9.1.2.3 Board committees

The SCCG 2005 states in chapter 2.1 that the nomination committee is a body of the shareholders’ meeting, which is in line with the CGP. The nomination committee prepares decisions on appointments for the general meeting. Rule 2.1.2 provides that the nomination committee should consist of at least three members, the majority of which are not part of the board. The managing director may not be a member. The chair is allowed to have a seat on the nomination committee, but he and other board members may not chair the committee. Representatives of the company’s competitors are not allowed to have a seat on the committee. The general meeting appoints the nomination committee and not the board itself, as has been observed in the Netherlands and the United Kingdom. However, in Sweden the nomination committee is not a subcommittee of the board. The Code Group mentions that a majority of the respondents are a proponent of the appointment of the nomination committee by the general meeting (Code Group 2004b: 26-27).

The board should establish an audit committee comprising at least three directors, the majority of which are independent of the company and its management, and at least one member of the major shareholders, according to rule 3.8.2. No requirements with respect to financial expertise are included for the audit committee. The Code Group reasons that such a requirement is unnecessary as the nomination committee should select candidates suited for the position. Although the European audit directive has included such a requirement, the Code Group has decided that it is superfluous (Code Group 2004b: 48-49). In addition to the nomination and audit committees, the board should also establish a remuneration committee, of which the chairman of the board may be the chairman. The other members should be independent of the company and its management, according to rule 4.2.1.