter the fra- On 16 June 2011, the United Nations Human mework conditions for economic activity world- Rights Council endorsed the UN Guiding Prin- wide. ciples on Business and Human Rights In the wake of these international processes, (UNGP); a landmark in the international there is mounting awareness of company risk community’s commitment to human rights. exposure and vulnerability to climate change and Norway led the negotiations on the UNGP wit- climate policy. Increased climate risk may adver- hin the United Nations Human Rights Council sely impact the value of companies. Meanwhile, and continues to oversee this theme within the there has been a substantial increase in funds and framework of the UN Human Rights Council other investors focusing on sustainable invest- through an inter-regional cooperation with ments; see chapter 2.3.4. Russia, India, Argentina and Ghana. An important contribution to the field of The UNGP set out non-binding expectati- human rights has been the introduction of the UN ons of, and recommendations for, businesses, Guiding Principles on Business and Human based on existing international obligations on Rights (UNGP). These were adopted by the Uni- the part of states. ted Nations Human Rights Council in 2011. The In only a few years time, the UNGP have UNGP have been implemented widely, for exam- emerged as the prevailing international stan- ple, within the OECD, EU and UN and through dard for how businesses are expected to efforts to draw up national action plans. The address human rights challenges. The princi- OECD has incorporated the UNGP in the OECD ples are incorporated in a number of related Guidelines for multinational enterprises; the EU guidelines designed to promote responsible has initiated implementation efforts within certain corporate conduct in all business activities. sectors, and within the UN, the UNGP are integral The UNGP are aimed at all states and all to the UN Global Compacts programme. Norway enterprises, regardless of size, sector, loca- is among the countries that are in the process of tion, ownership or structure. The UNGP preparing an action plan for implementation of encompass three pillars: UNGP, an undertaking for which the Norwegian – The obligation of states to guarantee Ministry of Foreign Affairs holds principal human rights through national legislation responsibility. and to protect against human rights abuses Major companies with international interests within the states’ own jurisdiction, inclu- are increasingly adopting the UNGP precautio- ding by third parties such as business and nary approach in risk identification and preven- industry. tion51. This also applies to a number of the compa- – The responsibility of business and industry nies in the state’s portfolio. to respect human rights over and above Increased awareness of the need to respect compliance with the laws and rules in the human rights and employee and worker rights in countries in which they operate, and a the value chain is a prominent trend. Many recommendation to carry out human rights companies have experienced that illegal or other- due diligence in fulfilling that responsibi- wise unacceptable conditions in the value chain lity. may adversely impact their reputation and finan- – The obligation of states to ensure access to cial results. New guiding principles have been various forms of judicial and non-judicial established in this field under pressure from grievance and remedy mechanisms. employer and employee unions and civil society. In the case of Norway, special mention should be made of the advocacy activities of the Ethical Tra- In the field of anti-corruption there has been ding Initiative Norway. considerable progress in recent years. The implemented legislation in Norway on this area was enacted more than a decade ago (see the anti-corruption provision in the Penal Code incorporated 51 UN Global Compact Leaders Summit 2013. in 2003) and also encompasses the conduct of 82 Meld. 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Norwegian citizens abroad. Under Norwegian Progress has also been made in stakeholder law, all forms of corruption are criminal offences. dialogue as a method of ensuring that third par- Norwegian companies with extraterritorial activities affected by company activities are duly taken ties may also be subject to a number of different into account, and as a means of identifying and anti-corruption acts, including the UK Bribery Act minimising risk. Many of the companies, inclu- 2010 and the US Foreign Corrupt Practices Act ding those in which the state has a holding, are (FCPA). The anti-corruption acts also direct atten- increasingly conducting stakeholder dialogues. tion at preventive measures and compliance with Civil society has played an important role in this guidelines. area by asserting explicit expectations. This is A number of individual cases have resulted in demonstrated, for example, through guiding prin- increased awareness among Norwegian compa- ciples for stakeholder dialogue prepared in 2013 nies as regards safeguards against corrupt by KOMpakt, the government’s Consultative practices. Norwegian case law has resulted in Body for Corporate Social Responsibility. increased fines for corrupt practices, while such fines in countries like the USA are far higher. For any violation of the anti-corruption rules, compa- 8.3.3.1 Overarching and general expectations nies are now liable for corporate penalties, inclu- The government believes that the state in its capa- ding the detrimental effects of being excluded city as an owner must exercise diligence in rela- from public procurements. tion to its companies’ commitment to CSR. Atten- Reporting is one of the main instruments in tion on CSR issues has increased, and there is company-level commitment to CSR. However, growing awareness that diligent fulfilment of CSR there is now general agreement that the volume of is conducive to corporate commercial growth. In reporting from companies has become excessive the government’s opinion, this provides for a furt- and that focal issues are overshadowed by less her development of the state’s expectations as the relevant information. Responding to this problem, owner of companies. in 2013, the new version of the internationally In this White Paper to Parliament, increased recognised reporting standard, Global Reporting emphasis is placed on the following aspects: Cla- Initiative (G4) introduced the materiality principle rity from the state regarding the role and respon- as a main principle. Materiality concerns the fact sibility of boards in respect of CSR, the materiality that companies both address and report on mat- principle in connection with reporting and elabo- ters that are key to that business’s impacts on peo- ration of stakeholder dialogue as a procedure for ple, society, climate and environment. In Norway, determining the impacts on people, society, cli- with effect from the financial year 2013, a require- mate and environment and in the interests of ment was introduced for CSR reporting for large improving corporate risk management. In addi- companies; see Section 3–3C of the Accounting tion, expectations for the specific areas have been Act. Increased emphasis on reporting and materi- elaborated in light of developments in this domain ality is linked to the requirement for increased in recent years. transparency concerning corporate activities. Norwegian companies are subject to differing Requirements regarding publicly disclosable exposure to challenges and risks in different information are increasingly being enacted in law. areas. The government therefore proposes that The government would also draw attention to the companies should observe the «comply or EU’s commitment in this area, which may ultima- explain» principle in combination with the materi- tely result in new directives of relevance to Nor- ality principle in adapting their commitment and way. reporting to their business activities. The «comply Concerns with regard to so-called tax havens or explain» principle entails that boards are expec- have been mounting in recent years. Extensive ted to account for any deviation, which in some efforts are ongoing internationally to prevent tax cases may be justified, from the state’s expectati- evasion and non-disclosure of financial informa- ons. tion through the use of tax havens. In Norway, requirements for country-by-country reporting have been introduced for large companies and the Board follow-up on CSR issuers of listed securities in the extractive and The government has found that in companies in forestry industries. In addition, in recent years, which the state has a holding there is also a need Norway has concluded tax information exchange for increased attention on the responsibility of the agreements with a number of new countries. 2013–2014 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 83 Diverse and value-creating ownership board and the manner in which the board addres- – The companies have effective grievance ses CSR. mechanisms within their own organisation. Increased attention on the part of company – The companies maintain dialogue with key sta- boards, will, in the government’s opinion, be con- keholders as and where relevant to determine ducive to improved risk management and as such who is impacted by the company’s activities, serve to protect shareholder assets. It is left to the and in order to reduce risk. discretion of the boards as to how they intend to fulfil their responsibility for CSR. One option, in The government believes that greater knowledge line with current practice in some companies, is to of international norms, conventions and guideli- lodge responsibility for preparation of the board’s nes such as the ILO’s core conventions, the UN deliberations on CSR with a dedicated board Global Compact, the UNGP and the OECD Guide- committee. lines for Multinational Enterprises, will serve to reduce the risk of companies contributing to The government expects that: adverse human rights impacts and violations of – A commitment to CSR is embedded in the employee and worker rights. company board work, that boards play an active and prominent role, and that they account for significant aspects of CSR in their 8.3.3.2 Climate and environment annual report. The business and industry’s environmentally cor- – The boards arrange for the necessary board porate social responsibility imply that regards for competence development in the relevant CSR the environment and resource management is domains. integrated to corporate financial decision-making. – The companies should be frontrunners in the In addition to compliance with national and inter- commitment to CSR in their sectors. The national environmental requirements, the compa- companies actively abide by, and assist in ela- nies should also take proactive measures to borating, best corporate practices in areas of reduce their adverse environmental impacts – relevance for their business. over and above the national and international – The companies have ethical guidelines in place requirements. This may contribute to cost reducti- and make them publicly available. ons, a better strategic platform for business activi- – The companies prepare guidelines for their ties in the long term, and new market opportuni- work on CSR and the guidelines are publicly ties. Business and industry can contribute to redu- available. The companies incorporate their cing adverse environmental impacts through commitment to climate and environment, more environmentally friendly and resource-effici- human rights, employee and worker rights, ent operations at the individual company level. and anti-corruption in their guidelines. Companies can also develop processes or techno- – Companies with international operations sign logies for more efficient use of scarce resources up to the UN Global Compact. All companies and reduce their greenhouse gas emissions. High are expected to be familiar with and commit to environmental standards on the part of suppliers observance of the Global Compact’s ten princi- and in the value chain are also key factors in ples and to consider signing up to the UN Glo- environmental CSR. This applies to all companies, bal Compact. regardless of their ownership structure. – Companies with extraterritorial activities or The need for effective measures to counter cli- international supplier chains familiarise them- mate change has increased. Efforts are being selves with and follow the recommendations of undertaken internationally to limit greenhouse the OECD Guidelines for Multinational Enter- gas emissions in order to achieve the two-degree prises. target. Against this background, the government – Companies adopt the ILO’s eight core conven- is anticipating changes in the international climate tions as the foundation for their activities. regime. These changes will potentially have great – Companies report on their CSR performance, impact on business and industry. This is part of placing emphasis on key challenges, and target the reason for the increased attention among mar- and performance indicators. Companies of a ket participants on climate policy trends and their certain size employ the internationally recogni- implications for business. sed reporting standard, Global Reporting Initi- As an owner, the state must protect the assets atives. in its portfolio. In light of this, the government believes it to be essential for companies to develop 84 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 2013–2014 Diverse and value-creating ownership a sound understanding of the risk entailed by ned in international conventions, in all their potential changes in operating conditions ensuing undertakings, and in their dealings with suppli- from realistic climate change scenarios and natio- ers and business partners. nal and international climate initiatives. Climate – All companies in which the state has a holding policy measures are also potential drivers of incorporate relevant human rights aspects in technological advances and can pave the way for their activities. new market opportunities. The companies should – Companies carry out human rights due dili- take a well-informed approach to the business gence in line with the UNGP recommendations opportunities presented by such changes. to prevent their involvement in adverse human rights impacts and to account for how they The government expects that: address the company’s human rights impacts. – Companies have a sound understanding of the risk posed to their activities by climate change and climate policy measures. 8.3.3.4 Labour rights – Companies are at the forefront in climate and Companies in which the state has a holding are environmental performance in their sector, expected to respect and promote decent working including initiatives to reduce greenhouse gas conditions which safeguard fundamental labour emissions. standards and rights and under which employees – Companies are well-informed of the benefits to are paid a living wage. Companies are assumed to be reaped from early adaptation to new climate be familiar with national legislation and internatio- and environmental requirements. nal labour conventions. The eight core conventions of the ILO are focal and are regarded as setting the standards for labour and employment. 8.3.3.3 Human rights The core conventions encompass fundamental The government emphasises that the authorities principles and rights at work: freedom of associa- have a duty to protect human rights, and that the tion and the right to collective bargaining, the eli- state is bound by several international conventi- mination of all forms of forced and slave labour ons which obligate Norway to protect universal and discrimination, and the elimination of child human rights. This means that only states can be labour. The ILO member states are bound by held legally responsible for human rights abuses. international law to apply the core conventions, However, human rights impose certain impor- which are also regarded as integral to human tant constraints on business undertakings. By vir- rights and comprised by the UNGP. tue of requirements for national legislation and The Norwegian labour market is generally other instruments, the human rights conventions well-regulated and there is an extensive coopera- require states to ensure that business and indus- tion between employees and employers. This is try do not violate human rights. Business and not the case in many of the countries in which industry can also be urged to respect human Norwegian companies operate or have business rights through non-binding guidelines. partners and suppliers. Norwegian companies Aside from the harm caused to the victims, have the potential to promote employee and wor- any conduct contributory to human rights abuses ker rights in other countries by observing best- may result in loss of reputation and other substan- practice standards in the individual countries. tial losses for a business. A more systematic approach by companies to prevent human rights The government expects that: abuses serves to reduce this risk. Both the OECD – Companies adopt the ILO’s core conventions and the EU have issued their own guidelines on as a minimum standard for their activities, and corporate social responsibility in line with the UN that these are followed up in the value chain. Guiding Principles on Business Rights (UNGP). – Companies are leaders in their sector in The government assumes that Norwegian com- occupational health, safety and the environ- panies are familiar with the UNGP and the incor- ment (HSE) and actively address these issues poration of the UNGP in the OECD and EU guide- with their suppliers and business partners. lines. – Companies assess the need to sign global framework agreements with the trade union The government expects that: movement applicable to business operations – Companies in which the state has a holding worldwide. respect universal human rights as they are defi- 2013–2014 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 85 Diverse and value-creating ownership

– Companies act responsibly in organisational – Companies perform diligent assessments of restructuring processes, implementing these corruption-related issues in relation to their in dialogue with employees and local communi- undertakings. If such assessments point to rea- ties. sonable doubt as to whether behaviours may be construed as corrupt, the companies are expected to refrain from such behaviours. 8.3.3.5 Commitment to anti-corruption practices and transparency in financial transactions 8.3.3.6 The government’s follow-up of corporate Corruption is a criminal offence under both Nor- social responsibility wegian and international law. Norwegian anti-cor- The follow-up of CSR performance will be conduc- ruption legislation applies regardless of which ted through the owner dialogue at quarterly mee- countries a Norwegian company operates in, and tings and/or at annual meetings devoted to CSR. corrupt practices abroad are liable for prosecution In specific cases, additional follow-up of compa- in Norway. Corruption poses a threat to the rule nies may be necessary. Company and board of law, democracy, human rights and social commitment to CSR will form part of the evaluati- justice. Corruption also hampers economic ons conducted in preparation for board elections. growth and distorts competition. The government The government would also refer to the annual expects this to set the standard for the commit- report on the state’s direct ownership, the State ment by Norwegian companies to prevent corrup- Ownership Report, which reviews the CSR perfor- tion. mance of each individual company. Transparency and public disclosure are effe- The government recognises that voluntary ctive instruments in anti-corruption efforts. Cash- organisations possess expertise and experience of flow transparency is also crucial in upholding relevance to the state as an owner with regard to companies’ tax responsibilities in the countries company commitment to CSR. In light of this, a where they operate. In many developing dialogue has been established with voluntary countries, low tax revenue is one of the primary organisations concerning CSR. The government causes of poverty. One of the causes of low tax intends to continue this dialogue. Reference is inflow is lack of transparency in the global finan- also made to the government’s general commit- cial system. ment and work related to CSR, and to KOMpakt, More targeted efforts by boards and compa- the government’s Consultative Body for Corpo- nies in this area will serve to reduce the risk of rate Social Responsibility. corruption and thereby contribute to value creation for companies and owners. This is conducive to a more systematic approach to anti-corruption 8.3.4 Executive salaries measures and hence serves to prevent involve- The government wishes to reassert the main ment in corruption, loss of reputation and finan- principles of the state’s policy on executive cial loss. salaries in companies in which the state has a holding; see the current guidelines. The state’s policy The government expects that: is that the determination of executive remunera- – Companies demonstrate the highest possible tion shall be the board’s responsibility and that degree of transparency as regards cash flows, executive pay shall be competitive but not above including taxes. those of other similar companies. The emphasis – Companies with international operations apply shall be on moderation. OECD guidelines on taxation, including that Based on experience and practice in recent they seek to avoid the use of tax havens that do years, the government recognises the need to not apply the standards of the Global Forum on adjust the state’s policy on executive salaries in Transparency and Exchange of Information for respect of three aspects. These concerns which Tax Purposes and which decline to conclude companies should be subject to the guidelines; tax information exchange agreements with pension terms; and how wholly-owned companies Norway. should implement the state’s policy. – Companies have guidelines, systems and mea- In group holdings in which the parent sures in place to prevent corruption, and to company is wholly owned or effectively controlled address possible or borderline violations that by the state (shareholding in excess of 90 per might be detected in this area. cent), the government’s position is that the state 86 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 2013–2014 Diverse and value-creating ownership policy on executive salaries should also comprise definable and measurable criteria’s and factors the wholly-owned subsidiaries in a given group of that the executive is able to influence. Variable pay companies, even if the state does not attend their schemes should comprise a number of relevant general meetings. The government asserts this to metrics and be transparent and comprehensible. be a fair and proper position given that the inter- Variable pay currently accounts for a substantial nal corporate organisation of such groups should proportion of pay packages in a few of the compa- not be determinative for which corporate entities nies in which the state has a holding. are comprised by state pay policy. In recognition The government would point to the comple- of this, the government proposes an amendment xity of assessing variable pay schemes. The to the articles of association of wholly owned government’s opinion is that a detailed review companies articulating that the formalised exe- should be performed of such schemes before the cutive salary disclosure before the general mee- government presents its policy on executive ting of the parent company shall also state how salaries. the board’s remuneration policy is to be imple- The same applies to the companies’ long-term mented in wholly-owned subsidiaries. Further, the incentive (LTI) schemes. These were introduced government will be assessing whether partially- largely to compensate for the loss of share options owned subsidiaries of companies controlled by from 2006/2007 and as a way of maintaining the state should also be comprised by the policy. incentives for senior executives to grow sharehol- As regards employee pensions, the current der assets. The format of LTIs varies from one state policy is that an employer pension contribu- company to the next, but essentially involves fixed tion linked to pension entitlements in excess of 12 annual remuneration calculated as a percentage of G (12 times the Norwegian National Insurance the fixed basic rate of pay. The post-tax LTI pay base amount (G)) should be a defined-contribu- must be invested in shares with a commitment tion pension, limited to 30 per cent of the base term of at least three years. Given that some years salary, and that the pension fund should be prote- have now elapsed since the schemes were intro- cted externally, i.e. assured by a separate legal duced, the government believes that detailed revi- entity. The requirement for external pension-fund ews are now merited in order to determine, insurance introduced by the Stoltenberg Govern- among other things, how such schemes address ment in 2011 prevents employees from losing the distinction between fixed and variable pay. accrued entitlements in the event of their Taking account of these factors, the govern- employer’s bankruptcy. However, this form of pen- ment will be presenting its policy on executive sion scheme has not proved feasible since, to date, salaries once the above-mentioned reviews have no pension products are available on the market been completed and will inform the Storting acco- to assure pension contributions in excess of 12 G. rdingly. For some companies, the workaround has been to cover the surplus by the company paying the contribution as an operating expense. Given this 8.3.5 Research, development, innovation situation, the government maintains that the state and expertise as an owner should not endorse pension entitle- Commercial companies in which the state has a ments in excess of 12 G. The government holds holding are required to operate their business in that this will be consistent with the principle for the best interests of the company and its sharehol- such pensions not to be financed as an operating ders over time. The government would stress that expense, and will serve to reinforce the general capacity for achieving the required restructuring policy that the basic fixed salary should be the and innovation is often crucial for the future main component of any pay package. The govern- growth and competitiveness of individual compa- ment also maintains that this type of measure will nies. But it is not least important for business and promote increased transparency regarding the industry and the economy as a whole. Realisation level of executive salaries. of adaptability and innovation is key to value crea- In companies where the state is the sole tion and to sustained national welfare. Increased owner, or has a holding of more than 90 per cent, value creation is achieved primarily when resour- the government expects conformance with the ces are put to new and more effective use. state policy on executive salaries. Through innovative production methods and by The policy currently permits variable remune- developing new goods and services, companies ration up to the equivalent of six months’ fixed can produce superior products at lower cost or salary. Variable pay must be based on objective, demand a higher price for what they produce. 2013–2014 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 87 Diverse and value-creating ownership

