Openness and transparency 
The board of directors of the company and management strive for a more open and transparent communication with its interested parties to ensure a high and consistent level of information that will allow interested parties to evaluate the company and future opportunities.

The role of shareholders and interaction with the company management
Topsil communicates with its shareholders on an ongoing basis through the publication of annual and interim reports and other stock exchange announcements via email. The stock exchange announcements are published in Danish and in English and are available on the company website immediately after their release to the OMX, Nordic Exchange Copenhagen.

Topsil regularly holds meetings with investors, financial analysts and the press at least once a quarter immediately after publishing the accounts for that quarter. All investor presentations are made available (in Danish) on the website prior to the presentation taking place.

Topsil has established silent periods of 4 weeks preceding the announcement of the annual and interim reports, in which the company does not make any statements to investors, financial analysts, the press or other interested parties about accounting matters nor participate in investor meetings. The silent periods are stated under the menu “Financial calendar" in the annual report.

Once a year, the Board assesses whether the capital and share structures of the company are in the interest of the shareholders and shall report on the issue in the annual report. 

The General Meeting
The General Meeting is Topsil’s highest authority. The company uses electronic document exchange as well as email in its communication with the shareholders, pursuant to section 65b of the Danish Public Companies Act. Notices convening shareholders to the Annual and Extraordinary General Meetings and agendas for the meetings are sent via email.

The General Meeting is convened electronically giving at least 8 days’ and no more than 4 weeks’ notice. Shareholders, who have requested to be convened to General Meetings by indicating their email address, will be convened by email. A notice is sent to the shareholders convening the meeting with all relevant appendices including a power of attorney giving the shareholder the opportunity to consider each individual item on the agenda.

Every shareholder has access to the General Meetings if he/she has obtained an admission card for him/her and an accompanying advisor, if relevant, not later than 3 days prior to the meeting with reference to the recording of the shares in the register of shareholders or on presenting documentation for the shareholding.

All shareholders are equal. All shares have the same voting rights without limitations or sub-divisions into classes of shares.

According to Topsil’s Articles of Association, the voting right may be exercised by proxy on presentation of a written and dated power of attorney. The design of the power of attorney gives the shareholder the possibility to decide each individual item on the agenda. A power of attorney may only be granted for a General Meeting specified in advance. However, a power of attorney to attend the Annual General Meeting – unless revoked – shall also be considered valid for a possible Extraordinary General Meeting held with the purpose of ratifying a decision to change the Articles of Association, which requires 2 General Meetings, cf. Articles 10.2 and 10.3 of the Articles of Association.

Should the company receive a public acquisition offer, which is supported by the Board of Directors, the company will convene an Extraordinary General Meeting and present the offer for approval by the General Meeting.

Rules for changing the Articles of Association
A decision to change the Articles of Association requires that at least half the share capital be represented at the General Meeting and that the decision be adopted with at least 2/3 of both the votes cast and of the share capital entitled to vote and represented at the General Meeting.

If the share capital mentioned is not represented at the General Meeting in question and if the proposal does not obtain 2/3 of the votes cast, it is repealed. If the proposal obtains 2/3 of the votes cast, the Board shall convene a new Extraordinary General Meeting within 14 days and if the proposal also obtains at least 2/3 of both the votes cast and the share capital entitled to vote represented at the General Meeting on this occasion, the proposal is adopted irrespective of the amount of the share capital represented.

The role of interested parties and importance to the company
The Board shall ensure that good and constructive relations as well as an active dialogue exist with the interested parties of the company and that the interests and roles of these parties are respected.

Because of the modest size of Topsil at present no written policy exists governing the company’s relations to its interested parties.

Topsil conducts customer satisfaction analyses at 18-month intervals to elucidate our customers’ experience of Topsil as a partner.

The annual report and supplementary information
Topsil decided to present its annual report according to IFRS as of the annual report for 2005. In connection with future annual reports, the Board will consider to what extent the annual report is to be supplemented with other relevant international accounting standards and whether the report should contain detailing information on the development and maintenance of internal knowledge resources, ethical and social responsibilities as well as occupational health.

The duties and responsibilities of the Board
The Board of Topsil is responsible for the overall management of the company and the following main duties:

• Establishing overall objectives, strategies and action plans.
• Securing clear guidelines for the distribution of responsibilities and the organisation of the company.
• Supervision of the financial development, capital resources, risk management, insurance matters and the management’s day-to-day running of the company.
• Ensuring that statutory control measures are implemented in a reassuring way.

The duties of the Board, including the duties of the Chairman and the Vice-Chairman, are described in the rules of procedure of the Board, which the Board reviews and amends, if necessary, at least once a year. As a main rule, all material decisions are made by the Board collectively and decided by a simple majority of votes. In case of equality of votes, the Chairman holds the casting vote.

The Board appoints the management, which is responsible for the day-to-day operation. The distribution of responsibilities and duties between the Board and the management is described in the rules of procedure as are the procedures for the management’s reporting to the Board. In addition, the Board has provided the management with written management instructions. The management provides information to the Board on an ongoing basis through written and oral communication. In addition, the Chairman currently receives information about special events in the company from the management of the company.

In connection with the quarterly Board meetings where the quarterly reports are presented, a written report for the most recent quarter is published including a profit and loss account, a balance sheet, an updated profit forecast for the present year as well as an account of any material deviations compared to the approved budget.

