Danske Bank's "Rules of procedure for the Board of Directors and the Executive Board" has been prepared in accordance with Danish legislation and constitutes a central document on the management structure of the Bank.
It lays down rules for the responsibilities of the Board of Directors and the Executive Board and for the division of responsibilities between them.
The Rules of Procedure is subject to ongoing review and adjustment to ensure that it is appropriate to the Group's current operations.
Extracts from the Rules of ProcedureFor competitive reasons, the Rules of Procedure is not suitable for publication in full. Instead, extracts are available below to give an impression of the governance provisions.
Election of chairman and vice chairmen, Board meetings and decisionsAfter the annual general meeting, the members of the Board of Directors elect a chairman and one or two vice chairmen from among themselves.
The chairman's roleThe chairman's responsibilities include chairing Board proceedings, arranging the meeting schedule for each calendar year, convening Board meetings on an ad hoc basis and representing the Board externally.
DecisionsThe Board of Directors shall constitute a quorum when more than half of its members participate in the passing of a resolution. In case of parity of votes, the Chairman, or in his absence the Vice Chairman chairing the meeting, shall have the casting vote.
Participants in meetings of the Board of DirectorsAs a general rule, the members of the Executive Board attend meetings of the Board of Directors.
If the Board of Directors deals with matters that concern members of the Executive Board personally, or if the Board of Directors wishes to discuss the Bank's business without the presence of the Executive Board, the members of the Executive Board do not attend. At meetings of the Board of Directors not attended by the Executive Board, the Board of Directors may not make decisions on the conclusion of business transactions.
Members of the Executive Board are not entitled to vote at meetings of the Board of Directors, but the Board of Directors may not approve credits or enter into other transactions in which the Bank incurs a risk or an existing risk is increased against the unanimous recommendation of the members of the Executive Board.
The external auditors and the group chief auditor are entitled to attend meetings of the Board of Directors when the Board considers matters of importance to the audit or to the preparation of accounts. The external auditors and the group chief auditor are obliged to participate in meetings of the Board of Directors dealing with these matters if so requested by a member of the Board.
The Board of Directors is kept informed of the auditors' work on an ongoing basis through submission of audit reports to the Board, and the Board evaluates this work upon the signing of the reports.
Members of the Board of Directors and the Executive Board cannot be present during the discussion of their own accounts and facilities or the discussion of accounts and facilities available to a company in which they are members of the board of directors or the executive board. This also applies to the discussion of other matters if a member of the Board of Directors or of the Bank's Executive Board has a significant interest that may be in conflict with the Bank's or Group companies' interests.
However, a member of the Bank's Executive Board may be present during the discussion of the accounts and facilities of a company within the Group even if the member concerned also sits on the board of directors of the company in question.
Status and the execution of decisionsAt the meetings, the Executive Board gives an account of current issues and developments and generally provides any information required by the Board of Directors.
The Executive Board is responsible for executing decisions made by the Board of Directors. As laid down in their respective functional descriptions, the group chief auditor and the secretary to the Board of Directors monitor that Board decisions are carried out.
The Board of Directors' right to information
The members of the Board of Directors may at any time view the minutes of Board meetings and may ask the chairman or a vice chairman of the Board to provide information on any matter of importance to the Bank.
The chairman and vice chairmen of the Board of Directors may require senior executives appointed by the Board of Directors or other Group officers to provide information about matters regarding their business areas.
Age limit for members of the Board of DirectorsMembers of the Board of Directors who attain the age of 70 retire as members of the Board at the next annual general meeting thereafter.
Back to topDirectors' and Executive Board members' trading in securities issued by the GroupEach individual member of the Board of Directors or the Executive Board must inform the Board of Directors of his or her holding of Danske Bank shares and of subsequent purchases or sales of such shares. A register of shareholders is kept jointly for Danske Bank and Group companies.
Members of the Bank's Board of Directors or Executive Board may purchase and sell exchange-listed securities issued by the Bank or other companies in the Group, as well as derivative financial instruments related to such securities, only for a specified period after the date of publication of the annual report, interim report or similarly extensive reports of accounting information.
The rule also applies to trading on the account of a third party but does not apply to subscription for employee shares, exercise or sale of subscription rights, exercise of subscription options, acceptance of purchase offers, exercise of pre-emption rights or obligations or similar special cases.
The purchase and sale of exchange-listed bonds issued by Realkredit Danmark is allowed. However, the chairman or a vice chairman must be informed of the transaction in writing.