Figure 8.3 One of the aluminium industry’s leading research centres is located at Norsk Hydro’s plant in Årdal. Photo: Norsk Hydro.

Enhancements of this kind increase company pro- arch centres and companies. The national funding fitability but also underpin the welfare society. system should be used where it can support International competition is a vital stimulus for companies’ own research drives. innovation and adaptability. Norwegian business A number of companies in which the state has and industry continues to excel at adapting to a holding are leaders in Norway, not least in rese- trends in international competition. In the inte- arch and development. Corporate commitment to rests of achieving efficient operations and satis- fostering high-powered technological innovation, factory earnings, the government expects the strong business clusters, offshoots and increased boards of companies in which the state has a hol- value creation boosts competitiveness in the Nor- ding to stay abreast of technological and market wegian economy. trends and to demonstrate agility in realigning Access to a specialised workforce is an increa- their operations efficiently at any given time. singly important competitive factor for companies. Corporate competitiveness is influenced by a Norway generally has a highly educated popula- company’s ability to apply and develop new exper- tion, and employees in both the public and private tise and new technological and organisational sectors are consistently well qualified. As an solutions. For this reason, the government main- owner, the government aims for each company to tains that enterprises should be continually alert maintain a dedicated recruitment policy, and for to the value of investing in research and develop- companies to update and develop employee ment and of commercialising their research. competence so that both the companies and the Companies should likewise be committed to dis- individual employees are well equipped to seminating their research results, but also to respond to new requirements and readjustment commercialising the results of third-party rese- needs. 88 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 2013–2014 Diverse and value-creating ownership

with the companies where it manages ownership. 8.3.6 Diversity and equality These meetings may involve financial perfor- A diverse range of skills and know-how may be mance review, communication of the state’s positive factors for a company’s development. If a return and dividend targets, briefings and talks company possesses diverse and complementary concerning corporate strategy, issues surroun- skills, this provides a broader basis for sound deciding CSR etc. Such meetings are conducted in line sion-making. This in turn extends the company’s with customary practice between listed compa- innovation capacity, equipping it to meet challen- nies and major investors52. The meetings are con- ges and thereby achieve more profitable develop- ducted within the parameters prescribed by cor- ment. Companies should therefore maintain awa- porate and securities legislation, not least as reness of the value of diversity in their organisa- regards equal treatment of all shareholders. tion. Diversity in this context denotes, for exam- Meetings are usually attended by representatives ple, differences in theoretical and practical of the company’s administrative management, but knowledge, age, gender, cultural and geographi- it is up to the boards of the companies to deter- cal background. mine who represents the company at meetings, Ensuring that equality and diversity are firmly including whether members of boards also should embedded in corporate human resources policies be present53. In some cases, the owner may speci- is a key management task. Boards are expected to fically request board representation. ensure that human resources policy is characteri- The framework for corporate governance does sed by inclusivity and diversity and that compa- not prevent the state, like other shareholders, nies in which the state has a holding have establis- from raising matters that should be considered by hed strategies and implemented initiatives to pro- the companies in relation to their business and mote equality and diversity in their organisations. growth. Any opinions conveyed by the state at The number of women holding executive posts in such meetings are to be regarded as suggestions Norwegian companies remains low, at the same regarding the company’s administration and time as women account for more than half of governance. The board is responsible for mana- those pursuing higher education in Norway. ging the company in the best interests of the Company succession planning should incorpo- company and the shareholders and to that end rate strategies for making the most of leading must make the necessary deliberations and deci- expertise in the company, including how to sions. Matters requiring the endorsement of the encourage more women to seek senior manage- owner must be addressed at the general meeting ment positions. The government aims to increase in the customary manner. the number of female chairs on the boards of companies in which the state has a holding. 8.4.1 Particular about information exchange in companies wholly owned by the state 8.4 Contact with companies Some of the companies wholly owned by the state The state’s Principle 1 of corporate governance are required by law to submit the minutes of emphasises the equitable treatment of all share- board meetings to the owning ministry. This holders in companies in which the state is a joint applies to state-owned enterprises and Vinmono- shareholder. This encompasses information recei- polet. The regional health trusts, as state enterpri- ved by the state, in its capacity as an owner, from a given company and the contact that exists with the state as an owner. 52 The commentary on topic 13 Information and Communica- Information exchanges between a company tions in the Norwegian Code of Practice for Corporate Governance states that «In addition to the dialogue with and its owner(s) can be done via various channels. the company’s owners in the form of general meetings, the In addition to quarterly and annual reports, other board of directors should make suitable arrangements for public information and the general meeting, regu- shareholders to communicate with the company at other times. This will increase the board’s understanding of lar liaison meetings are held with company mana- which matters affecting the company from time to time are gement as a key element in the follow-up process of particular concern to shareholders». by most ministries exercising state ownership. 53 See topic 13 of the Norwegian Code of Practice for Corpo- rate Governance which recommends that «The board of The Ministry of Trade, Industry and Fisheries, for directors should establish guidelines for the company’s its part with a few exceptions, holds quarterly contact with shareholders other than through general mee- meetings, along with annual meetings on CSR tings». 2013–2014 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 89 Diverse and value-creating ownership ses, are required to submit an annual perfor- same way as companies in which the state has no mance report to their owning ministry. holdings. Some of the ministries exercising state ownership hold regular meetings with the boards of enterprises wholly owned by the state. As brie- 8.5.1 Organisation of the state’s ownership fings, these are the equivalent of the quarterly administration meetings discussed earlier. In wholly owned Administration of direct state ownership is distri- companies where such regular meetings are not buted among a number of different ministries. If customary practice, the ministries will discuss the same ministry manage sectoral regulation, with the chair of the board if it is desired to intro- responsibility for sectoral supervision and corpo- duce. Matters requiring the endorsement of the rate ownership to a company, this gives the oppor- owner must be addressed at the general meeting/ tunity to practice consistent policy, but also puts enterprise general meeting. greater demand for stringent internal checks to avoid confusion of roles. A number of processes have been in progress for some time to separate 8.5 The state’s various roles out the state’s roles as an owner and as an executive authority. Ownership of the majority of The state exercises a number of different roles, companies with commercial objectives is cur- such as that of policy formulator, financing autho- rently managed by the Ownership Department of rity, market regulator, supervisory authority and the Ministry of Trade, Industry and Fisheries in owner. A conscious attitude to keeping the state’s line with the OECD recommendation for the grea- role as an owner separate from its other roles is test possible coordination of commercial owners- important for both the legitimacy of state owners- hip54, while companies with sectoral-policy obje- hip and for the state’s other roles. State authority ctives are administered by the ministries responsi- is usually exercised by issuing statutes and regu- ble for the respective sectors. Notable exceptions lations; by applying conditions to concessions aut- include the ownership of Statoil ASA, which is horised in law; through licensing, by concluding administered by the Ministry of Petroleum and agreements, and by making executive decisions Energy. on individual matters. A related form of authority The arm’s length commitment to drawing a is exercised by applying economic instruments sharper organisational distinction between the such as procurement of public services and char- state’s differing roles and to consolidate as much ging taxes and duties. The state also exercises as possible of the commercial, strategic owners- influence through dialogue with both public- hip with a single entity in the central administra- sector and private-sector companies, for example, tion, has served to professionalise, streamline and as regards expectations regarding corporate self- boost confidence in the state’s ownership adminis- policing and CSR. The state also has a role as a tration. The government maintains that ownership national supervisory and complaints body. This of commercial companies should remain under role is often kept separate from other state manda- the national ownership entity currently lodged tes in order to maintain confidence in the imparti- with the Ministry of Trade, Industry and Fis- ality of state decisions. heries unless special considerations dictate other- In order to maintain the legitimacy of the wise. The government will consider further con- various roles and of the state as an owner, the solidating of direct state ownership of commercial state should be aware of the role it has assumed at companies and certain other companies under any given time, and must not abuse its power and this entity, not least with a view to further separate influence in other roles to promote its interests as of the state’s ownership role from that of other an owner. Conversely, in its other roles, the state roles. must not exploit its power and influence to make political decisions or exercise authority in a man- 54 Consequently, in line with the OECD recommendation, ner that would disfavour state-owned enterprises companies such as Arcus AS, BaneTele AS, Cermaq ASA, DNB ASA, ECC AS, Entra Eiendom AS, Flytoget AS, Grø- over companies under private ownership. degaard AS, Mesta AS, NOAH Holding AS, Norsk Eien- For these reasons, the state refrains from domsinformasjon AS, Norsk Medisinaldepot AS, SAS AB, exercising its authority as a public administrator Secora AS, SIVA SF, SND-Invest AS, Statkraft SF and Telenor ASA have been transferred from other ministries in its corporate governance. Companies in which to what is now the Ministry of Trade, Industry and Fis- the state has a holding are therefore subject to heries since the late 1990s. A number of these companies regulatory and supervisory authorities in the have subsequently been privatised. 90 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 2013–2014 Diverse and value-creating ownership

Ownership Forum addresses a range of 8.5.2 Further development of the state’s topics concerning ministerial ownership exercise of ownership activities. Trends and increased attention on new aspects of – Professional seminar: an all-day seminar state ownership, as set out in chapter 2.3, point to hosted annually. The target audience and the increasing challenges of exercising sound topics are the same as for the Ownership state ownership. Good corporate governance on Forum. the part of the state serves to boost the value of – Owner Lunches are meetings of up to two companies. The state should be an exemplary hours hosted every other month for the owner in promoting good corporate governance. ministries that deal with the state’s direct Competent ownership entities within the minis- ownership. This session is used for dia- tries are key determinants of exemplary direct logue, discussion and experience state ownership. Although the objectives for exchange. companies in which the state has holdings differ – A Competence Forum is hosted once or from one company to the next, state ownership twice annually and invites voluntary organi- administration overall has many common traits55. sations with specialist expertise in CSR to Corporate governance should be practised as engage in dialogue and discussion with competently and consistently as possible across representatives of the ministries responsi- the ministries, and effort should be made to facili- ble for exercising state ownership. The tate increased cooperation on matters of owners- object of these meetings is to explore a hip between ownership entities within the state in range of CSR issues in order to extend order to make best use of joint ministerial gover- insights among the owning ministries of nance expertise. Over the last two years, the the challenges faced by the companies. state’s ownership administration has been strengt- – Strengthening the capacity of the ownership hened, for example, within board recruitment and administration within the Ministry of Trade, evaluation. The government will continue to seek Industry and Fisheries has facilitated improved to enhance and further professionalise the state’s strategic and financial supervision of compa- exercise of ownership in order to ensure the best nies with commercial objectives, on the one possible management of national assets. Exam- hand by means of more extensive analytical fol- ples of initiatives that have been implemented, low-up, and on the other hand by achieving bet- and activities currently in progress: ter understanding of the company’s strategic – The role of the Ministry of Trade, Industry and development. Fisheries as a resource centre for the exercise – The efforts to nominate and evaluate boards of state ownership has been reinforced, as has have been intensified by means of systematic interministerial cooperation on ownership mat- and thorough processes and by increased capa- ters through the coordinating role of the city within the Ministry of Trade, Industry and Ownership Department. The following specia- Fisheries. lised interministerial fora have been established, all under the Ownership Department: The Ministry of Trade, Industry an Fisheries is – An Ownership Forum is hosted six to eight also responsible for compiling the annual «State times a year for all ministerial employees Ownership Report»; for hosting the annual «State engaged or otherwise interested in owners- Ownership Conference», for participation in hip administration at ministerial level. The various fora such as the Corporate Governance Committee and Working Party on State Owners- 55 This applies, for example, to interdisciplinary areas such as hip and Privatisation Practices in OECD and the the principles of corporate governance, financial manage- Ownership Forum, all of which are devoted to set- ment and reporting, CSR, remuneration schemes for executives and board members and work concerning board ting standards in corporate governance and other composition. matters relating to state ownership. 2013–2014 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 91 Diverse and value-creating ownership

