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In laying down the management principles for Novozymes, the Board of Directors has followed the recommendations on corporate governance that form part of the disclosure requirements applicable to companies listed on Nasdaq Copenhagen. These recommendations are available at corporategovernance.dk. A detailed review of Novozymes’ position on all of the recommendations and a description of the internal control and risk management system relating to financial reporting can be found in the statutory report on corporate governance pursuant to section 107b of the Danish Financial Statements Act.

The recommendations require companies to explain any noncompliance. Novozymes follows 43 of 47 recommendations, the exceptions being:

• Nomination and remuneration committees was not set up in 2016. Instead, these responsibilities were laid down in the Charter for the Chairmanship (Recommendations 3.4.6 and 3.4.7). The Board of Directors has decided to establish a nomination and remuneration committee in 2017, following which the company will be compliant
• The remuneration policy for the Executive Leadership Team contains no specific clause that pertains to the repayment of variable remuneration components paid on the basis of misstated information, as Novozymes considers the rules in danish law to be sufficient in such cases (Recommendation 4.1.2)
• Due to the limitations imposed by the Novo Nordisk Foundation’s articles of association and Novozymes’ ownership structure, the Board of Directors reserves the right in certain circumstances to reject takeover bids without consulting shareholders (Recommendation 1.3.1)

Furthermore, under the Danish financial statements act (section 99a and section 99b) it is mandatory for large companies to report on corporate responsibility and equal opportunities. As a member of the UN global compact, Novozymes prepares a communication on progress, which is available under supplementary. Together with the integrated financial, environmental and social reporting, the Communication on Progress meets both the requirements for reporting on corporate responsibility and equal opportunities, and the UN global compact’s advanced reporting criteria.

Novozymes also works within the parameters of Touch the World, a document outlining the company’s values and commitments, and has committed to principles derived from the UN global compact and the UN convention on biological diversity.

The Board of Directors held seven meetings in 2016, with an overall attendance rate of 100%.

Any changes to the Articles of association require that shareholders representing at least two-thirds of the total number of votes in the company are represented at the shareholders’ meeting, and that at least two-thirds of the votes cast, as well as two-thirds of the voting capital represented at the meeting, are in favor of the proposal to change the Articles of Association. The Annual Shareholders’ Meeting has authorized the Board of Directors to allow the company to acquire treasury stock on an ongoing basis to the extent that the nominal value of the company’s total holding of treasury stock at no time exceeds 10% of its share capital, cf. section 198 of the Danish companies act. The purchase price must not deviate by more than 10% from the price quoted on Nasdaq Copenhagen on the date of acquisition. The authorization applies until March 1, 2017. In addition, the Board of Directors has been authorized to increase the share capital. The authorization applies until March 2, 2018.

Each year, one of the responsibilities of the Board of Directors is to assess whether the capital and share structure in Novozymes is optimal. The Board of Directors remains of the opinion that the share structure with A and B common stock is the best way to safeguard Novozymes’ long-term strategy and development to the benefit of the company’s shareholders and other stakeholders. Regarding capital structure, Novozymes will continue to favor a conservative balance sheet, reflected by a target for net interest-bearing debt of 0-1x EBITDA. This target was met in 2016.

Novozymes is party to a number of partnership contracts that can be terminated by the other party in the event of significant changes in the ownership or control of Novozymes. A few contracts contain provisions that restrict Novozymes' licenses to use specific forms of technology in such situations.