Notwithstanding the above, the purchase and sale of securities or solicitation of purchase and sale may not be made by anyone who has inside information of relevance to the transaction. The Executive Board keeps a list of special projects of strategic importance that could affect the price of Danske Bank shares and that the Executive Board considers to be inside information.
The individual members of the Board of Directors and the Executive Board must notify the Bank as soon as possible of transactions in shares or other securities issued by Danske Bank.
Back to topThe Bank's organisationAn organisational chart must be prepared for the Bank and for the Group and must be approved by the Board of Directors. If the Executive Board wishes to make significant changes to the organisation, they must be approved by the Board of Directors in advance.
Credit organisationThe Executive Board must ensure that the credit organisation and the risk management organisation are structured at all times so that the execution of tasks is separated from the control of the same tasks. Significant changes to this or to the Bank's or Group's approval procedures must be submitted to the Board of Directors in advance.
Investor relationsThe Executive Board ensures that special functions have been established to carry out the Bank's and the Group's investor-related activities and that a written policy for investor-related activities is available and meets the requirements of the rules for official listing on the Copenhagen Stock Exchange.
IT security
The Executive Board is responsible for preparing an IT security policy and for presenting it to the Board of Directors.
Back to topExecutive Board and senior management of the Bank and signatory authorityThe Board of Directors appoints and dismisses members of the Bank's Executive Board, senior executives with the title of direktør (i.e., member of the Executive Committee or senior executive vice president), the secretary to the Board of Directors, the group chief auditor and the deputy group chief auditors as well as two auditors for the Mortgage Finance division.
Duty of disclosureThe officers appointed by the Board of Directors are obliged – each within his or her area – to report irregularities to both the chairman of the Executive Board and the chairman or a vice chairman of the Board of Directors.
Own businessMembers of the Bank's Executive Board, the group chief auditor, the deputy group chief auditor and the secretary to the Board of Directors must obtain permission from the Board of Directors to own or run an independent business or participate in the management or operation of other business undertakings as board members, employees or otherwise.
The Executive Board decides in which cases other of the Bank's employees may own, run or participate in an independent business.
Signatory authority
The Bank shall be bound by the signatures of all members of the Board of Directors in aggregate, by the joint signatures of the chairman and a vice chairman of the Board of Directors, by the signature of one of these jointly with that of a member of the Executive Board, or by the joint signatures of two members of the Executive Board.
The Board of Directors may grant any employee of the Bank the power of procuration to bind the Bank by his or her signature, either jointly with a member of the Executive Board or jointly with another holder of procuration.
Duties of the Executive Board and division of duties between the two boardsThe Executive Board of the Bank consists of the members appointed and registered with the Danish Commerce and Companies Agency at any given time. The Executive Board is chaired by a chairman appointed by the Board of Directors and given the title of chairman of the Executive Board and chief executive officer.
The Executive Board carries out the day-to-day management and is authorised to make decisions in matters pertaining thereto, with the exception of matters that according to the Rules of Procedure fall under the authority of the Board of Directors. Business of an unusual nature or of material importance must always be submitted to the Board of Directors.
In case of urgent business, a member of the Executive Board in conjunction with the chairman or a vice chairman of the Board of Directors may make decisions in matters that are normally the responsibility of the Board of Directors. In such case, the matter must be submitted to the Board of Directors at the next Board meeting.
The Executive Board should generally submit matters of special importance or of an unusual nature to the Board of Director's chairman or vice chairmen, who may, at their discretion, resolve that the matter must be submitted to the full Board of Directors.
In addition to the day-to-day management of the Bank, the Executive Board is responsible in particular for regularly monitoring trends in the Group's market situation with a view to laying down strategies and proposing new strategies or changes to existing strategies to the Board of Directors as needed.
The Executive Board is obliged to report all important events and material changes to the situation of the Bank or other Group companies to the Board of Directors.
The Executive Board's contact with the chairman and vice chairmen of the Board of Directors; the media; public authorities, including the Danish Financial Supervisory Authority; the National bank of Denmark; the Danish Bankers' Association; and other trade organisations in Denmark as well as abroad is normally the responsibility of the chairman of the Executive Board, unless it is delegated according to agreement with him.
Back to top Accounts, balance sheets, budgets and positionsThe Executive Board drafts the annual report and submits the draft, signed by the members of the Executive Board, to the Board of Directors for their signatures together with the audit opinion issued by the group chief auditor and the external auditors.
In connection with the submission of the annual report, the Board of Directors must review the valuation of major assets and other risks not included in the annual renewal of facilities.
BudgetBefore the start of the next accounting year, the Executive Board must also prepare or, in the case of Group companies, arrange for the preparation of a budget and submit it to the Board of Directors.