9 A review of the state’s direct ownership interests

This chapter discusses the state’s direct ownership interests. The companies under review are The company’s purpose those with commercial objectives and the largest The company’s purpose is to operate and develop and most important companies with sectoral-pol- the EDR data collection system and other associ- icy objectives. They are grouped in accordance ated activities. with the four categories on which the state’s ownership of enterprises is based. For each company, the following are provided: general company infor- The company’s activities mation, the purpose of the company, a description Ambita (formerly Norsk Eiendomsinformasjon) is of its activities and the objective of the state’s own- a fully commercial ICT company operating within ership. The figures are for 2013 and in NOK mil- sales, administration, operation and development lions. For the listed companies, the market value of ICT systems for property data. The company of their equity is stated. For the unlisted compa- supplies services, systems and products based on nies, book equity less any minority interests is property information and cartographical data. given. The book value of equity may vary consid- Through the company’s EDR publishing system erably from the companies’ actual market values. and the Infoland marketplace, the company sup- For supplementary information about the compa- plies property and map data that has been pro- nies’ activities, readers are referred to the annual cessed from data deriving from the municipalities, ownership reports which the Ministry of Trade, housing associations, the Norwegian Mapping Industry and Fisheries publishes and submits to Authority, the power companies and so forth. Info- parliament. land is an online marketplace linked to systems for counting, authorisation and invoicing. The systems allow customers to place direct orders for 9.1 Category I – Companies with information products from around 240 municipali- commercial objectives ties, housing cooperatives and other data providers. Ambita’s head office is in Oslo. 9.1.1 Ambita AS The government has decided to place the com- Table 9.1 Company information and key figures. pany in category 1 «Companies with commercial The figures are for 2013 and in NOK millions. objectives» with effect from 1 January 2014, since as of this date it will be in full competition with Corporate form: Limited company other distributors, and subject to the same framework conditions as they are. As a consequence of Founded: 1987 this, the company’s purpose as set out in its stat- State holding: 100 % ues must also be amended, since it will no longer be under obligation to fulfil any social mandates. Owner: Ministry of Trade, Industry and Fisheries Number of employees: 59 The objective of the state’s ownership The objective of the state’s ownership of Ambita Book equity: 78 AS is purely commercial. The company is to be Operating revenues: 324 run on a commercial basis and with the aim of delivering a competitive return. Operating profit/loss: 60 The government is of the opinion that there Profit/loss after tax and are no special grounds for the state to be a long- minority interests: 42 term owner of the business and is therefore recep- tive to considering solutions that entail a reduc- 92 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 2013–2014 Diverse and value-creating ownership tion in its holding. On this basis, in the budget proposal for 2015, the government will ask parlia- The objective of the state’s ownership ment for a mandate to fully or partially dispose of The objective of the state’s ownership of Baneser- its holding in Ambita AS. Any use of the mandate vice AS is purely commercial. The company is to would depend on commercial assessments relat- be run on a commercial basis and with the aim of ing to, for example, company-specific and market- delivering a competitive return. specific factors. The government is of the opinion that there are no special grounds for the state to be a long- term owner of the business and is therefore recep- 9.1.2 Baneservice AS tive to considering solutions that entail a reduc- Table 9.2 Company information and key figures. tion in its holding. On this basis, in the budget The figures are for 2013 and in NOK millions. proposal for 2015, the government will ask parliament for a mandate to fully or partially dispose of Corporate form: Limited company its holding in Baneservice AS. Any use of the mandate would depend on commercial assessments Founded: 2005 relating to, for example, company-specific and State holding: 100 % market-specific factors and would also be viewed in the context of the outcome of the Ministry of Owner: Ministry of Transport Transport and Communications’ reform of the and Communications railways sector. Number of employees: 292 Book equity: 101 9.1.3 Cermaq ASA Operating revenues: 426 Table 9.3 Company information and key figures. Operating profit/loss: -29 The figures are for 2013 and in NOK millions. Profit/loss after tax and Corporate form: Public limited company minority interests: -23 Founded: 1994 State holding: 59.17 % The company’s purpose Owner: Ministry of Trade, The company’s purpose is to offer services and Industry and Fisheries products for developing, building, maintaining and operating railway infrastructure and other Number of employees: 4,361 related activities, including in other areas where Value of the company: 9,990 the company’s expertise and resources can be utilised. Activities may be performed by the com- Operating revenues: 5,155 pany itself, by wholly owned subsidiaries or Operating profit/loss: 2,877 through participation in or cooperation with other companies. Profit/loss after tax and minority interests: 3,886

The company’s activities Baneservice is a continuation of the former Bane- The company’s purpose Service business unit of Jernbaneverket, the Nor- The purpose of the company is to undertake sus- wegian National Rail Administration. The com- tainable aquaculture and other activities that natu- pany builds and maintains track, and catenary, sig- rally belong with this. The company will play an nalling and telecommunications installations for active role in research and development in the railways, tramways and light rail. The company is aquaculture industry. Activities may be performed one of the leading full-spectrum suppliers of rail- by the company itself, by subsidiaries or through way engineering services in Norway. The com- participation in or cooperation with other compa- pany also has a wholly owned subsidiary in Swe- nies. den which supplies marshalling services for ter- minal operations. Baneservice’s head office is in Lysaker. 2013–2014 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 93 Diverse and value-creating ownership

The company’s activities The company’s purpose Cermaq’s vision is to be a global fish-farming com- The company’s primary purpose is to cater for the pany and a leader in the sustainable production of state’s requirement for premises. The company salmonid species. The group is one of the largest can own, buy, sell operate and manage property farmers of salmon and trout, with production facil- and perform other associated activities. The com- ities in Chile, Canada and Norway. Cermaq is pany can also own shares or holdings in, and par- listed on the Oslo Stock Exchange and has its ticipate in, other companies that perform activities head office in Oslo. as mentioned above. The company is to be run on commercial principles.

The objective of the state’s ownership The objective of the state’s ownership of Cermaq The company’s activities ASA is purely commercial. The company is to be Entra Holding is the parent company of the Entra run on a commercial basis and with the aim of group, and owns all the shares in Entra Eiendom delivering a competitive return. AS including 25 wholly or partially owned subsid- The government is of the opinion that there iaries. The company develops, leases, manages, are no special grounds for the state to be a long- operates, buys and sells real estate in Norway and term owner of the business. On this basis, the is one of the country’s leading property compa- government has been granted parliament’s man- nies. It is run on commercial principles in compe- date to sell, through payment in cash and/or tition with other, private, commercial property shares in another company in the same sector, all companies. The company’s portfolio covers pri- of the state’s shareholding in Cermaq ASA as part marily Oslo, Stavanger, Bergen and Trondheim. of an industrial solution. In the budget proposal Entra Holding’s head office is in Oslo. for 2015, the government will ask for an extended mandate to allow full or partial disposal of the state’s shares in Cermaq ASA, in line with equiva- The objective of the state’s ownership lent powers for the other companies in category 1. The objective of the state’s ownership of Entra Any use of the mandate would depend on com- Holding AS is purely commercial. The company is mercial assessments relating to, for example, to be run on a commercial basis and with the aim company-specific and market-specific factors. of delivering a competitive return. The government is of the opinion that there are no special grounds for the state to be a long- 9.1.4 Entra Holding AS term owner of the business. On this basis, the Table 9.4 Company information and key figures. government currently has a mandate from parlia- The figures are for 2013 and in NOK millions. ment to «sell all shares in Entra Holding AS». A privatisation process has been initiated. In 2013, Corporate form: Limited company the mandate from parliament was extended from applying to «down to 33.4 per cent» to applying to Founded: 2000 «all shares», in order to allow greater scope of State holding: 100 % alternatives for providing options for divestment. To the extent required, in the budget proposal for Owner: Ministry of Trade, 2015, the government will ask for this mandate to Industry and Fisheries be maintained. Number of employees: 152 Book equity: 7,878 Operating revenues: 1,575 Operating profit/loss: 612 Profit/loss after tax and minority interests: 453 94 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 2013–2014 Diverse and value-creating ownership

ing to, for example, company-specific and market- 9.1.5 Flytoget AS specific factors. Table 9.5 Company information and key figures. The figures are for 2013 and in NOK millions. 9.1.6 Mesta AS Corporate form: Limited company Table 9.6 Company information and key figures. Founded: 1992 The figures are for 2013 and in NOK millions. State holding: 100 % Corporate form: Limited company Owner: Ministry of Trade, Founded: 2003 Industry and Fisheries State holding: 100 % Number of employees: 349 Owner: Ministry of Trade, Book equity: 968 Industry and Fisheries Operating revenues: 897 Number of employees: 1,520 Operating profit/loss: 223 Book equity: 897 Profit/loss after tax and Operating revenues: 4,011 minority interests: 170 Operating profit/loss: 73 Profit/loss after tax and The company’s purpose minority interests: 166 The purpose of the company is to operate train services to and from Oslo Airport, together with associated investments and services. The company’s purpose Mesta AS’s purpose is to offer services and products for developing, building, operating and main- The company’s activities taining transport infrastructure and other related Flytoget operates high-speed trains between activities, including in other areas where the com- Drammen and Oslo Airport. The company trans- pany’s expertise and resources can be utilised. ports around 6 million passengers annually, which Activities may be performed by the company equates to around 10 per cent of all train passen- itself, by wholly owned subsidiaries or through gers in Norway and approximately 20 per cent of participation in other companies or cooperation all train passengers in the Greater Oslo region. with others. The company’s market share of ground transport access services to Oslo Airport in 2013 was 32.8 per cent. Flytoget’s head office is in Oslo. The company’s activities Mesta is one of Norway’s largest road operating and maintenance companies. The company was The objective of the state’s ownership formed when the production unit of the Norwe- The objective of the state’s ownership of Flytoget gian Public Roads Administration was separated AS is purely commercial. The company is to be out into a limited company subject to market com- run on a commercial basis and with the aim of petition. In recent years, the company has under- delivering a competitive return. taken a comprehensive restructuring process The government is of the opinion that there which has helped provide a lower cost base, better are no special grounds for the state to be a long- competitiveness and a more targeted business term owner of the business and is therefore recep- strategy. Mesta’s head office is in Lysaker. tive to considering solutions that entail a reduction in its holding. On this basis, in the budget proposal for 2015, the government will ask parlia- The objective of the state’s ownership ment for a mandate to fully or partially dispose of The objective of the state’s ownership of Mesta AS its holding in Flytoget AS. Any use of the mandate is purely commercial. The company is to be run would depend on commercial assessments relat- on a commercial basis and with the aim of delivering a competitive return. 2013–2014 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 95 Diverse and value-creating ownership

The government is of the opinion that there are no special grounds for the state to be a long- The company’s activities term owner of the business. On this basis, the SAS is one of Scandinavia’s leading airlines, government currently has a mandate from parlia- whose primary purpose is to offer competitive ment to «sell all shares in Mesta AS». In the bud- passenger services originating in the home mar- get proposal for 2015, the government will ask for ket in Northern Europe. In 2012/2013 the com- this mandate to be maintained, in line with equiva- pany flew more than 28 million passengers to 120 lent powers for the other companies in category 1. destinations. The company is also part of the Any use of the mandate would depend on com- global airline alliance Star Alliance. SAS is listed mercial assessments relating to, for example, on the Oslo, Stockholm and Copenhagen stock company-specific and market-specific factors. exchanges and its head office is in Stockholm. In connection with the company’s wish to be able to utilise different sources of capital, the gov- 9.1.7 SAS AB ernment currently has a mandate for the Ministry Table 9.7 Company information and key figures. of Trade, Industry and Fisheries to vote in 2014 at The figures are for 2013 and in NOK millions1. the annual general meeting of SAS AB to empower the board to issue financial instruments Corporate form: Public limited company which include equity and debt components (hybrid capital), including preference shares and Founded: 1946 convertible loans, with the limitation that the State holding: 14.3 % state’s percentage of voting shares in SAS AB does not fall below 7.5 per cent. Owner: Ministry of Trade, Industry and Fisheries Number of employees: 14,127 The objective of the state’s ownership The objective of the state’s ownership of SAS AB Value of the company: 5,128 is purely commercial. The company is to be run Operating revenues: 38,057 on a commercial basis and with the aim of delivering a competitive return. Operating profit/loss: 1,665 The government is of the opinion that there Profit/loss after tax and are no special grounds for the state to be a long- minority interests: 161 term owner of the business. On this basis, the government currently has a mandate from parlia- 1 The figures are in Norwegian kroner, converted from the SAS group figures in Swedish kronor. Due to differences in ment to «sell shares in SAS AB in connection with accounting years, the figures relate to the period November an industrial solution». In the budget proposal for 2012-October 2013. 2015, the government will ask for an extended mandate to allow full or partial disposal of the The company’s purpose state’s shares in SAS AB, in line with equivalent powers for the other companies in category 1. Any The purpose of the company is directly or indi- use of the mandate would depend on commercial rectly to conduct air traffic operations chiefly assessments relating to, for example, company- through the Scandinavian Airlines System Den- specific and market-specific factors. mark-Norway-Sweden (SAS) Consortium, other transport and travel-related business as well as any business compatible therewith. 96 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 2013–2014 Diverse and value-creating ownership

cial basis and with the aim of delivering a competi- 9.1.8 Veterinærmedisinsk tive return. Oppdragssenter AS The government is of the opinion that there Table 9.8 Company information and key figures. are no special grounds for the state to be a long- The figures are for 2013 and in NOK millions. term owner of the business and is therefore recep- tive to considering solutions that entail a reduc- Corporate form: Limited company tion in its holding. On this basis, in the budget proposal for 2015, the government will ask parlia- Founded: 1988 ment for a mandate to fully or partially dispose of State holding: 34 % its holding in Veterinærmedisinsk Oppdrags- senter AS, in line with equivalent powers for the Owner: Ministry of Agriculture other companies in category 1. Any use of the and Food mandate would depend on commercial assess- Number of employees: 42 ments relating to, for example, company-specific and market-specific factors. Book equity: 76 Operating revenues: 541 9.2 Category 2 – Companies with Operating profit/loss: 32 commercial objectives and an Profit/loss after tax and objective of maintaining head minority interests: 25 office functions in Norway 9.2.1 Aker Kværner Holding AS The company’s purpose Table 9.9 Company information and key figures. The purpose of the company is to help improve The figures are for 2013 and in NOK millions. fish and animal health and improve utilisation of genetic resources in fish by offering goods, ser- Corporate form: Limited company vices and research and test facilities based on Founded: 2007 international high-level competence and quality. The company aspires to promote the conversion State holding: 30 % of ideas from the veterinary and fish health area Owner: Ministry of Trade, into commercially interesting projects. Industry and Fisheries Number of employees: 1 The company’s activities Value of the company: 12,714 Veterinærmedisinsk Oppdragssenter is a knowledge-based company with a scientific foundation Operating revenues: 0.0 in Norwegian veterinary medicine and related Operating profit/loss: -1.5 environments. The company supplies goods and services to the Norwegian aquaculture industry Profit/loss after tax and and goods to the Norwegian veterinary market minority interests: -444 through a separate wholesale and pharmacy con- cession. The company also supplies clinical infec- tion trials to the international pharmaceutical, The company’s purpose feed and breeding industries working on national The purpose of the company is to own 110,333,615 and international aquaculture through research shares in Aker Solutions ASA and 110,333,615 facilities. The company operates in a competitive shares in Kværner ASA. market on a commercial basis. Veterinærmedis- insk Oppdragssenter’s head office is in Oslo. The company’s activities Aker Kværner Holding administers shares in The objective of the state’s ownership Aker Solutions ASA and Kværner ASA. The com- The objective of the state’s ownership of Veter- pany owns 40.3 per cent of the shares in Aker inærmedisinsk Oppdragssenter AS is purely com- Solutions ASA and 41.0 per cent of the shares in mercial. The company is to be run on a commer- Kværner ASA and has one employee. 2013–2014 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 97 Diverse and value-creating ownership

The state owns 30 per cent of the shares in Aker Kværner Holding AS, while Aker ASA owns 9.2.2 DNB ASA 70 per cent. The state and Aker ASA have mutu- Table 9.10 Company information and key figures. ally committed themselves to retaining combined The figures are for 2013 and in NOK millions. ownership of Aker Solutions ASA and Kværner ASA for a period of at least 10 years (from 2007). Corporate form: Public limited company Aker Kværner Holding AS has the same rights in Founded: 1999 Aker Solutions ASA and Kværner ASA as other shareholders. The owners of Aker Kværner Hold- State holding: 34 % ing AS have signed a shareholder agreement Owner: Ministry of Trade, which, in practice, ensures negative control for Industry and Fisheries the state and Aker ASA in respect of a number of key issues in Aker Solutions ASA and Kværner Number of employees: 12,452 ASA. Value of the company: 176,725 Kværner is a leading, specialist supplier of engineering, procurement and construction Operating revenues: 46,619 (EPC) services for offshore oil and gas platforms Operating profit/loss: 22,710 and onshore installations. The company has around 2,800 employees. Kværner is listed on the Profit/loss after tax and Oslo Stock Exchange and has its head office in minority interests: 17,526 Fornebu. Aker Solutions supplies products, systems and services to the oil and gas industry. The com- The company’s purpose pany’s technologies and competence contribute to The purpose of the company is to own or partici- establishing, increasing and extending production pate in other enterprises that perform banking, from oil fields worldwide. The company has insurance or financing activities or connected around 26,000 employees in more than 30 coun- activities within the framework of applicable legis- tries. Aker Solutions is listed on the Oslo Stock lation. Exchange and has its head office in Fornebu. On 30 April 2014, Aker Solutions published a proposal for a demerger of the Aker Solutions The company’s activities group. The state is provisionally inclined to sup- DNB is Norway’s largest finance group, and one port this proposal, but its final view will be deter- of the largest in the Nordic region by market mined when the demerger plan and other final value. The bank has a presence throughout Nor- documentation are in place. way and has several international offices. In total, the company has more than 2.1 million retail customers and more than 220,000 business custom- The objective of the state’s ownership ers. The online bank has around 1.7 million users. The objective of the state’s ownership of Aker Through DNB Eiendom and DNB Næringsei- Kværner Holding AS is to help ensure that indus- endom, the group is Norway’s largest estate trial expertise in petroleum-related activities are agency. It is also one of the world’s leading ship- developed and that such activities are run from ping and offshore banks, the world’s leading sea- Norway. The company is to be run on a commer- food industry bank and a foremost bank in the cial basis and with the aim of delivering a competi- energy sector. The group’s portfolio of major busi- tive return. ness customers includes large Norwegian and The government notes that the state has international companies and finance institutions, signed a shareholder agreement with Aker ASA local and county authorities and public-sector concerning the ownership of Aker Kværner Hold- enterprises in Norway. ing AS. DNB Markets is Norway’s largest securities company and serves customers from its head office in Oslo, a number of regional brokers and international branches. DNB Asset Management is the country’s largest asset manager with more than 500,000 investment fund customers and some 400 institutional customers in Norway and 98 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 2013–2014 Diverse and value-creating ownership

