Corporate Governance

Confidentiality and honesty are the cornerstones of Glitnir's business operations, and the Bank's Board of Directors attaches great importance to maintaining good corporate governance in the operation of the Bank with the objective of sustaining confidence and trust between shareholders, directors, day-to-day managers and other stakeholders in the Bank. Good corporate governance also contributes to the trust and confidence enjoyed by the Bank in the global business environment in which it operates and improves its competitive position. In this way, good corporate governance serves to increase the value of the Bank for the benefit of the shareholders.

In order both to strengthen the Bank’s operating infrastructure and build confidence, the Board of Directors has made an effort to establish general internal and external rules for the operation of the Bank relating to the work of the Board of Directors, the management and the employees of the Bank. The rules are reviewed on a regular basis as necessary.

Shareholders

Under statutory law and the Bank’s Articles of Association, the shareholders have supreme authority in all matters relating to the affairs of the Bank at shareholders’ meetings. Each shareholder has the right to submit issues for discussion and due process at shareholders’ meetings pursuant to the Articles of Association of the Bank. Thus, a shareholders’ meeting can address and decide on any issues relating to the Bank’s operations which are not specifically excluded under statutory law. Furthermore, shareholders' meetings are required to address certain aspects of the Company's operations, such as amendments to the Bank’s Articles of Association and changes in its share capital.

Board of Directors

In accordance with the Articles of Association of the Bank, the shareholders elect the Board of directors at each Annual General Meeting. The Board of Directors of the Company has supreme authority in the affairs of the Company between shareholders’ meetings. The Board of Directors supervises the operation of the Company and seeks to ensure that the activities of the Bank are always within the framework of applicable laws and government regulations, as well as the rules that the Bank has undertaken to observe as a result of its listing in regulated securities markets. The Board of Directors deals with all major decisions relating to the Bank’s business strategy but delegates the day-to-day operation of the Bank pursuant to the policy and resolutions of the Board to the Chief Executive Officer. The Board of Directors is generally not involved in deciding on individual business matters unless such decisions are substantial in relation to the Bank’s assets.

Chief Executive Officer

The Chief Executive Officer appointed by the Bank’s Board of Directors is responsible for the day-to-day operation of the Bank pursuant to the policy and resolutions of the Board of Directors. It is also the task of the CEO to ensure that the Bank’s operations are at all times consistent with the Articles of Association of the Company and applicable legislation.

Internal auditing

In accordance with the law on financial undertakings, Glitnir Bank hf. has an Auditing Department which is responsible for the internal auditing of the Bank. The Head of Internal Auditing is appointed by the Board of Directors of the Bank and entrusted by the Board with the responsibility for internal auditing. Internal auditing thus forms a part of the Bank’s organisational structure and represents one aspect of its internal surveillance system.

Auditing

At the Annual General Meeting, an auditing firm is elected for a term of one year to audit the Company’s annual accounts pursuant to law and generally accepted accounting principles.

Rules of procedure of the Board of Directors

The Board of Directors of Glitnir Bank hf. has, on the basis of Article 70 of Act No. 2/1995 on Public Limited Companies and Article 54 of Act No. 161/2002 on Financial Undertakings, established rules of procedure providing in detail for the work of the Board. Among other things, the rules address the following:

Rules of order.
The independence of the members of the Board of Directors, i.e. whether individual members of the Board of Directors can be regarded as dependent upon the Bank in any way as a result of relations with the Bank.
The eligibility of members of the Board to participate in individual decisions of the Board of Directors.
Access of the members of the Board of Directors to information relating to the operation of the Bank.
Confidentiality and secrecy.
Business of members of the Board of Directors and related parties with the Bank.
Performance assessment.
Appointment of sub-committees of the Board of Directors.
Service of members of the Board of Directors on the boards of directors of the Bank’s subsidiaries.

The substance of the rules are based on the corporate governance guidelines issued and presented by the Iceland Chamber of Commerce, the Iceland Stock Exchange and the Confederation of Icelandic Employers, with the exception that instead of making individual sub-committees permanent in the rules, the procedure has been adopted to authorise the Board of Directors to appoint such committees at its own discretion when necessary at any time. No sub-committee has as yet been appointed in Glitnir Bank hf. The rules are also based on the requirements of the Icelandic Financial Supervisory Authority regarding such rules pursuant to the Authority guidelines No. 1/2003.

The majority of the members of the Board of Directors of Glitnir Bank hf. is regarded as independent of the Company.

Compliance officer of Glitnir Bank hf.

The Compliance Officer is appointed by the CEO to undertake the statutory role assigned to compliance officers by Act No. 33/2003 on Securities Transactions, together with government regulations, guidelines of the Icelandic Financial Supervisory Authority and rules established by Bank itself on the basis of the Act. The Compliance Officer is also responsible for monitoring the access control procedures of the Bank, together with the Security Officer. The compliance officer works independently but subject to the surveillance of the Bank’s Internal Auditing.

The work of the Compliance Officer is primarily to monitor staff trading and to ensure that the handling of information and data complies with Glitnir's rules concerning employees’ personal trading in securities, foreign currencies and derivatives, Chinese walls and the proprietary trading of the Bank, which financial institutions are under an obligation to set for themselves, as well as Glitnir's rules relating to the treatment of insider information and insider trading, which institutions listed on regulated markets are required to establish. The Compliance Officer also takes the initiative in the interpretation of these rules and undertakes the necessary presentation and training required to uphold them.