Corporate Governance
The overall aim of Føroya Banki’s corporate governance policy is to ensure responsible corporate management and to safeguard the interests of the Bank’s shareholders, customers and employees. This includes providing clarity on the distribution of responsibility, avoiding conflicts of interest and ensuring satisfactory internal control, risk management and transparency.
Corporate Governance at Føroya Banki
Commitment to Føroya Banki’s vision and values requires the integration of a sound corporate governance framework under which the Bank is governed and managed.
Corporate governance at Føroya Banki follows generally recognized principles of corporate governance. The external framework that regulates corporate governance work includes Nasdaq’s recommendation on corporate governance, the Faroese Companies Act, the Faroese Financial Business Act, the Faroese Financial Statements Act, the Executive Order on Financial Reports for Credit Institutions and Investment Companies etc., and rules issued by the relevant financial supervisory authorities.
Terms of reference
(in Danish only)
Management structure
The Bank’s management structure reflects the statutory requirements governing Faroese companies in general and financial institutions in particular. The shareholders elect the members of the Board of Directors and the independent auditors at general meeting of shareholders. The Board of Directors appoints the Executive Board and the internal chief auditor and determines their remuneration. According to the Faroese Financial Business Act, members of the Executive Board may not serve on the Board of Directors.
Recruitment and assessment of Board members
According to the Articles of Association, four to six members of the Board of Directors are elected by the shareholders at the annual general meeting to hold office until the next annual general meeting. The age limit for election and re-election of board members is 70 years. Pursuant to the statutory provisions on employee representation of Faroese legislation, the employees are entitled to elect a number of representatives to serve on the Board of Directors for four-year terms. The three current employee representatives on the Board were elected by the Bank's employees in the Faroe Islands, Denmark and Greenland in March 2018 and, accordingly, their term of office expires immediately after the annual general meeting to be held in 2022.
The primary duty of the Bank's Board of Directors is to determine the strategic framework for the Bank and its activities. The Bank emphasizes the importance of ensuring that the Board of Directors possesses the necessary and relevant experience and qualifications to adequately fulfil its duties. The assessment of whether the Board of Directors possesses the necessary experience and qualifications is based on the Bank's business model, the associated risks, and the Board's competence profile. The Board of Directors' understanding of the fundamentals of the Bank's business model and associated risks is therefore of essential importance. Furthermore, the Bank believes it is important that the Board of Directors continually evaluates whether it possesses the necessary experience and qualifications to understand and appropriately address the risks and challenges which the Bank is exposed to, and handle these in an appropriate manner.
Division of duties and responsibilities
According to the division of decision-making powers, the Board of Directors outlines the overall principles governing the affairs of BankNordik, whereas the Executive Board is in charge of the day-to-day management and reporting to the Board of Directors. The rules of procedure for the Board of Directors and the written instructions from the Board of Directors to the Executive Board stipulate the exact division of duties and responsibilities. The rules of procedure of the Board of Directors and the written instructions from the Board of Directors to the Executive Board are not available to the public.