Sweden. DNB Livsforsikring has more than 1 mil- company may participate in and own other compa- lion life and pension insurance customers, and nies. DNB Skadeforsikring has around 210,000 personal accident insurance customers in Norway. DNB is listed on the Oslo Stock Exchange and The company’s activities has its head office in Oslo. Kongsberg Gruppen is an international group which supplies high technology systems and solutions in offshore, petroleum industry, merchant The objective of the state’s ownership shipping, defence and space. The objective of the state’s ownership of DNB The group has four business areas. Kongsberg ASA is to maintain a large and skilled finance Maritime supplies systems for positioning, moni- group with head office functions in Norway. The toring, navigation and automation for merchant company is to be run on a commercial basis and shipping and the offshore industry. Kongsberg with the aim of delivering a competitive return. Oil & Gas Technologies supplies technological The government notes that a state holding that subsea products and solutions, and information provides negative control contributes to this. The systems for drilling operations, production and government will therefore retain the state’s hold- the subsea environment. Kongsberg Defence Sys- ing in DNB ASA, and does not see it as appropri- tems is Norway’s leading supplier of defence and ate to reduce it to below 34 per cent. space-related systems, with products and systems for command and control, weapons control and monitoring, communications solutions and mis- 9.2.3 Kongsberg Gruppen ASA siles. Kongsberg Protech Systems is a world-lead- Table 9.11 Company information and key figures. ing supplier of remote-controlled weapons control The figures are for 2013 and in NOK millions. systems. Their main product is the Protector Remote Weapon Station. Kongsberg Gruppen is Corporate form: Public limited company listed on the Oslo Stock Exchange and has its head office in Kongsberg. Founded: 1987 State holding: 50.001 % The objective of the state’s ownership Owner: Ministry of Trade, The objective of the state’s ownership of Kongs- Industry and Fisheries berg Gruppen ASA is to maintain a knowledge- Number of employees: 7,493 based and high-technology industrial group with head office functions in Norway. The company is Value of the company: 15,300 to be run on a commercial basis and with the aim Operating revenues: 16,323 of delivering a competitive return. The government notes that a state holding that Operating profit/loss: 1,659 provides negative control contributes to this. On Profit/loss after tax and this basis, in the budget proposal for 2015, the minority interests: 1,228 government will ask parliament for a mandate to possibly reduce the state’s holding in Kongsberg Gruppen ASA down to 34 per cent. Any use of the The company’s purpose mandate would depend on commercial assess- The purpose of Kongsberg Gruppen ASA is to ments relating to, for example, company-specific engage in technological and industrial activities in and market-specific factors. The government does the maritime, defence and related sectors. The not consider it appropriate to reduce state ownership to below 34 per cent. 2013–2014 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 99 Diverse and value-creating ownership

The government notes that the state has 9.2.4 Nammo AS signed a shareholder agreement with Patria Hold- Table 9.12 Company information and key figures. ing Oyj of Finland concerning the ownership of The figures are for 2013 and in NOK millions. Nammo AS. Any changes to the state’s shareholding with a view to developing Nammo AS’s busi- Corporate form: Limited company ness must be assessed in relation to the provisions in this agreement. Founded: 1998 State holding: 50 % 9.2.5 Norsk Hydro ASA Owner: Ministry of Trade, Industry and Fisheries Table 9.13 Company information and key figures. The figures are for 2013 and in NOK millions. Number of employees: 2,139 Corporate form: Public limited company Book equity: 1,835 Founded: 1905 Operating revenues: 3,703 State holding: 34.26 % Operating profit/loss: 489 Owner: Ministry of Trade, Profit/loss after tax and Industry and Fisheries minority interests: 327 Number of employees: 12,564

The company’s purpose Value of the company: 56,008 The purpose of the company is to develop, pro- Operating revenues: 65,358 duce and market ammunition products and to Operating profit/loss: 1,674 cooperate with other companies and enterprises with similar objectives. The company is run on Profit/loss after tax commercial principles. and minority interests: -920

The company’s activities The company’s purpose Nammo’s core activity is ammunition and rocket The purpose of the company is industry, trade and motors for military and civil purposes, and the transport, and the utilisation of energy and raw environmentally friendly recycling and destruc- materials, and to undertake other associated activ- tion of old and outdated ammunition, including ities. These activities may be performed through cluster munitions. Markets beyond the Nordic participation in or cooperation with other enter- home market comprise an increasingly large prises. share of the business. In 2013, 77 per cent of operating revenues derived from non-Nordic countries. The largest shares of the company’s export The company’s activities market are made up of the USA and Canada, 39 Norsk Hydro is a global supplier of aluminium, per cent combined, and other European countries, active along the entire value chain, from raw mate- 22 per cent of turnover. Nammo’s head office is at rials extraction to finished product. The company Raufoss. has activities around the world, linked to, for example, the production of primary metal and the manufacture of finished products. It has factories The objective of the state’s ownership in Norway at Karmøy, Høyanger, Årdal, Sunn- The objective of the state’s ownership of Nammo dalsøra and Holmestrand. The company also has a ASA is to maintain a knowledge-based and high- substantial energy business, and is Norway’s sec- tech group with head office functions in Norway. ond largest generator of electrical power. It is The company is to be run on a commercial basis active in more than 50 countries on all continents. and with the aim of delivering a competitive Norsk Hydro is listed on the Oslo Stock Exchange return. and has its head office in Oslo. 100 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 2013–2014 Diverse and value-creating ownership

tries. The company’s primary activity is produc- The objective of the state’s ownership tion of oil and gas, and Statoil is the operator for The objective of the state’s ownership of Norsk around 69 per cent of oil and gas production on Hydro ASA is to maintain a knowledge-based and the Norwegian Continental Shelf. In 2013, 37 per high-technology industrial group with head office cent of the company’s equity production came functions in Norway. The company is to be run on from international activities. The company is a commercial basis and with the aim of delivering among the world’s largest net sellers of crude oil a competitive return. and condensate, and a major seller of natural gas The government notes that a state holding that in the European market. The company also has provides negative control contributes to this. The considerable downstream activities and renew- state’s holding is currently close to the minimum able energy, such as offshore wind power. level that secures negative control. The govern- Through a special instruction, adopted at Statoil’s ment will therefore retain the state’s holding in Annual General Meeting of 25 May 2001, the com- Norsk Hydro ASA, and does not see it as appropri- pany has been given responsibility for selling the ate to reduce it to below 34 per cent. The govern- state’s petroleum alongside its own. Statoil is ment does not intend to extend the existing parlia- listed on the Oslo and New York Stock Exchanges mentary mandate to increase the state’s holding and has its head office in Stavanger. in Norsk Hydro ASA up to 39.9 per cent.

The objective of the state’s ownership 9.2.6 Statoil ASA The objective of the state’s ownership of Statoil Table 9.14 Company information and key figures. ASA is to maintain a knowledge-based and high- The figures are for 2013 and in NOK millions. technology industrial group with head office functions in Norway. The company is to be run on a Corporate form: Public limited company commercial basis and with the aim of delivering a competitive return. Founded: 1972 On the basis of guidelines specified in a sale State holding: 67 % and marketing instruction, Statoil is responsible for managing, transporting and selling the Norwe- Owner: Ministry of Petroleum gian state’s oil and gas in conjunction with Statoil’s and Energy own reserves This arrangement presupposes that Number of employees: 23,413 the state is the majority owner of Statoil. Value of the company: 468,731 Operating revenues: 637,400 9.2.7 Telenor ASA Operating profit/loss: 155,300 Table 9.15 Company information and key figures. The figures are for 2013 and in NOK millions. Profit/loss after tax and minority interests: 39,900 Corporate form: Public limited company Founded: 1994 The company’s purpose State holding: 53.97 % The purpose of Statoil ASA is oil and gas explora- Owner: Ministry of Trade, tion and production, transportation, refining and Industry and Fisheries marketing of petroleum and its derivatives and other energy forms, as well as other activities. Number of employees: 33,100 These activities may also be performed through Value of the company: 219,304 participation in or cooperation with other enterprises. Operating revenues: 104,027 Operating profit/loss: 21,327 The company’s activities Profit/loss after tax and Statoil is an international energy company with minority interests: 8,749 around 23,400 employees and activities in 33 coun- 2013–2014 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 101 Diverse and value-creating ownership

The company’s purpose 9.2.8 Yara International ASA The purpose of the company is to engage in tele- Table 9.16 Company information and key figures. communications and other related activities. The figures are for 2013 and in NOK millions. These may be conducted by the company itself, by subsidiaries or through participation in other Corporate form: Public limited company companies or cooperation with others. Founded: 2004 State holding: 36.21 % The company’s activities Owner: Ministry of Trade, Telenor is one of the world’s largest suppliers of Industry and Fisheries telecommunications services. Its primary activity is in mobile telephony and data services, and the Number of employees: 9,759 company has more than 160 million mobile sub- Value of the company: 72,689 scribers. The group has mobile activities in 13 countries, divided into three regions: the Nordics, Operating revenues: 85,052 Central and Eastern Europe and Asia. Through its Operating profit/loss: 7,791 holdings in VimpelCom Ltd, the group has mobile activities in a further 17 countries. Telenor is a Profit/loss after tax and leading provider of mobile and fixed telephony in minority interests: 5,748 Norway, Sweden and Denmark, and has a substantial position in the Scandinavian broadband market. Through Telenor Broadcast, the group is The company’s purpose a major supplier of TV and satellite broadcasting The purpose of the company is to perform indus- services in the Nordic region. In Central and East- trial, commercial and transport activities, and ern Europe, the group occupies a strong position other related business. These activities may also as mobile service provider in Hungary, Serbia, be performed through participation in or coopera- Montenegro and Bulgaria. The group is one of the tion with other enterprises. largest mobile operators in Asia, with considerable activities in the growth markets of Thailand, Malaysia, Bangladesh, Pakistan and India. The The company’s activities group is also in the process of establishing itself in Yara International is a Norway-based, internation- Myanmar. Telenor is listed on the Oslo Stock ally oriented chemicals business with core activi- Exchange and has its head office in Fornebu. ties in the production, sale and distribution of nitrogen-based chemicals for various uses. The products’ most important application is mineral The objective of the state’s ownership fertiliser for agricultural uses, but they also have The objective of the state’s ownership of Telenor applications in industrial companies, and in envi- ASA is to maintain a knowledge-based and high- ronmental technology for emissions reductions. technology group with head office functions in This wide range of applications helps stabilise Norway. The company is to be run on a commer- earnings in volatile global markets. Yara Interna- cial basis and with the aim of delivering a competi- tional is listed on the Oslo Stock Exchange and tive return. has its head office in Oslo. The government notes that a state holding that provides negative control contributes to this. On this basis, in the budget proposal for 2015, the The objective of the state’s ownership government will ask parliament for a mandate to The objective of the state’s ownership of Yara possibly reduce the state’s holding in Telenor ASA International ASA is to maintain a knowledge- down to 34 per cent. Any use of the mandate based and high-technology industrial group with would depend on commercial assessments relat- head office functions in Norway. The company is ing to, for example, company-specific and market- to be run on a commercial basis and with the aim specific factors. The government does not con- of delivering a competitive return. sider it appropriate to reduce state ownership to The government notes that a state holding that below 34 per cent. provides negative control contributes to this. The state’s holding is currently close to the minimum 102 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 2013–2014 Diverse and value-creating ownership level that secures negative control. The government will therefore retain the state’s holding in The objective of the state’s ownership Yara International ASA, and does not see it as The objective of the state’s ownership of Aero- appropriate to reduce it to below 34 per cent. space Industrial Maintenance Norway SF is to ensure that the state enterprise can undertake contractual tasks of strategic significance for the 9.3 Category 3 – Companies with Norwegian armed forces in a cost-efficient man- commercial objectives and other ner. The company is to be run on a commercial specifically defined objectives basis and with the aim of delivering a competitive return. 9.3.1 Aerospace Industrial Maintenance Norway SF 9.3.2 Argentum Fondsinvesteringer AS Table 9.17 Company information and key figures. The figures are for 2013 and in NOK millions. Table 9.18 Company information and key figures. The figures are for 2013 and in NOK millions. Corporate form: State enterprise Corporate form: Limited company Founded: 2011 Founded: 2001 State holding: 100 % State holding: 100 % Owner: Ministry of Defence Owner: Ministry of Trade, Number of employees: 461 Industry and Fisheries Book equity: 343 Number of employees: 23 Operating revenues: 461 Book equity: 7,279 Operating profit/loss: -28 Operating revenues: 1,440 Profit/loss after tax and Operating profit/loss: 1,367 minority interests: -18 Profit/loss after tax and minority interests: 1,287 The company’s purpose The purpose of the company is to maintain and upgrade equipment, primarily in the domain of The company’s purpose military aviation and other associated activities. The company shall invest its assets in private The enterprise and its personnel shall assist the equity funds and investment companies. Through Norwegian armed forces in their military opera- its activities, the company shall contribute to tions at home and abroad. – better access to venture capital and equity for innovative, research-based business and industry The company’s activities – strengthening competent, long-term owners- Aerospace Industrial Maintenance Norway was hip in business established on 15 December 2011 through the – improving competitiveness and future value conversion of the Air Force Depot Kjeller into a creation in Norwegian business and industry state enterprise. The company supplies mainte- – triggering new opportunities in sectors and nance and modification services for aircraft, heli- industrial clusters where Norway is already copters, components and ground equipment to powerful the Norwegian armed forces and other custom- – developing productive networks between ers. The company comprises 22 different special- owners, managers, R&D environments and ist service centres organised into aircraft mainte- enterprises nance, engine maintenance, electronics mainte- The company’s activities are to be undertaken on nance, mechanical processes and engineering ser- commercial terms. vices. Aerospace Industrial Maintenance Nor- way’s head office is at Kjeller. 2013–2014 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 103 Diverse and value-creating ownership

The company’s activities 9.3.3 Eksportfinans ASA Argentum Fondsinvesteringer was established to Table 9.19 Company information and key figures. administer the state’s investments in active equity The figures are for 2013 and in NOK millions. funds (private equity) with the objective of competitive returns and a more dynamic capital mar- Corporate form: Public limited company ket for unlisted companies. The company has Founded: 1962 grown into a specialised capital management business directed towards active equity funds in Nor- State holding: 15 % way and Northern Europe, and the energy sector Owner: Ministry of Trade, internationally. The investment model is based on Industry and Fisheries the fund-in-fund principle, whereby the company commits capital to private equity funds which pri- Number of employees: 53 marily raise capital in the international capital Book equity: 12,075 markets. The company’s core competence is the evaluation and selection of active equity funds and Operating revenues: -6,680 administrators. At 31 December 2013, the com- Operating profit/loss: -6,844 pany had investments in 76 funds, which in turn own 461 unlisted companies. The company also Profit/loss after tax and cooperates with other investors and has estab- minority interests: -4,850 lished four investment programmes: Nordic Pri- vate Equity Programme, Argentum Investment Partner, Argentum Secondary, Nordic Additional The company’s purpose Funding. The company is the largest investor in The company’s purpose is to operate a financing Norwegian venture capital funds. Argentum Fond- business. This includes the financing of exporting sinvesteringer’s head office is in Bergen. industries, and for local and county authority purposes. The objective of the state’s ownership The objective of the state’s ownership of Argen- The company’s activities tum Fondsinvesteringer AS is to achieve a good Eksportfinans manages a portfolio of loans to Nor- return on investments in private equity funds, con- wegian exporters and foreign buyers of Norwe- tribute to a more dynamic capital market for gian capital goods. The loans are guaranteed by unlisted companies and co-invest in such funds The Norwegian Export Credit Guarantee with private investors, and, as an investor, to pro- Agency’s (GIEK) and/or banks. The company mote the development of the private equity sector. also manages a substantial portfolio of interna- The company is to be run on a commercial basis tional securities. Activities are financed through and with the aim of delivering a competitive bonds issued on the international capital markets. return. In November 2011, it became clear that a new gov- The state’s ownership objective is provided for ernment agency would take over the scheme for by the state being an owner of the company, and state-funded export credits. Exportfinans’s head not through special guidelines from the owners office is in Oslo. on the company’s operations.

