Articles of Association for Kommunalbanken AS

This is an unofficial in-house translation of the company’s official articles of association in Norwegian.

Chapter I
Company name, objectives and registered office

§ 1 Company name

The Company’s name is Kommunalbanken AS.

§ 2 Transfer of shares

The state’s shares may be assigned to municipalities, county authorities, intermunicipal companies and municipal pension funds. Any such assignment will be carried out in accordance with the Company’s aim of maintaining the highest possible creditworthiness.

§ 3 Object

The Company’s objective is to provide loans to municipalities, county authorities, and intermunicipal companies, and to other undertakings that carry out local government tasks against either a municipal or government guarantee or other satisfactory security. The Company may also undertake other activities naturally associated with its object.

§ 4 Registered office

The Company’s registered office is in Oslo.

Chapter II
Primary capital – shares

§ 5 Share capital

The Company’s share capital is NOK 3,894,625,000, divided into 3,894,625 shares with a nominal value of NOK 1,000 each.

Chapter III
Board of Directors

§ 6 Board meetings

The Chair of the Board shall ensure that the Board holds meetings as often as required by the Company’s business or when requested by a Board member.

§ 7 Borrowing authority

The Board of Directors shall resolve on and grant authority for the raising of loans.

§ 8 Remuneration of the Chief Executive Officer

The Board of Directors shall determine the remuneration of the Chief Executive Officer.

§ 9 Signatory rights

The Company is represented by the signature of the Chair of the Board jointly with the Chief Executive Officer, or by two shareholder-elected members of the Board jointly. The Board may grant powers of procuration.

Chapter IV
Supervisory Board

§ 10 Composition and election

The Supervisory Board consists of twelve members and five deputy members. One member and one personal deputy member shall be elected by and from amongst the employees. The remainder of the members and deputy members shall be elected by the Annual General Meeting.

The Supervisory Board should be composed of as broad a range of members as possible in order that the districts and interest groups affected by the Company’s business are fairly represented. No member of the Board of Directors or any of the Company’s senior executives can be elected as a member of the Supervisory Board.

The members of the Supervisory Board shall be elected for two-year terms. The Supervisory Board shall elect a Chair and Vice Chair from amongst its members to serve for a term of one year.

§ 11 Meetings and quorum

The Chair convenes meetings of the Supervisory Board at least once a year and otherwise when deemed necessary or when requested by the Board of Directors or at least two members of the Supervisory Board.

The notice shall specify the matters to be considered.

The Board of Directors and the auditor shall be summoned to meetings of the Supervisory Board. Unless otherwise decided in a specific case, members of the Board are entitled to attend meetings of the Supervisory Board with the right to speak and submit proposals. The Ministry of Local Government and Regional Development may attend with up to two observers.

The Supervisory Board constitutes a quorum when at least two-thirds of the members or alternates are present. If this requirement is not met, a new meeting shall be convened. This meeting shall constitute a quorum when more than half of the members are present.

A resolution is deemed adopted if it receives the majority of votes of those present, provided that such majority represents more than one-third of all members. In the event of a tie, the Chair has the casting vote.

§ 12 Duties

The Supervisory Board shall ensure that the Company’s object is promoted in accordance with law, these Articles of Association and the resolutions of the General Meeting and the Supervisory Board by:

• issuing a statement to the General Meeting on the Board of Director’s proposal for the income statement and balance sheet, and the proposed allocation of profit or coverage of loss;
• reviewing reports from the Board of Directors and the auditor; and
• issuing statements on matters concerning the Company submitted by the Board of Directors or that the Supervisory Board finds it necessary to consider, with particular attention to the Company’s public role and responsibilities.

§ 13 Determination of remuneration

The General Meeting determines the remuneration of the members of the Supervisory Board.

Chapter V
Nomination Committee

§ 14 Composition

The Nomination Committee consists of up to three members and one alternate member elected by the General Meeting for a term of two years.

§ 15 Duties

The Nomination Committee shall propose candidates for the following positions and functions:

• Chair of the Board
• Other members of the Board, except those elected by and from among the employees
• Members and alternate member of the Nomination Committee
• Members and alternate members of the Supervisory Board, except those elected by and from among the employees

Chapter VI
Auditor

§ 16 Auditor’s report

The auditor shall submit the audit report at least two weeks before the meeting of the Supervisory Board at which the financial statements are to be considered.

Chapter VII
Funding and lending

§ 17 Borrowing, capital and lending terms

The Company raises funds for lending through the issuance of bonds, certificates or other forms of debt instruments, or by entering into loan agreements. The Company may raise subordinated debt and other external capital.

Raising subordinated debt and hybrid capital shall be resolved by the General Meeting with the same majority as required for amendments to the Articles of Association, or by the Board pursuant to an authorisation granted with such majority. The authorisation shall be limited in amount and shall not extend beyond the next Annual General Meeting, and in any event no longer than 18 months.

The Board of Directors determines the applicable lending terms and conditions at any given time.

§ 18 Capitalisation and risk management

The Company’s capitalisation and financial management shall be prudent in light of the Company’s operations and consistent with its objective of maintaining the highest possible creditworthiness.

Chapter VIII
Remuneration of senior executives

§ 19 Guidelines for remuneration

The Company shall comply with the provisions on remuneration in Sections 6-16a and 6-16b of the Norwegian Public Limited Liability Companies Act, including related regulations.

Chapter IX
Amendments to the Articles of Association

§ 20 Amendments

Amendments to these Articles of Association must be approved by the King to the extent required under applicable law. If such approval is required, the amendments shall enter into force from the time such approval has been obtained.