Quarterly reportsThe Executive Board must prepare or, in the case of Group companies, arrange for the preparation of draft quarterly reports for the Bank and the Group for submission to the Board of Directors for approval.
Bookkeeping
The Executive Board must ensure that the bookkeeping of the Bank, Group companies and the Group is correct and complies with applicable legislation, that asset management is carried out in a proper manner and that the documentation and material required for auditing is available.
Back to top Lending authority and risk management
The Executive Board presents a risk policy applicable to the Bank and its consolidated subsidiaries that lays down the general principles and guidelines for risk-taking. This general risk policy is adapted to changes in the Bank's and the Group's business on an ongoing basis. Material changes in the risk policy must be submitted to the Board of Directors in advance.
The Executive Board's reporting on creditsThe Executive Board regularly submits reports to the Board of Directors on the trend in the credit quality of the Group's loan portfolio together with analyses of developments in relevant sectors or industries.
Once a year, the Executive Board submits a detailed report on developments in the Danske Bank Group's credit portfolio.
Rating of customers
The Executive Board lays down guidelines for the rating of customers (counterparties).
The Executive Board lays down guidelines for facilities to be closely monitored.
Lending authority of the Executive BoardThe Executive Board may approve credit facilities of any type within specific limits. The limit depends on the type of customer and the customer's rating, among other things.
If the matter is urgent and it is impossible to obtain the approval of the Board of Directors, the Executive Board may approve amounts that bring a facility over the maximum limits of the Executive Board's lending authority. If possible, such approvals should be first submitted to two members of the Credit Committee, and they must be submitted to the Board of Directors at the next Board meeting.
The approvals made by the Executive Board must be incorporated in the credit facility information to be submitted to the Board of Directors at the subsequent consideration of the facility.
The Executive Board may delegate its lending authority. Delegation must be made in writing.
The Executive Board's lending authority does not cover facilities for members of the Board of Directors and the Executive Board, for close relatives of members of the Executive Board and for companies in which members of the Board of Directors and the Executive Board have a seat on the board of directors or the executive board.
The Executive Board and the Board of Directors must closely monitor the appropriateness and progress of such facilities. The facilities must be granted in accordance with the Bank's ordinary business conditions and on market terms. Unauthorised overdrafts are not allowed under these facilities.
Annual renewal of facilitiesFacilities exceeding the specified limits are submitted to the Board of Directors for approval once a year.
Fixing of limitsThe Board of Directors lays down the general principles and limits for interest rate risk, equity risk and currency risk, including risk on derivative financial instruments, for the Group (excluding the Danica insurance group).
The Executive Board lays down limits for individual branches and departments of the Group (excluding the Danica insurance group) regarding interest rate risk, equity risk and currency risk. The limits are based on the requirements and objectives of branches and departments and are supplemented by a more detailed framework of limits.
Market riskThe Executive Board must ensure that market risk is incurred only on securities, derivative financial instruments and the like that have been subjected to adequate system, risk and accounting analyses and approval procedures, and that the capital adequacy rules are complied with.
Methods used for calculating market risk are subject to approval by the Executive Board. Major changes to calculation methods comparable to changes in limits for market risks must be submitted to the Board of Directors.
The Executive Board must ensure compliance with relevant legislation in this connection.
Back to top Board minutes and other informationThe secretary to the Board of Directors keeps minutes of the business transacted at Board meetings. The minutes are stored with the secretary to the Board of Directors.
The minutes must include a description of the discussions and decisions made at the meetings. Copies of the minutes are sent to the members of the Board of Directors, and the minutes are presented and signed at the next Board meeting.
Only the members of the Board of Directors and the Executive Board, the group chief auditor, the external auditors and the Danish Financial Supervisory Authority have access to the minutes.
The secretary to the Board of Directors stores the reports of the external auditors and the group chief auditor.
The secretary to the Board of Directors maintains and stores the minutes of the general meetings, the equity book (a record of purchases and sales by members of the Board of Directors and the Executive Board of the Bank and of Group companies), and a list of the Bank's major shareholders.
The secretary to the Board of Directors ensures that the Bank keeps a register of shareholders and other such books, lists and records that are required by banking and company law. In addition, the secretary to the Board of Directors keeps a list of the holdings of bonds issued by the Bank or subsidiaries of the Bank held by members of the Board of Directors and the Executive Board.
All material sent to the members of the Board of Directors or distributed at Board meetings must be returned to the secretary to the Board of Directors at the end of the Board meeting or as soon as possible thereafter, except for material that is publicly available.
Back to top Last updated on April 28, 2008