The objective of the state’s ownership The objective of the state’s ownership of Eksport- finans ASA is to contribute, as a shareholder, to the company managing to best effect its existing portfolio of assets, liabilities and obligations in accordance with applicable contracts. 104 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 2013–2014 Diverse and value-creating ownership

Centre AS is responsible for day-to-day operations 9.3.4 Electronic Chart Centre AS of the countries’ common electronic nautical chart Table 9.20 Company information and key figures. service. Electronic Chart Centre’s head office is The figures are for 2013 and in NOK millions. in Stavanger.

Corporate form: Limited company The objective of the state’s ownership Founded: 1999 The objective of the state’s ownership of Elec- State holding: 100 % tronic Chart Centre AS is to allow Norway to fulfil its obligations under international conventions Owner: Ministry of Trade, concerning safety at sea, as well as meeting the Industry and Fisheries public need for increased maritime safety by man- Number of employees: 20 aging and publishing authorised electronic nautical charts owned by the hydrographic offices. Book equity: 15 Electronic Chart Centre AS aims to support Nor- Operating revenues: 23 way’s position as a maritime nation by promoting increased safety at sea both domestically and Operating profit/loss: 1.4 internationally. The company is to be run on a Profit/loss after tax and commercial basis and with the aim of delivering a minority interests: 1.6 competitive return. The state’s ownership objective is provided for by the state being an owner of the company, and The company’s purpose not through special guidelines from the owners The purpose of the company is to develop and on the company’s operations. operate an official electronic nautical chart service for maritime businesses, and undertake associated activities, including cooperating with, par- 9.3.5 Investinor AS ticipating in or setting up other naturally related Table 9.21 Company information and key figures. enterprises. The figures are for 2013 and in NOK millions.

Corporate form: Limited company The company’s activities Founded: 2008 Electronic Chart Centre’s mission is to develop and operate an authorised electronic nautical State holding: 100 % chart service for the international maritime indus- Owner: Ministry of Trade, try. The work is performed in accordance with Industry and Fisheries international standards and through established international cooperation. The company was Number of employees: 21 founded in 1999 as the Norwegian operator in a Book equity: 2,052 joint European regional centre (PRIMAR), with responsibility for administering, quality-assuring Operating revenues: 14 and publishing authorised electronic navigation Operating profit/loss: -36 charts. The company’s activity is conducted under agreement with the Hydrographic Service of the Profit/loss after tax Norwegian Mapping Authority, and currently and minority interests: -4.4 comprises the administration of official nautical navigational chart data from 17 hydrographic offices through the PRIMAR cooperation (PRI- The company’s purpose MAR is a regional coordination centre for official The company’s purpose is to contribute to value electronic navigational charts). The company also creation by offering venture capital to internation- has electronic nautical charts from 35 other coun- ally oriented competitive companies, primarily tries in its database, and work is ongoing to start-ups. In addition to risk capital, the company extend global chart coverage. The international aims to provide competent, active ownership of cooperation is organised and headed by the the portfolio companies. The company’s catch- Hydrographic Service, while Electronic Chart ment area is to be the whole of Norway. 2013–2014 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 105 Diverse and value-creating ownership

Investments shall be made on a commercial to a lesser extent, those in the expansion stage. basis, and on the same terms as private investors. State ownership is also intended to help develop The company may make investments in the form experience and expertise in owning and develop- of shares or subordinated loans. ing companies in the early stage of growth. The company shall prioritise investments in Investinor shall invest on equivalent terms to pri- sectors with business environments that offer vate investors. The company is to be run on a potential international competitive advantages, commercial basis and with the aim of delivering a that safeguard the utilisation of important natural competitive return. resources, that make use of new technologies and As an owner, the state has defined in the com- skills and/or that help reduce environmental pany’s statutes particular policies for its activities. impacts and anthropogenic climate change. Of the The state considers it appropriate to under- original subscribed equity, NOK 500 million shall take an evaluation of Investinor AS after five years be reserved for investment in marine business of operation. and industry. The company also has NOK 500 million at its disposal, reserved for investments in the forestry and wood-processing industries. 9.3.6 Kommunalbanken AS The investment focus is to be early stage Table 9.22 Company information and key figures. enterprises, with a flexibility in the direction of The figures are for 2013 and in NOK millions. expansion phase enterprises where consistent with the company’s purpose. The company may Corporate form: Limited company also make follow-up investments in later phases. Founded: 1999 The investments are to be made with a long-term perspective. The company must have a disposal State holding: 100 % strategy for companies in the portfolio. Owner: Ministry of Local Govern- The company’s share capital in individual port- ment and Modernisation folio companies should not exceed 49 per cent. Where a portfolio company undergoes a capital Number of employees: 56 increase, Investinor’s share of this increase will, Book equity: 8,216 as a rule, again not exceed 49 per cent, but with an option in exceptional cases to rise to 70 per cent, Operating revenues: 1,602 provided that the risk in the overall portfolio does Operating profit/loss: 1,496 not change significantly. The company is not able to take out loans. Profit/loss after tax and minority interests: 1,083 The company’s activities Investinor is an investment company that aims to The company’s purpose create value by investing risk capital and exercis- The purpose of the company is to provide loans to ing active, informed ownership in internationally municipal and county authorities, IKS (intermu- oriented, competitive Norwegian companies in nicipal companies) and other companies that the early or expansion stages. The portfolio is con- undertake local authority business, against a local centrated on strong Norwegian sectors that have or central government guarantee or other suitable the preconditions necessary for international suc- security. The company may take on other tasks cess. The company makes its investments on a that may naturally form part of the company’s commercial basis, in conjunction with private co- activities. investors, seeking to generate a good long-term return, with appropriate risk diversification. Investinor’s head office is in Trondheim. The company’s activities Kommunalbanken provides loans for investment purposes in the municipal sector. It has a market The objective of the state’s ownership share of just under 50 per cent. All of the country’s The objective of the state’s ownership of county authorities, 98 per cent of the municipali- Investinor AS is to boost value creation in Norwe- ties and a number of municipal and intermunicipal gian business and industry through investments companies have loans from the bank. At year-end in start-up companies, early stage companies and, 2013, the bank’s loans to the municipal sector 106 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 2013–2014 Diverse and value-creating ownership came to NOK 240 billion. The bank has a key owned subsidiaries or through other companies it function as a stable credit provider to the munici- has holdings in or cooperates with. The company pal sector under the best possible lending terms. may operate in other Nordic countries to the Kommunalbanken’s head office is in Oslo. extent that this strengthens the company’s competitiveness on the Norwegian market and/or increases its ability to fulfil the social mission on The objective of the state’s ownership which the state’s ownership is based. The objective of the state’s ownership of Kommu- nalbanken AS is to facilitate the financing of the municipal sector. The company is to be run on a The company’s activities commercial basis and with the aim of delivering a NSB operates passenger transport by train and competitive return. bus, freight transport by train, property business and support functions. The largest share of passenger transport by train relates to public pro- 9.3.7 NSB AS curement; other activities are run on a commer- Table 9.23 Company information and key figures. cial basis. The group’s activities extend to much of The figures are for 2013 and in NOK millions. Norway and parts of Denmark and Sweden. The company was formerly a public sector enterprise. Corporate form: Limited company In 1996, this was split into the NSB BA special law company and Jernbaneverket, the Norwegian Founded: 2002 National Rail Administration, and in 2002 the spe- State holding: 100 % cial law company was converted into a limited company owned by the state. NSB’s head office is Owner: Ministry of Transport in Oslo. and Communications Number of employees: 13,523 The objective of the state’s ownership Book equity: 7,676 The objective of the state’s ownership of NSB AS Operating revenues: 14,145 is to help secure efficient, accessible, safe and eco-friendly passenger and goods transport by rail Operating profit/loss: 1,457 in Norway. This is the company’s social mission. Profit/loss after tax and The company is to be run on a commercial basis minority interests: 1,030 and with the aim of delivering a competitive return. The Ministry of Transport and Communica- The company’s purpose tions’ ownership report on the company’s activi- The company’s social mission is to provide effi- ties was last submitted to parliament in the spring cient, accessible, safe and eco-friendly transport of of 2013; see Report no. 31 (2012–2013) to the passengers and goods. The company operates Storting: Activities of NSB AS. Since the change of passenger train transport in Norway, transport of government, the Ministry of Transport and Com- passengers and freight in Norway and the other munications has been working to reform the rail- Nordic countries, and other operations that are ways sector. The outcome of this work may affect naturally related to these. The activities may be the company. performed by the company itself, by wholly 2013–2014 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 107 Diverse and value-creating ownership

group. The company was formerly a public sector 9.3.8 Posten Norge AS enterprise. In 1996, the public sector enterprise Table 9.24 Company information and key figures. was converted into a special law company (Posten The figures are for 2013 and in NOK millions. BA), and in 2002 it was converted into a limited liability company owned by the state. Posten Corporate form: Limited company Norge’s head office is in Oslo. Founded: 2002 State holding: 100 % The objective of the state’s ownership The objective of the state’s ownership of Posten Owner: Ministry of Transport Norge AS is to ensure nationwide provision of a and Communications universal service at a reasonable price and of Number of employees: 19,941 good quality. This is the company’s social mission. The company is to be run on a commercial basis Book equity: 6,050 and with the aim of delivering a competitive Operating revenues: 23,557 return. The Ministry of Transport and Communica- Operating profit/loss: 641 tions’ ownership report on the company’s activi- Profit/loss after tax ties was last submitted to parliament in the spring and minority interests: 510 of 2012; see Report no. 18 (2011–2012) to the Storting: Activities of Posten Norge AS. The government is working on a new postal law, in which The company’s purpose it will be proposed to implement the EU’s third Posten Norge AS is a wholly owned state limited postal services directive. Such a change would company. The company shall fulfil the require- have certain consequences for Posten Norge AS’s ments of the Postal Services Act. The company’s licence. social mission is to ensure provision of a nationwide postal service at a reasonable price and of good quality. This mission is described in the com- 9.3.9 Statkraft SF pany’s licence. The company shall operate a postal Table 9.25 Company information and key figures. and logistics business on a competitive basis. The The figures are for 2013 and in NOK millions. company may also engage in together with other naturally related activities. The activities may be Corporate form: State enterprise performed by the company itself, by wholly Founded: 1992 owned subsidiaries or through other companies which Posten Norge AS has shares in or cooper- State holding: 100 % ates with. The company shall perform tasks as Owner: Ministry of Trade, determined through legislation or its licence, or Industry and Fisheries through decisions by its annual general meeting. Number of employees: 3,493

The company’s activities Book equity: 62,849 Posten Norge is a Nordic postal and logistics Operating revenues: 24,367 group which develops and supplies integrated Operating profit/loss: 13,113 solutions in postal, communications and logistics services. The markets for the group’s services are Profit/loss after tax and growing strongly, driven by globalisation and minority interests: -351 technological changes, which are altering con- sumer behaviour and leading to increased competition. Due to a fall in the volume of letters, the The company’s purpose company has undertaken significant reorganisa- Statkraft SF’s purpose is to own all the shares in tion of its postal business. At the same time, it has Statkraft AS, to provide loans to Statkraft AS, to grown strongly in the logistics segment, primarily own power stations that are leased out and shares through acquisitions. The company’s strategy is in companies that operate power stations abroad, to develop a Nordic, integrated and industrialised as well as to trade in energy and undertake activi- 108 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 2013–2014 Diverse and value-creating ownership ties naturally associated with the above. Statkraft AS’s purpose is, singly or through participation in 9.3.10 Store Norske Spitsbergen or cooperation with other companies, to plan, Kulkompani AS engineer, build and operate power plants, to Table 9.26 Company information and key figures. undertake physical and financial energy trading, The figures are for 2013 and in NOK millions. and perform other naturally associated activities. Corporate form: Limited company The company’s activities Founded: 1916 Statkraft is Norway’s largest power producer, with State holding: 99.94 % around one third of total domestic production, and Owner: Ministry of Trade, is Europe’s largest producer of renewable energy. Industry and Fisheries The group produces and develops hydro-electric power, wind power, gas power and district heat- Number of employees: 336 ing, and is a major player on the European energy Book equity: 1,492 exchanges with expertise in physical and financial energy trading. In Norway, the group is the larg- Operating revenues: 1,319 est supplier of energy to Norwegian industry. Out- Operating profit/loss: -76 side of Europe, Statkraft SF is engaged in power generation and the development of new produc- Profit/loss after tax tion both on its own account and through owner- and minority interests: -64 ship of SN Power in partnership with Norfund. Industrial expertise and understanding of the market gained in the home markets in Norway The company’s purpose and the Nordic region have enabled the company The purpose of Store Norske Spitsbergen Kul- to grow internationally, for example through kompani Aktieselskap is to operate or otherwise hydro-power projects in emerging markets and exploit the company’s assets and rights on Sval- wind power projects off the UK coast. The com- bard. The company can also participate in and pany has holdings in 391 power plants and district operate other associated businesses. The com- heating plants in Europe, Asia and South America pany may use its expertise in environmentally with total combined output of more than 17,000 friendly resource utilisation on Svalbard and in MW. Of the total installed output, 80 per cent is in Finnmark and Troms counties. Norway and the Nordic region, 19 per cent in North-western Europe and 3 per cent in South- eastern Europe and outside of Europe. The The company’s activities group’s total annual power production is in the The primary activity of Store Norske Spitsbergen region of 60 TWh, of which some 90 per cent Kulkompani is coal mining on Svalbard. The com- derives from renewable energy sources. Stat- pany currently has coal mining operations in kraft’s head office is in Oslo. three mines, reducing to two from 2015. The company is actively prospecting and performing project development to secure a future operating The objective of the state’s ownership basis, including new activities, on Svalbard. The The objective of the state’s ownership of Statkraft main mine is Svea Nord. This is in the last stage of SF is to contribute to profitable and responsible production in the core area, which will be worked management of Norwegian natural resources. out in 2015. Svea Nord will be replaced by the new State ownership is also intended to help ensure mine at Lunckefjell, north-east of the current main that head office functions remain in Norway and mine. Lunckefjell is under development and will to help develop Norwegian expertise in renew- be in full production during 2015. The company’s able energy, which can also be used to undertake coal mining operation is run on a commercial profitable power projects internationally. The com- basis and is subject to very strict environmental pany is to be run on a commercial basis and with legislation. The company’s provisional plans for the aim of delivering a competitive return. coal mining operations stretch more than 15 years ahead, and the company has a resource base that provides a basis for coal mining on Svalbard for 2013–2014 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 109 Diverse and value-creating ownership even longer. Store Norske Spitsbergen Kulkom- ing to knowledge development and interest in pani’s head office is in Longyearbyen. these areas.