Own shares
The Board of Directors has adopted some guidelines for transactions with the company’s shares, which are laid down in the rules of procedure and the internal rules of the company. They apply to both the company’s own transactions as well as the transactions of the Board of Directors, the management and managerial employees. There are also written guidelines that prohibit abuse or disclosure of insider knowledge.

The trading window for the Board of Directors, the management and other insiders, to whom the guidelines for insiders apply, is set at 4 weeks after the publication of each quarterly report and only when no insider knowledge exists. Subscription for employee shares/exercise of employee subscription rights already held is not covered by the rule even if the subscription/exercise falls outside the 4-week limit.

It is the responsibility of the Chairman to inform insiders in case the trading window is closed due to insider knowledge.

Composition of the Board
Pursuant to the Articles of Association, the Board is composed of between three and six persons elected by the General Meeting, who are elected for one year at a time. Present members may be re-elected. Currently, Topsil has four members who are elected by the General Meeting. Furthermore, there are two employee representatives who are elected in accordance with the provisions of the Danish Public Companies Act in this regard.

The Board members elected by the General Meeting are elected for one year at a time whereas the employee representatives are elected for a 4-year period. No time limit has been established for the total period a person may be a member of the Board other than the provision that members of the Board must retire from the Board at the General Meeting held the year they attain the age of 70 at the latest.

Members of the company’s management may not be nominated or elected to the Board of Directors.

On the nomination for election (re-election) of the members of the Board at the General Meeting, the Board of Directors distribute a description of the background of the nominated candidates, their special competences and managerial duties in other Danish and foreign companies together with the notice convening the General Meeting. Equivalent information will be reported in the annual report together with information on the holdings of shares and warrants of the individual directors of the Board and Management, and their transactions during the accounting year.

On composing the Board, the aim is that the majority of the Board members elected by the General Meeting are independent from special interests whether they be the company, major shareholders, chief suppliers or key accounts. It will be disclosed in the annual report, in case a member of the Boards is not considered independent.

At an annual meeting, the appropriateness of the number of members of the Board is evaluated. If a new or an additional member of the Board elected by the General Meeting is required, the Chairman and the Vice-Chairman and the managing director state the criteria for the new member’s qualifications and subsequently find suitable candidates.

Topsil offers its newly elected members of the Board a thorough introduction to the company’s products, market and industrial conditions.

The Board of Directors meet at least six times annually.

It has been decided that the Board of Directors and the management will meet once a year to discuss and define their most important tasks relating to the overall strategic management, financial and managerial control, and to evaluate the auditor and the competences, work, results and collaboration of the Board of Directors and the management.

It is up to each member of the Board to assess how many directorships he/she is able to undertake simultaneously with the directorship in Topsil. In principle, this is considered a personal matter; however, the issue is discussed in connection with the annual self-evaluation of the Board of Directors.

The company does not have Board committees.

Management
The Board of Directors assesses and decides the number of directors and appoints and dismisses the management. The Chairman and the Vice-Chairman determine the terms of engagement of the management in the form of a contract and negotiate adjustments of the remuneration etc., usually once a year.

Remuneration of the management
The fee of the Board of Directors must be competitive and reasonable having regard to the duties and responsibilities of the office. The fee of the Board of Directors is determined at the first Board meeting and is paid as a lump sum the next year following the approval of the annual report by the General Meeting. The remuneration for the Chairman, the Vice-Chairman and the other members of the Board, respectively, will be specified in the annual report according to IFRS.

The Board of Directors is not remunerated by means of share option programmes.

The company does not have an actual remuneration policy as the size of the company does not necessitate such a policy. The remuneration of the company’s management is evaluated regularly by the Board of Directors.

The remuneration of the management (basic salary, bonus, etc.) must reflect the interest of the shareholders, be adjusted to circumstances and be reasonable having regard to the duties and responsibilities. The remuneration and bonus of the members of the management will be specified in the annual report. In the case of substantial or atypical contributions to fringe benefits, severance allowances, etc. for the management, such contributions will also be specified in the annual report.  
 
The Board of Directors determine the principles and guidelines of the incentive programmes for the management to promote long-term conduct and transparency and the valuation is performed according to approved methods in accordance with applicable law.

Risk management
The Board of Directors and the management will meet once a year to discuss the overall strategy for the company. At the strategy meeting the most important business risks, among other things, are identified, and they will be specified in the annual report.

The management has developed a plan for the company’s risk management and regularly reports at the Board meetings. The section on risks related to currency, interest rate and credit in the annual report describes the greatest risks connected with Topsil’s activities.

Auditors
In accordance with the Articles of Association, the General Meeting each year appoints an auditor who must be a state-authorised public accountant. It is the responsibility of the Board of Directors to recommend the election of an auditor by the General Meeting and together with the management to ensure that the contractual basis of the audit is reasonable and satisfactory.

The auditor must audit the annual accounts in accordance with good auditing practices including a critical review of the accounting material of the company.

The auditors report on the progress of the audit on an ongoing basis in audit book comments to the Board of Directors. The auditors attend Board meetings at least once a year, normally in connection with the review of the annual report and the presentation of the audit book comments. At this meeting, the accounting policies and material accounting estimates are reviewed.