The objective of the state’s ownership The company’s activities The objective of the state’s ownership of Store Andøya Space Center (formerly Andøya Norske Spitsbergen Kulkompani AS is to help Rakettskytefelt) was founded in 1997 through sep- maintain and develop the Longyearbyen commu- aration from the Norwegian Space Centre. The nity in a way that underpins the general objectives background to the company is the activities initi- of Norway’s Svalbard policy. The company is to be ated in 1962 in Andøya, under the auspices of the run on a commercial basis and with the aim of Norwegian Defence Research Establishment and delivering a competitive return. one of the precursors of the Research Council of The state’s ownership objective is provided for Norway, originally to meet military and civil radio by the state being an owner of the company, and communication requirements. In addition to the not through special guidelines from the owners parent company, the Andøya Space Center AS on the company’s operations. consists of the Andøya Test Center AS and NAROM (Norwegian Centre for Space-related Education) subsidiaries. The company is owned 9.4 Category 4 – Companies with by the Ministry of Trade, Industry and Fisheries sectoral-policy objectives (90 per cent) and Kongsberg Defence Systems AS (10 per cent). The company supplies services to 9.4.1 Andøya Space Center AS national and international research institutions Table 9.27 Company information and key figures. (launch of sounding rockets and release of The figures are for 2013 and in NOK millions. research balloons) and to technology development enterprises (testing of rocket motors). The Corporate form: Limited company company is seeing increasing activity relating to the development, testing and use of unmanned Founded: 1997 aerial systems, and undertakes student-oriented State holding: 90 % work through the NAROM subsidiary. Around 45 per cent of the company’s total revenues come Owner: Ministry of Trade, from contributions it receives from Norwegian Industry and Fisheries and foreign agencies through the Esrange Andøya Number of employees: 65 Special Project (EASP) multilateral agreement between Sweden, Norway, Germany, France and Book equity: 62 Switzerland. In addition to the grants from the Operating revenues: 94 EASP agreement, the company has its own revenues from the sale of services, notably to the Nor- Operating profit/loss: 7.1 wegian armed forces. Andøya Space Center’s Profit/loss after tax head office is at Andøya. and minority interests: 2.9 The objective of the state’s ownership The company’s purpose The objective of the state’s ownership of Andøya Andøya Space Center AS’s purpose is to supply Space Center AS is to strengthen Norwegian services and products for space and atmospheric research and high-technology business activities research, environmental monitoring and technol- through the operation and development of infra- ogy testing and verification, as well as contribut- structure for technology testing and scientific research. It is a requirement for the company to be run efficiently. 110 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 2013–2014 Diverse and value-creating ownership

ket administrative agency. The company adminis- 9.4.2 Avinor AS ters the national aviation infrastructure which is a Table 9.28 Company information and key figures. prerequisite for a nationwide air transport net- The figures are for 2013 and in NOK millions. work in Norway. The company has two primary areas of activity: operation of a nationwide net- Corporate form: Limited company work of airports for civil aviation and operation of air navigation services for civil and military avia- Founded: 2003 tion. This comprises 46 airports (12 of them co- State holding: 100 % operated with the armed forces in Norway) and control towers, control centres and other techni- Owner: Ministry of Transport cal infrastructure for air navigation. In addition, and Communications the company undertakes commercial activities Number of employees: 3,156 associated with the airports through airport hotels, parking facilities, duty free sales and leas- Book equity: 11,969 ing of premises for refreshments and other ser- Operating revenues: 9,978 vices. Activities are operated such that profitable airports help finance unprofitable ones. The air Operating profit/loss: 1,620 navigation services are to be self-financing by Profit/loss after tax and being priced at cost. Around half of the group’s minority interests: 891 revenues come from fees that the airlines pay for services Avinor provides. The remainder of the revenues are commercial revenues from airport- The company’s purpose related business activity. Avinor’s head office is in The company’s social mission is to own, operate Oslo. and develop a nationwide network of airports for the civilian sector and a joint air navigation service for the civilian and military sectors. The owner The objective of the state’s ownership determines which airports the company shall The objective of the state’s ownership of Avinor operate. The company is to be run in a safe, effec- AS is to operate and develop a nationwide network tive and environmentally friendly manner, and to of airports for the civilian sector and joint air navi- ensure good accessibility for all travelling groups. gation services for the civilian and military sec- To the greatest extent possible, the company tors. This is the company’s social mission. should be self-financing from revenues from its Together with other government instruments, main activities and other airport-related business state ownership of Avinor AS contributes to an activities. Within the company, there must be co- appropriate nationwide air service. Within this financing between the commercially profitable sectoral-policy framework, the company also has and unprofitable units. The activities may be per- an obligation to ensure sound administration of formed by the company itself, by wholly owned the state’s assets. It is a requirement for the com- subsidiaries or by other companies it has holdings pany to be run efficiently. in or cooperates with. The company shall perform The Ministry of Transport and Communica- socially mandated tasks as laid down by the tions’ ownership report on Avinor’s activities was owner. last submitted to parliament in the spring of 2013; see Report no. 38 (2012–2013) to the Storting: Activities of Avinor AS. The company’s activities Avinor was established in 2003 through conversion into a public corporation of the Luftfartsver- 2013–2014 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 111 Diverse and value-creating ownership

9.4.3 Bjørnøen AS 9.4.4 Eksportkreditt Norge AS Table 9.29 Company information and key figures. Table 9.30 Company information and key figures. The figures are for 2013 and in NOK millions. The figures are for 2013 and in NOK millions.

Corporate form: Limited company Corporate form: Limited company Founded: 1918 Founded: 2012 State holding: 100 % State holding: 100 % Owner: Ministry of Trade, Owner: Ministry of Trade, Industry and Fisheries Industry and Fisheries Number of employees: 0 Number of employees: 42 Book equity: 4.1 Book equity: 39 Operating revenues: 0.2 Operating revenues: 99 Operating profit/loss: 0.0 Operating profit/loss: 13 Profit/loss after tax and Profit/loss after tax minority interests: 0.0 and minority interests: 12

The company’s purpose The company’s purpose The purpose of Bjørnøen AS is the operation and The purpose of the company is to manage a state utilisation of the company’s properties on Sval- scheme for financial services in connection with bard and other associated activities. Norwegian exports of capital goods and services. In order to promote the purpose, the company may in its own name 1) provide state-financed The company’s activities export credits in accordance with international Bjørnøen owns all the ground and some cultural agreements, and 2) provide loans on market- heritage buildings on Bjørnøya. Administratively, based terms as an alternative to loans as referred the company is controlled by Kings Bay which to in 1). Where special considerations dictate, the also supplies management services to Bjørnøen. loans can be issued in the state’s name. Some of the state subsidy to Kings Bay is transferred for the operation of Bjørnøen. Bjørnøen’s head office is in Ny-Ålesund. The company’s activities Eksportkreditt Norge administers the state scheme for financial services for Norwegian The objective of the state’s ownership exports of capital goods and services (the export The objective of the state’s ownership of Bjørnøen credit scheme). The scheme is intended to help AS is to administer properties on Bjørnøya and Norwegian exporters to compete on similar terms thereby also support Norwegian sovereignty con- to other exporters with access to national export siderations. It is a requirement for the company to credit schemes. This means that the company be run efficiently. may offer, on behalf of the state, Commercial Interest Reference Rate (CIRR) loans in compliance with an OECD-related agreement on export financing. In addition, the company can offer loans on market terms to borrowers who qualify for CIRR loans. In order for the company to offer financing, the Norwegian Export Credit Guaran- tee Agency (GIEK) and/or one or more well-rated financial institutions must provide guarantees. The company caters for the entire procedure associated with the promotion, sales, applications processing, disbursements and follow-up of loans 112 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 2013–2014 Diverse and value-creating ownership under the export credit scheme. The loans under assets in a cost-efficient and targeted manner. The the export credit scheme appear on the national Energy Fund derives revenues from a levy on the balance sheet, and the state is liable for all risks electricity grid tariff, returns from the fund for cli- associated with the lending activity. The com- mate, renewable energy and energy conversion, pany’s operation is financed exclusively through and from interest earned on the capital balance of state subsidy, and all the revenues from the lend- the fund from preceding years. Enova’s head ing activity devolve to the state. Eksportkreditt office is in Trondheim. Norge’s head office is in Oslo.

The objective of the state’s ownership The objective of the state’s ownership The objective of the state’s ownership of Enova SF The objective of the state’s ownership of Eksport- is to achieve energy policy goals. It is a require- kreditt Norge AS is to promote Norwegian ment for the company to be run efficiently. exports through competitive, accessible and effective export financing. It is a requirement for the company to be run efficiently. 9.4.6 Gassco AS Table 9.32 Company information and key figures. The figures are for 2013 and in NOK millions. 9.4.5 Enova SF Table 9.31 Company information and key figures. Corporate form: Limited company The figures are for 2013 and in NOK millions. Founded: 2001 Corporate form: State enterprise State holding: 100 % Founded: 2001 Owner: Ministry of Petroleum and Energy State holding: 100 % Number of employees: 362 Owner: Ministry of Petroleum and Energy Book equity: 16 Number of employees: 62 Operating revenues: 0.0 Book equity: 10 Operating profit/loss: 0.0 Operating revenues: 88 Profit/loss after tax and minority interests: -0.2 Operating profit/loss: -3.7 Profit/loss after tax and minority interests: -3.3 The company’s purpose Gassco’s purpose is to operate transport systems for natural gas on and from the Norwegian Conti- The company’s purpose nental Shelf, including pipelines and terminals, The purpose of the company is to promote envi- either itself or through participation in or coopera- ronmentally friendly transition in energy con- tion with other companies, along with associated sumption and generation, as well as development activities. of energy and climate technology. Enova’s activities shall contribute to develop environmentally friendly energy solutions, reduce greenhouse gas The company’s activities emissions and strengthen security of energy sup- Gassco is the operator of the integrated transport ply. system for gas from the Norwegian Continental Shelf to Europe. The integrated transport system consists of pipelines, processing facilities, plat- The company’s activities forms and gas terminals on the European main- Enova manages the Energy Fund. The Energy land and in the UK. The company’s operational Fund has been established to ensure a long-term duties comprise technical operation and adminis- financing source for Enova’s activities. The com- tration of installations and facilities on behalf of pany is obliged to administer the Energy Fund the Gassled joint venture, which owns the gas 2013–2014 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 113 Diverse and value-creating ownership transport system. The company’s operational Petroleum and Energy regarding CCS. Gassnova duties also encompass the planning of new gas SF shall facilitate the Norwegian state’s participa- infrastructure, the allocation of transport capacity tion in CCS projects to provide maximum benefit to the gas shippers, and the coordination and con- for the state or state-owned entities. Gassnova SF trol of gas flows through the pipeline network to shall also manage the support scheme for devel- the markets. The company advises the Ministry of opment of CCS technologies, the CLIMIT pro- Petroleum and Energy on the development of the gramme, in cooperation with the Research Coun- regulatory framework, the setting of tariffs and cil of Norway. Gassnova SF does not have a com- the processing of plans for facilities and operation. mercial purpose. Gassco’s head office is at Karmøy.

The company’s activities The objective of the state’s ownership Gassnova contributes to technology development The objective of the state’s ownership of Gassco through the CLIMIT programme, administration AS is to assume the operator responsibility for the of the state’s interest in the CO2 Technology Cen- transport of gas from the Norwegian Continental tre Mongstad DA, and project implementation. Shelf. The transport and processing facilities must The company shall also provide the Ministry of serve all gas producers and contribute to an effi- Petroleum and Energy with expert advice on CCS cient overall exploitation of the resources on the issues. Gassnova’s head office is in Porsgrunn. Continental Shelf. As the entity responsible for the operation of the transport systems, Gassco AS must act impartially towards all the systems’ The objective of the state’s ownership users. It is a requirement for the company to be The objective of the state’s ownership of Gassnova run efficiently. SF is to manage the state’s interests regarding CCS. It is a requirement for the company to be run efficiently. 9.4.7 Gassnova SF Table 9.33 Company information and key figures. 9.4.8 Innovation Norway The figures are for 2013 and in NOK millions. Table 9.34 Company information and key figures. Corporate form: State enterprise The figures are for 2013 and in NOK millions. Founded: 2007 Corporate form: Special law company State holding: 100 % Founded: 2003 Owner: Ministry of Petroleum State holding: 51 % and Energy Owner: Ministry of Trade, Number of employees: 38 Industry and Fisheries Book equity: 24 Number of employees: 758 Operating revenues: 88 Book equity: 1,252 Operating profit/loss: 0.2 Operating revenues: 1,276 Profit/loss after tax and Operating profit/loss: 190 minority interests: 1.0 Profit/loss after tax and minority interests: 164 The company’s purpose The purpose of Gassnova SF is to manage the Norwegian state’s interests regarding Carbon The company’s purpose Capture and Storage (CCS) and to implement the Innovation Norway’s purpose is to act as a projects determined by the enterprise meeting. national and local authority instrument for realis- The objective of the enterprise’s activities is to ing value-generating business development yield results in the form of cost reductions for throughout Norway. CCS. Gassnova SF shall advise the Ministry of 114 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 2013–2014 Diverse and value-creating ownership

The company’s activities The company’s purpose Innovation Norway is one of the business-oriented The purpose of Kings Bay AS is the operation and funding agencies. The company is intended to utilisation of the company’s properties on Sval- promote commercially and socially beneficial bard and other associated activities. The com- business development, and spur regional business pany’s activities shall have the particular objective opportunities through sub-goals of facilitating of providing services to and promoting research more entrepreneurs, more high-growth compa- and scientific activities, and to help develop Ny- nies and more innovative businesses. The com- Ålesund as an international Arctic scientific pany administers business-oriented policy instru- research station. ments on behalf of various ministries and county- level authorities. These instruments cover financing, competence, branding and promotion, net- The company’s activities working and consultancy services. The company Kings Bay owns the ground and most of the build- also derives income from the interest margin on ings in Ny-Ålesund on Svalbard. The company is loan schemes, equity-based schemes and user- responsible for the location’s infrastructure and paid services. Innovation Norway’s head office is for protecting the environment and cultural heri- in Oslo. tage. With the exception of services such as the police, rescue and emergency preparedness, essentially all services at the location are man- The objective of the state’s ownership aged and provided by the company. Currently, 14 The objective of the state’s ownership of Innova- research institutions from ten countries have per- tion Norway is to promote a nationally-coordi- manent stations at Ny-Ålesund. The Norwegian nated service of business-oriented measures and Polar Institute and Norwegian Mapping Authority schemes to spur commercially and socially benefi- also have stations at Ny-Ålesund. Other commercial business development and promote regional cial activity in and around Ny-Ålesund must be business opportunities. As an owner, the Ministry adapted to the framework defined by the research of Trade, Industry and Fisheries aspires to activity. Kings Bay’s head office is in Ny-Ålesund. enhance Innovation Norway’s role as a pivotal player in the shaping and execution of national and regional business and innovation policy. It is a The objective of the state’s ownership requirement for the company to be run efficiently. The objective of the state’s ownership of Kings Bay AS is to ensure that Ny-Ålesund can be developed as a Norwegian centre for international Arc- 9.4.9 Kings Bay AS tic scientific research on Svalbard. Ny-Ålesund is Table 9.35 Company information and key figures. to be a green research station, which entails that The figures are for 2013 and in NOK millions. Kings Bay must implement necessary measures to reduce the environmental impact of activities in Corporate form: Limited company the Ny-Ålesund areas to a minimum. Further growth in research activity must take place within Founded: 1916 an appropriate environmental framework. It is a State holding: 100 % requirement for the company to be run efficiently. Owner: Ministry of Trade, Industry and Fisheries Number of employees: 25 Book equity: 12 Operating revenues: 60 Operating profit/loss: 4.7 Profit/loss after tax and minority interests: 3.9 2013–2014 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 115 Diverse and value-creating ownership

that the results are of high quality and are actually 9.4.10 Nofima AS put into use. Nofima’s head office is in Tromsø. Table 9.36 Company information and key figures. The figures are for 2013 and in NOK millions. The objective of the state’s ownership Corporate form: Limited company The objective of the state’s ownership of Nofima AS is to help ensure that Norway has a strong Founded: 2007 expert research environment able to meet the State holding: 56.84 % needs of the food, fisheries and aquaculture industries for long-term, strategic industrial research. It Owner: Ministry of Trade, is a requirement for the company to be run effi- Industry and Fisheries ciently. Number of employees: 386 Book equity: 30 9.4.11 Norfund Operating revenues: 505 Table 9.37 Company information and key figures. Operating profit/loss: 10 The figures are for 2013 and in NOK millions. Profit/loss after tax and Corporate form: Special law company minority interests: 9.4 Founded: 1997 State holding: 100 % The company’s purpose Owner: Ministry of Foreign The purpose of the company is to help boost com- Affairs petitiveness in the food, fisheries and aquaculture industries through research and development, Number of employees: 54 including participation in other enterprises Book equity: 10,201 engaged in such activity. The company’s mission is to develop research projects in close coopera- Operating revenues: 165 tion with users. The company does not have a Operating profit/loss: 4.8 commercial purpose, and is partially financed through public subsidies. Any surplus from activi- Profit/loss after tax and ties must be entirely used for the company’s non- minority interests: 328 profit purposes. The company does not pay dividends to the shareholders. The company’s purpose Norfund’s purpose is to provide equity and other The company’s activities risk capital, and offer loans and guarantees for the Nofima delivers research-based expertise and development of sustainable business activity in consultancy to the value chains that produce food, developing countries. The objective is to establish whose raw materials come from fishing, aquacul- viable, profitable business that would not other- ture, stable or field. The company’s primary focus wise get off the ground due to its high risk. is to assist the members of the value chain to develop solutions that yield better profitability in both the short and long terms. The company The company’s activities employs a wide range of instruments for develop- Norfund is a development policy instrument ing profitable solutions. Long-term, applied and aimed at the private sector in developing coun- industry-oriented research projects stretching tries. The company aims to contribute to develop- over several years create the foundation for the ment by making sustainable and profitable invest- company’s expertise. This research forms the ments in business activities in developing coun- basis of the advice given to individual producers tries, which would not otherwise be realised due or companies. One important aspect of the com- to the high risk. Norfund invests in new compa- pany’s work is to ensure that the projects are rele- nies and in the expansion and modernisation of vant to the industry, are correctly executed and existing ones, and aims to combine a concern for profitability with the overarching objective of pro- 116 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 2013–2014 Diverse and value-creating ownership moting sustainable development. The company invests in conjunction with other partners, and is The company’s purpose always a minority interest owner. It prioritises The company’s purpose is to promote value cre- investment in Africa, south of the Sahara and the ation in the fisheries and aquaculture industries least developed countries (LDCs) and focuses on by increasing demand and awareness of Norwe- areas where Norway possesses special expertise gian seafood in Norway and abroad. The company and interests, notably renewable energy. The com- does not have a commercial purpose. pany operates in regions with demanding and uncertain framework conditions. It prioritises investments in renewable energy, finance institu- The company’s activities tions and agriculture and agriculture-related The Norwegian Seafood Council’s primary mis- industries. At year-end 2013, Norfund’s total sion is to perform general marketing of Norwe- investment portfolio was NOK 9.6 billion. Nor- gian seafood. The activities cover four areas: joint fund’s head office is in Oslo. marketing, market information, market access and information and preparedness. This is intended to boost demand for and awareness of The objective of the state’s ownership Norwegian seafood abroad. The company regu- The objective of the state’s ownership of Norfund larly performs surveys of the consumption of and is to assist in the development of sustainable busi- attitude to seafood in general and Norwegian sea- ness activity in developing countries by financing food in particular. The company issues statistics viable, profitable activities which would otherwise on the export and import of Norwegian seafood not be realised due to the high financial risk. The based on Norwegian national trade statistics. It fund is responsible for providing equity and other also maintains a register of Norwegian seafood risk capital, and offering loans and guarantees for exporters. It is financed by the fisheries and aqua- the development of sustainable business activity culture industries through a levy on the export of in developing countries. The activities must be seafood (the market fee), and an annual fee of undertaken in compliance with the fundamental NOK 15,000 from registered fish exporters principles of Norwegian development policy. It is a (around 450 at any one time). The Norwegian Sea- requirement for the company to be run efficiently. food Council’s head office is in Tromsø.

9.4.12 Norwegian Seafood Council AS The objective of the state’s ownership Table 9.38 Company information and key figures. The objective of the state’s ownership of the Nor- The figures are for 2013 and in NOK millions. wegian Seafood Council AS is to have a sectoral- policy instrument to help boost value creation in Corporate form: Limited company the fisheries and aquaculture industries through increased demand for and awareness of Norwe- Founded: 1991 gian seafood at home and abroad. It is a require- State holding: 100 % ment for the company to be run efficiently. Owner: Ministry of Trade, Industry and Fisheries Number of employees: 66 Book equity: 314 Operating revenues: 468 Operating profit/loss: 13 Profit/loss after tax and minority interests: 18 2013–2014 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 117 Diverse and value-creating ownership

company itself and in part of services provided by 9.4.13 Norsk Helsenett SF hundreds of different third-party providers. The Table 9.39 Company information and key figures. basic service comprises the health network with The figures are for 2013 and in NOK millions. messaging, access to an address directory, secure internet access and associated customer service. Corporate form: State enterprise Other services include transmission over the network of reimbursement claims to HELFO, a Founded: 2009 national service for patient transport involving State holding: 100 % booking and pooling patient journeys, and a national settlement system for patient journeys. Owner: Ministry of Health and The company operates a range of national solu- Care Services tions such as www.helsenorge.no, a national Number of employees: 136 patient records system, and also has a key role in a number of national ICT projects in the sector. Book equity: 105 Norsk Helsenett’s head office is in Trondheim. Operating revenues: 271 Operating profit/loss: -5.6 The objective of the state’s ownership Profit/loss after tax and The objective of the state’s ownership of Norsk minority interests: -3.0 Helsenett SF is to secure access to necessary health data on a secure ICT platform for the administration and communication of secure The company’s purpose information and use of telemedical solutions in The purpose of Norsk Helsenett SF is to ensure the sector. It is a requirement for the company to the existence of a suitable and secure infrastruc- be run efficiently. ture for efficient interaction between all parts of the health and care services, and to contribute to the simplification, streamlining and quality assur- 9.4.14 Norsk Rikskringkasting AS ance of electronic services for the benefit of Table 9.40 Company information and key figures. patients and the population in general. In provid- The figures are for 2013 and in NOK millions. ing the services, the company must take into account the general economic interest on a per- Corporate form: Limited company manent basis, with reference to rules on state sub- Founded: 1933 sidy in the EEA agreement. The company has a non-economic purpose, State holding: 100 % and it is not intended to generate a surplus greater Owner: Ministry of Culture than is necessary to ensure prudent operation. The company is however focused on both finan- Number of employees: 3,740 cial results and efficient resource allocation such Book equity: 1,260 that the services offered are of good quality and designed and implemented cost efficiently. Operating revenues: 5,356 Operating profit/loss: -8.1 The company’s activities Profit/loss after tax and Norsk Helsenett customers are local authorities, minority interests: 28 general practitioners, hospitals and associated units, other health personnel groups and third- party service providers such as operations and The company’s purpose system providers, public registers and databases Under Section 6–1, para. 3 of the Broadcasting etc. All local authorities, health enterprises, GPs Act, the purpose of the company is to provide pub- and pharmacies as well as many consultants are lic service broadcasting and related activities. The connected to the health network. The services purpose is expanded on in Sections 12–17 of the available in the health network are comprehen- company’s statutes. sive, consisting in part of services provided by the 118 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 2013–2014 Diverse and value-creating ownership

The company’s activities 9.4.15 Norsk samfunnsvitenskapelig Norsk Rikskringkasting (NRK) is the country’s datatjeneste AS largest media company with daily coverage of 88 Table 9.41 Company information and key figures. per cent of the population. By market shares, the The figures are for 2013 and in NOK millions. company is the largest in radio and television and the second largest in news-based websites. In Corporate form: Limited company addition to traditional broadcasting, under the Founded: 2003 present statutes, the company must be present on and develop new services for all important media State holding: 100 % platforms in order to achieve the broadest reach Owner: Ministry of Education with its combined programming. The company’s and Research three TV channels, 16 radio channels and www.nrk.no website offer broad content on a Number of employees: 75 range of platforms. The digital terrestrial network Book equity: 16 is the company’s primary distribution platform for television. Digitisation of the TV terrestrial net- Operating revenues: 54 work was completed in December 2009. The plan Operating profit/loss: 1.3 is for the transition to digital radio to be completed in 2017, or at the latest 2019. Public service Profit/loss after tax broadcasting is a key instrument of Norwegian and minority interests: 4.0 cultural and media policy and must be independent of all special interests, both political and financial. Under the statutes, the main channels The company’s purpose must be available to the entire population, while The purpose of the company is to manage data for the company must seek the widest possible distri- and provide services to the research sector. In col- bution of its other programming. The company is laboration with national and international entities, represented throughout Norway and has corre- the company’s mission is to perform development spondents in various locations abroad. Through work within its remit. subsidiaries, the company may undertake commercial activities with the object of generating revenues for public service broadcasting; see Section The company’s activities 6–4 of the Broadcasting Act. Norsk Rikskring- Norsk samfunnsvitenskapelig datatjeneste was kasting’s head office is in Oslo. established in 2003 having previously been part of the Research Council of Norway. The company has a mission to facilitate and improve the work- The objective of the state’s ownership ing conditions for Norwegian empirical research. The objective of the state’s ownership of Norsk Activities are organised on the basis of the com- Rikskringkasting AS is to ensure good provision pany’s national responsibility for providing central of public service broadcasting in Norway. Public infrastructure services to Norwegian research. service broadcasting is a key instrument in Nor- This entails the company acting on a broad basis wegian cultural and media policy. The state’s to secure access to data for researchers and stu- involvement in the company is based on it having dents by collecting, processing, filing, maintaining an important social role. This applies to public and distributing data. Norsk samfunns- ownership, funding by licence and the pro- vitenskapelig datatjeneste’s head office is in Ber- gramme requirements. Norsk Rikskringkasting gen. AS has a special responsibility for promoting democratic, social and cultural values in the community. It is a requirement for the company to be run The objective of the state’s ownership efficiently. The objective of the state’s ownership of Norsk samfunnsvitenskapelig datatjeneste AS is to ensure data management for and service provision to the research sector. The company cooperates with national and international entities to perform development activities in line with its mis- 2013–2014 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 119 Diverse and value-creating ownership sion. The company has a duty to adopt a neutral tural purposes accounted for in the national bud- stance in relation to its cooperation partners. State get. In addition, funds are set aside for gambling ownership contributes to ensuring that the educa- addiction research, information, prevention and tion and research sector’s data provision and ser- treatment. Norsk Tipping’s head office is at vice management needs are met. It is a require- Hamar. ment for the company to be run efficiently.

The objective of the state’s ownership 9.4.16 Norsk Tipping AS The objective of the state’s ownership of Norsk Table 9.42 Company information and key figures. Tipping AS is to channel Norwegians’ desire to The figures are for 2013 and in NOK millions. gamble into moderate and responsible proposi- tions that do not create social problems. It is a Corporate form: Limited company requirement for the company to be run efficiently. Founded: 1946 State holding: 100 % 9.4.17 Petoro AS Owner: Ministry of Culture Table 9.43 Company information and key figures. The figures are for 2013 and in NOK millions. Number of employees: 381 Corporate form: Limited company Book equity: 159 Founded: 2001 Operating revenues: 21,668 State holding: 100 % Operating profit/loss: 3,862 Owner: Ministry of Petroleum Profit/loss after tax and and Energy minority interests: 3,946 Number of employees: 64

The company’s purpose Book equity: 25 In accordance with the gambling regulations laid Operating revenues: 268 down by the Ministry, the company’s mission is to Operating profit/loss: -4.0 organise and operate gambling in safe forms under public control, with the aim of preventing Profit/loss after tax and gambling’s negative consequences, while, minority interests: -0.5 through rational operation of the company, ensuring that as much as possible of the surplus from gambling goes to the purposes referred to in sec- The company’s purpose tion 10 of the Gambling Act. The purpose of Petoro AS is to hold the responsibility for and to attend to the commercial aspects related to the state’s direct financial interest in The company’s activities petroleum activities on the Norwegian Continen- Norsk Tipping has the sole right to offer a range tal Shelf (NCS), and business associated here- of gambling facilities in Norway, and operates its with. business in compliance with the Gambling Act; see the company’s mission statement. The national budget for 2014 sets out a change in the The company’s activities distribution of the surplus from gambling. This Petoro is a state-owned limited company which was decided by the Storting through its treatment manages the state’s direct financial interest of a specific proposal concerning the issue: Draft (SDFI) in Norwegian oil and gas activities. SDFI resolution 205 L (2012–2013) and Recommenda- comprises the state’s participation as a direct tion 45 L (2012–2013). The gambling surplus is to investor in petroleum activities on the NCS. The be distributed as follows: 56 per cent for sporting company is the licensee for the state’s shares in purposes, 14.9 per cent for extra-budgetary cul- fields, pipelines, exploration licences and onshore tural purposes, 18 per cent for humanitarian and facilities on the NCS and is the licensee for the charitable organisations and 11.1 per cent for cul- state’s share in three exploration licences on the 120 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 2013–2014 Diverse and value-creating ownership

Icelandic Continental Shelf. The main objective of the company’s management of SDFI is to achieve The company’s purpose the highest possible revenue for the state. The The purpose of the company is to undertake fun- company’s main duties are: 1) Management of the damental long-term research in selected areas in SDFI assets held by the government in joint ven- software and communication technology, and tures at any given time, 2) Monitoring Statoil’s through such research to promote innovation in marketing and sales of the petroleum produced business and industry. The company does not from the SDFI, in line with the instruction issued have a commercial purpose, and does not distrib- to Statoil and 3) Financial management for the ute dividends to its owners. SDFI, including the keeping of accounts. The company’s operations are financed by appropriations from the central government budget. The The company’s activities appropriations cover administrative expenses Simula Research Laboratory has three primary related to the management of the commercial duties: research at a high international level, edu- aspects of the SDFI. This includes its own admin- cation in partnership with Norwegian universities istrative expenses and the purchase of external and innovation based on the company’s research. services. Petoro’s head office is in Stavanger. The decision to found the company was made during parliamentary discussion of the budget for 2000. The Simula centre was set up as a project of The objective of the state’s ownership the University of Oslo in 2001, and established as The objective of the state’s ownership of Petoro a limited company in 2002. Creation of the com- AS is to ensure the best possible management of pany was a step in the state’s IT-Fornebu initiative, the state’s direct financial interest in petroleum when it became owner of the company. Simula activities on the NCS. It is a requirement for the Research Laboratory AS is the parent company of company to be run efficiently. a group comprising the wholly-owned subsidiaries Simula Innovation AS and Kalkulo AS and the part-owned subsidiary Simula School of Research 9.4.18 Simula Research Laboratory AS and Innovation AS (Simula 56 per cent, Statoil 21 Table 9.44 Company information and key figures. per cent, Bærum municipality 14 per cent, Telenor The figures are for 2013 and in NOK millions. Communication II AS 7 per cent, Norwegian Com- puting Center 1 per cent, Sintef Holding AS 1 per Corporate form: Limited company cent). Simula Research Laboratory’s head office is in Fornebu. Founded: 2002 State holding: 100 % The objective of the state’s ownership Owner: Ministry of Education The objective of the state’s ownership of Simula and Research Research Laboratory AS is to contribute to funda- Number of employees: 140 mental long-term research in selected areas in software and communication technology. State Book equity: 33 ownership of the company helps ensure a high Operating revenues: 135 international level of research in Norway, and produces highly qualified researchers. The state’s Operating profit/loss: 3.0 financing contributes to achievement of the com- Profit/loss after tax and pany’s objective. It is a requirement for the com- minority interests: 4.2 pany to be run efficiently. 2013–2014 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 121 Diverse and value-creating ownership

regional, national and international networks. 9.4.19 SIVA SF SIVA’s head office is in Trondheim. Table 9.45 Company information and key figures. The figures are for 2013 and in NOK millions. The objective of the state’s ownership Corporate form: Limited company The objective of the state’s ownership of SIVA SF is to promote profitable business development in Founded: 1968 companies and regional industrial and knowledge State holding: 100 % clusters, in particular in remote areas, by facilitating physical and organisational infrastructure. As Owner: Ministry of Trade, the owner, the Ministry of Trade, Industry and Industry and Fisheries Fisheries wishes to further develop the company Number of employees: 46 as an effective, targeted tool in the business-oriented public support system, with prime expertise Book equity: 1,153 within its areas of responsibility. It is a require- Operating revenues: 343 ment for the company to be run efficiently. Operating profit/loss: 30 Profit/loss after tax and 9.4.20 Space Norway AS minority interests: 3.7 Table 9.46 Company information and key figures. The figures are for 2013 and in NOK millions.

The company’s purpose Corporate form: Limited company Through its real estate and innovation activities, Founded: 1995 SIVA is a government instrument for facilitating ownership and development of companies and State holding: 100 % industrial and knowledge clusters throughout Owner: Ministry of Trade, Norway. SIVA has a special responsibility for pro- Industry and Fisheries moting growth in remote areas. Number of employees: 2

The company’s activities Book equity: 65 SIVA is part of the business public support system Operating revenues: 28 aimed at triggering commercially and socially Operating profit/loss: 8.5 beneficial projects that would not otherwise get started. The company’s areas of activity are real Profit/loss after tax and estate and innovation. Within its real estate activi- minority interests: 12 ties, the company offers construction and leasing of buildings and physical infrastructure for business and innovation clusters. The activity is The company’s purpose intended to alleviate companies’ risks and capital The company’s purpose is to own and lease out requirements and lower the entry barriers where space-related infrastructure and to make other market mechanisms make this especially demand- investments in space-related activities, including ing. The real estate activity is operated on com- owning shares in other companies engaged in mercial terms. Within innovation, the company such activities. performs assignments on behalf of three ministries, providing support for incubation activities and so-called business gardens throughout Nor- The company’s activities way. The company emphasises network building Space Norway (formerly Norsk Romsenter Eien- and skills transfer between research and innova- dom) has a mission to promote business and infra- tion centres, private industry and public activities. structure development relating to Norwegian The activities are aimed at facilitating the estab- space-related activities. The company was for- lishment and growth of companies in industrial merly managed through the state agency Norwe- and knowledge clusters, and interlink these in gian Space Centre. The company has been a key sectoral-policy instrument for developing Norwe- 122 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 2013–2014 Diverse and value-creating ownership gian space-related activities over many years. Within the framework of its sectoral-policy man- The company’s purpose date, the company is to be operated on a commer- Statnett SF is the system operator for the Norwe- cial basis. At present, its primary activities are the gian power system. Under its statutes, the enter- administration of ownership of the subsea fibre prise is responsible for ensuring rational opera- cable from Harstad to Longyearbyen, a long-term tion and development of the central grid in accor- lease of a transponder on Telenor’s Thor 7 satel- dance with socio-economic criteria. On its own or lite (which is for ensuring communication to the in conjunction with others, Statnett SF is to plan, Troll research station in Antarctica) and 50 per design, build and operate transmission infrastruc- cent ownership in Kongsberg Satellite Services ture. Statnett SF is to undertake the tasks incum- AS (KSAT). Space Norway’s head office is in bent upon it under the terms of legislation and Oslo. licences. Statnett SF shall otherwise follow commercial principles.

The objective of the state’s ownership The objective of the state’s ownership of Space The company’s activities Norway AS is to contribute to the operation and Statnett is the system operator for the Norwegian development of space-related infrastructure in power system, which entails a responsibility for order to meet national user requirements and ensuring a proper balance between generation facilitate value creation based on space-related and consumption of electrical power in Norway at activities in Norway. It is a requirement for the all times. The company currently owns around 90 company to be run efficiently. per cent of the central grid, as well as interconnec- tors to other countries. The company shall ensure the rational development of the grid way in accor- 9.4.21 Statnett SF dance with economic criteria. The company’s rev- Table 9.47 Company information and key figures. enues are regulated by the Norwegian Water The figures are for 2013 and in NOK millions. Resources and Energy Directorate. Norway currently has interconnections to Sweden, Denmark, Corporate form: State enterprise Finland, the Netherlands and Russia. In 2013, Stat- nett applied for a licence to allow power Founded: 1992 exchanges with Germany and the UK. Statnett’s State holding: 100 % head office is in Oslo. Owner: Ministry of Petroleum and Energy The objective of the state’s ownership Number of employees: 1,079 The objective of the state’s ownership of Statnett SF is to contribute to the socially and economi- Book equity: 12,135 cally rational operation and development of the Operating revenues: 4,561 central grid. The company shall otherwise follow commercial principles. The company is the sys- Operating profit/loss: 346 tem operator for the Norwegian power system Profit/loss after tax and and is responsible for critical infrastructure. minority interests: 82 These are tasks of major significance for national security. The state’s ownership of Statnett SF helps the enterprise to be perceived as a neutral market participant. It is a requirement for the company to be run efficiently. 2013–2014 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 123 Diverse and value-creating ownership

opment of the enterprise’s properties are based 9.4.22 Statskog SF on its primary objective of helping fulfil national Table 9.48 Company information and key figures. policies for the use and protection of forest and The figures are for 2013 and in NOK millions. wilderness areas, and to increase its own and others’ value creation in respect of the properties. Corporate form: State enterprise Beyond this commercial activity, the company undertakes administrative duties on behalf of the Founded: 1993 state. These comprise national administrative State holding: 100 % duties, supervision of property and common land, administration of hunting and fishing on state land Owner: Ministry of Agriculture etc. Statskog’s head office is in Namsos. and Food Number of employees: 125 The objective of the state’s ownership Book equity: 1,680 The objective of the state’s ownership of Statskog Operating revenues: 339 SF is to ensure efficient resource management for the benefit of society, to meet the public demand Operating profit/loss: 27 for hunting, fishing and outdoor recreational facili- Profit/loss after tax and ties and so forth. Much of the company’s holdings minority interests: 19 are common land, use of which is regulated through various legal frameworks. National ownership allows the state to achieve various political The company’s purpose goals associated with the administration of forest The purpose of the company is to manage, operate and wilderness areas. The company is to be oper- and develop public forest and mountain lands, and ated on a commercial basis. associated resources and other naturally associ- For a number of years, Statskog SF has tar- ated activities. Within this framework, the enter- geted the development of renewable energy based prise may, through participation in or cooperation on its properties’ resources. The government with other entities, administer and manage prop- assessment is that Statskog SF’s investments in erties and other forms of service within the enter- renewable energy do not fall within the enterprise’s area of activity. prise’s core activities and expertise, and they The properties are to be managed efficiently entail increased risk and uncertain benefits. The with a view to achieving a satisfactory financial majority of the revenues from power production return. An active nature conservation policy shall will derive from leasing waterfall rights, and the be conducted and consideration given to outdoor government therefore believes that Statskog SF recreational interests. The resources shall be uti- should limit its activities to this. lised in a balanced fashion and renewable The government wishes to promote private resources protected and developed. forestry by selling areas from Statskog SF, equivalent to its purchases in recent years, with reference to the government’s political platform (the The company’s activities Sundvolden Declaration). In pursuit of this, the Statskog manages around 60,000 km2 of land, government will assess different models for the which is roughly one fifth of Norway’s surface privatisation of Statskog SF’s forestry activity. area. This is essentially all mountain and wilder- This includes continuing, and potentially also ness. The company is the country’s largest forest expanding, the ongoing rationalisation sales. It owner, with around 6 per cent of the total produc- may also be appropriate to evaluate other forms of tive forest in Norway. The company’s commercial privatisation of Statskog SF’s forestry activities. A activities comprise forestry, wilderness manage- mapping will be performed of the extent to which ment and other land and property management. public access to hunting and the conditions for The company has a mission to stimulate and facili- hunting, fishing and outdoor recreation may be tate public access to hunting, fishing and other affected by privatisation, and how it can be outdoor pursuits. Other management and devel- ensured that this is not weakened. 124 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 2013–2014 Diverse and value-creating ownership

9.4.23 UNINETT AS The objective of the state’s ownership Table 9.49 Company information and key figures. The objective of the state’s ownership of The figures are for 2013 and in NOK millions. UNINETT AS is to secure the operation and development of a national electronic network for Corporate form: Limited company information exchange between groups and users in Norwegian research and education. State own- Founded: 1993 ership of UNINETT AS aims to safeguard the State holding: 100 % overarching concern of coordination and expansion of the whole national infrastructure for Owner: Ministry of Education advanced research and higher education. It is a and Research requirement for the company to be run efficiently. Number of employees: 105 Book equity: 160 9.4.24 University Centre in Svalbard AS Operating revenues: 294 Table 9.50 Company information and key figures. Operating profit/loss: 5.5 The figures are for 2013 and in NOK millions. Profit/loss after tax and Corporate form: Limited company minority interests: 11 Founded: 2002 State holding: 100 % The company’s purpose Owner: Ministry of Education The purpose of UNINETT AS is to develop and and Research operate the academic research network in Nor- way so that higher education and research is Number of employees: 99 offered cost-effective communications services on Book equity: 20 a par with best international practice in the academic domain. UNINETT AS is to be a driving Operating revenues: 134 force in the use of forward-looking and open stan- Operating profit/loss: 3.0 dards for electronic infrastructure in Norway, and simulate development and competition in this Profit/loss after tax field. and minority interests: 3.0

The company’s activities The company’s purpose UNINETT operates the academic research net- The purpose of the company is to provide study work in Norway. The company supplies a network options and perform research based on Svalbard’s infrastructure comprising production services geographical location in a High North area, and and a separate test network comprising experi- the particular advantages this offers through the mental services. The institutions connected use of nature as a laboratory and arena for obser- include Norwegian universities and university col- vations and data collection and analysis. The study leges, non-commercial research institutions and options are to be at university level and offered as other research and educational institutions. The a supplement to the education provided at univer- company also has project-based links to commer- sities on the mainland, and form part of an ordi- cial research environments and public institu- nary course of study leading to exams and tions. Other institutions and users may also be degrees at bachelor, master and doctoral levels. offered the company’s services if there are no The studies offered must have an international alternative service providers and this benefits the profile, and teaching will be done in English. The company’s primary target group. UNINETT’s company does not have a commercial purpose. head office is in Trondheim. Any surplus from operations must be used for the company’s primary purpose. 2013–2014 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 125 Diverse and value-creating ownership

The company’s activities The company’s purpose University Centre in Svalbard (UNIS) was Vinmonopolet is one of the most important instru- founded as a limited liability company in 2002, ments for ensuring the responsible sale of alcohol. replacing the Universitetsstudiene på Svalbard Through its sole rights on the retail sale to con- foundation that was set up in 1994. The company sumers of alcoholic drinks containing more than has the world’s northernmost university studies 4.7 per cent by volume, the mission of Vinmono- and has established itself as a key player in the polet is to help restrict the sale of alcoholic drinks Svalbard research platform. UNIS has grown sig- and thereby the damage they do. nificantly since it was established and plays a key role in Svalbard in general and in Longyearbyen in particular. The company aspires to be a leading The company’s activities international centre for Arctic studies. UNIS has Vinmonopolet’s activities consist of the sale of become an important feature and resource in the alcoholic items and non-alcoholic party drinks to local community. The company receives the the extent and in the manner determined by law, majority of its allocation from the budget of the with reference to Section 3, Act no. 18 of 19 June Ministry of Education and Research. University 1931 on wine monopoly. Pursuant to Section 3–1 Centre in Svalbard’s head office is in Longyear- of Act no. 27 of 2 June 1989 on the sale of alcoholic byen. beverages (the Alcohol Act), AS Vinmonopolet has a sole right to the retail sale of alcoholic beverages of more than 4.7 per cent alcohol by volume. The objective of the state’s ownership The company is a key means of achieving the pur- The objective of the state’s ownership of Univer- poses of the Alcohol Act. With effect from 1 Janu- sity Centre in Svalbard AS is to contribute to the ary 1999, the company has been responsible for centre’s university level study provision and the import, wholesale and retail of alcohol on Sval- research activities based on Svalbard’s location in bard through its Nordpolet AS subsidiary. The the High North. In terms of research policy, Sval- alcohol policy framework defines clear limitations bard is considered to be an important arena for for the company’s commercial operation, not least the internationalisation of Norwegian research that the company may not conduct sales promo- and cooperation with foreign researchers; see also tional activities. Furthermore, it is a key plank in report no. 22 (2008–2009) to the Storting on Sval- the company’s social mission to ensure that sales bard. It is a requirement for the company to be are made in controlled ways with particular atten- run efficiently. tion paid to social control. Vinmonopolet’s head office is in Oslo. 9.4.25 AS Vinmonopolet The objective of the state’s ownership Table 9.51 Company information and key figures. The figures are for 2013 and in NOK millions. The objective of the state’s ownership of AS Vin- monopolet is to ensure that the sale of alcoholic Corporate form: Limited company drinks of more than 4.7 per cent by volume takes place in controlled ways so as to limit the harmful Founded: 1922 effects of alcohol in Norway for the individual and State holding: 100 % for society. Due to the alcohol policy objective of restricting the sale of alcohol, no targets are Owner: Ministry of Health and defined for the company’s financial results beyond Care Services the requirement to operate as efficiently as possi- Number of employees: 1,802 ble. Book equity: 479 Operating revenues: 12,307 Operating profit/loss: 86 Profit/loss after tax and minority interests: 85 126 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 2013–2014 Diverse and value-creating ownership

Table 9.54 South-Eastern Norway RHA. Company 9.4.26 Regional health authorities information and key figures. The figures are for Table 9.52 Central Norway RHA. Company infor- 2013 and in NOK millions. mation and key figures. The figures are for 2013 and in NOK millions. Corporate form: Health enterprise Founded: 2007 Corporate form: Health enterprise State holding: 100 % Founded: 2001 Owner: Ministry of Health and State holding: 100 % Care Services Owner: Ministry of Health and Number of employees: 76,730 Care Services Book equity: 24,654 Number of employees: 21,835 Operating revenues: 68,033 Book equity: 5,803 Operating profit/loss: 556 Operating revenues: 18,338 Profit/loss after tax and Operating profit/loss: 351 minority interests: 483 Profit/loss after tax and minority interests: 286 Table 9.55 Western Norway RHA. Company information and key figures. The figures are for 2013 Table 9.53 Northern Norway RHA. Company infor- and in NOK millions. mation and key figures. The figures are for 2013 and in NOK millions. Corporate form: Health enterprise Founded: 2001 Corporate form: Health enterprise State holding: 100 % Founded: 2001 Owner: Ministry of Health and State holding: 100 % Care Services Owner: Ministry of Health and Number of employees: 26,821 Care Services Book equity: 9,928 Number of employees: 17,402 Operating revenues: 23,923 Book equity: 7,346 Operating profit/loss: 622 Operating revenues: 14,943 Profit/loss after tax Operating profit/loss: 424 and minority interests: 648 Profit/loss after tax and minority interests: 488 The purpose of the enterprises Through their duty of care, the regional health authorities (RHAs) have overall responsibility for ensuring access to health services for the region’s population by offering high-quality and equitable specialised health services to all who need them, when they need them regardless of age, gender, place of residence, personal finances or ethnic background, and to facilitate research and training. 2013–2014 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 127 Diverse and value-creating ownership

The RHAs own subordinate health enterprises The enterprises’ activities consisting of somatic and psychiatric hospitals, The regional health enterprises are the Central and other activities within the specialised health Norway RHA (Helse Midt-Norge), the Northern service. The authorities are independent legal Norway RHA (Helse Nord), South-Eastern Nor- entities with boards at both regional and local way RHA (Helse Sør-Øst) and the Western Nor- level. Formal responsibilities etc. are regulated way RHA (Helse Vest). They have the following through the Health Authorities and Health Trusts main remits: treatment of patients, training of Act while the duties they are required to perform health personnel, research, and providing instruc- are primarily regulated through other acts, nota- tion for patients and next of kin. Helse Midt- bly the Specialised Health Services Act, the Norge, Helse Nord, Helse Sør-Øst and Helse Vest Patients’ Rights Act, and the Mental Health Care have their head offices in respectively Stjørdal, Act. Bodø, Hamar and Stavanger. As stated in the government’s policy platform, They each have overall responsibility for oper- the regional health authorities are to be discontin- ations and investments in their own region. Activi- ued once a national health and hospital plan has ties are to be undertaken within the objectives, be drawn up. The aim is to present a national performance requirements and frameworks health and hospital plan (white paper) to be con- established through statutes, decisions in enter- sidered by the Storting in 2015. Until the plan has prise general meetings and conditions applying to been adopted and implemented, the regional parliamentary allocations. The regional health health authorities shall retain a central coordina- authorities must coordinate their activities in sub- tion and management role. ordinate health trusts in order to achieve appropriate and rational utilisation of resources. The RHAs must fulfil sectoral-policy objectives that The objective of the state’s ownership emerge from national health, research and educa- The objective of the state’s ownership of the tion policy decisions and plans. Their overall activ- regional health authorities is to guarantee special- ities must be founded on consideration for users. ised health services for the region’s population by The RHAs must ensure the establishment of nec- offering high-quality and equitable specialised essary cooperation with and guidelines in respect health services to all who need them, when they of the local authorities in both administrative and need them regardless of age, gender, place of resi- medical terms so as to guarantee patients a com- dence, personal finances or ethnic background, prehensive health and social service proposition. and to facilitate research and training. It is a The same applies in respect of cooperation part- requirement for the health enterprises to be run ners such as national child and family protection efficiently. and other relevant state responsibilities. 128 Meld. St. 27 (2013–2014) Report to the Storting (white paper) 2013–2014 Diverse and value-creating ownership

10 Financial and administrative consequences

The main objectives of this report are to discuss The report emphasises that reductions of state the government’s work to lay the foundations for ownership will take place gradually over time and, diversified and value-creating ownership that can in making its decisions, the government will contribute to strengthening competitiveness in assess both market-related and company specific Norwegian business and industry and economy. factors. The government will not make changes or The government wants to facilitate strengthening support transactions unless this is financially ben- of private ownership and reduce the state’s owner- eficial for the state in each individual case. ship over time. Nonetheless, Norway will retain In its exercise of state ownership, the govern- considerable state ownership for the foreseeable ment will emphasise areas where the state has future, and the government wishes to exercise sound preconditions for bringing value, such as this ownership in a professional and predictable strategic and financial follow-up of the companies, manner. the election of boards, good corporate governance Measures relating to strengthening private and company management. This may support ownership will be dealt with in the forthcoming achievement of the objectives that the state has in national budgets. A reduction of the state’s hold- its ownership. ings in individual companies can take place in a number of ways. Potential sale of the state’s shares will entail a change in the state’s asset The Ministry of Trade, Industry and Fisheries placement. Reductions in the state’s sharehold- recommends: ings through non-participation in capital increases or mergers with other companies through stock Recommendation of the Ministry of Trade, deals, often referred to as dilution, do not lead to Industry and Fisheries of 20 June 2014 concern- revenue on the national budget. ing diverse and value-creating ownership to be submitted to the Storting. Meld. St. to the Storting 27 (2013–2014) Report Meld. St. 27 (2013–2014) Report to the Storting (white paper)

Published by: Norwegian Ministry of Trade, Industry and Fisheries Diverse and value-creating Internet address: www.government.no

Printed by: DSS 03/2015 Diverse and value-creating ownership

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