SKAGEN’s Voting Guidelines

POLICY STATEMENT

SKAGEN believes that companies, who understand and utilise sustainability in their business strategy, will outperform their counterparts over the longer term. Investing responsibly is thus essential in order to achieve the best possible risk-adjusted returns for the unit holders. As part of our commitment to investing responsibly, we will use our voting rights.

SKAGEN also believes in exercising our rights as shareholders. The framework for the use of voting rights for funds managed by the SKAGEN is set out in Norwegian Regulations on Securities Funds Section 2-24 and in the industry recommendations from the Norwegian Fund and Asset Management Association.

OBJECTIVE

SKAGEN is committed to a future that our customers can look forward to. We therefore believe that our key contribution to achieving this is two-fold: We seek to generate the best possible risk-adjusted returns for our unit holders, while also not letting our actions today come at the expense of a prosperous tomorrow.

To do this, our actively managed funds aim to vote in all shareholder meetings.

The ultimate responsibility for execution of corporate governance in our funds lies with the Board of directors of the respective fund management company. The daily execution is delegated to the portfolio managers of each fund and activities are reported back to the Board. The Board annually evaluates the execution of corporate governance.

Voting is done to the benefit of the fund in question, with the objective of securing the best possible risk-adjusted returns for unit holders. Normally, the portfolio manager assesses how the voting rights are to be used.

In all cases where SKAGEN vote, the respective portfolio manager familiarises him or herself with the matters to be discussed at the general meeting and decides how to vote. Voting rights are exercised directly by the fund management company or by using a proxy voting platform.

METHODOLOGY

The SKAGEN’s voting guidelines are as follows:

• Information: We can support an item only if the accompanying information describing the proposal is deemed sufficient and timely. All proposals should be presented in separate agenda items. Shareholders should be able to propose binding resolutions and call a general meeting and we will vote against proposals limiting such rights.

• Board of directors: SKAGEN expects a majority of the Board members to be independent from management and business partners, fully independent Board key committees (i.e. compensation, nominating and audit); different persons as CEO and Chairman; number of directorships; and annual election of Board members. The Board should be competent and able to support the management in their daily operations.

• Anti- takeover mechanisms: Poison pills, unlimited capital authorizations, staggered boards, super voting shares, super majority vote requirements and golden shares all serve to enhance the power of management at the expense of shareholders. We vote against unless they are structured to give shareholders the ultimate decision in any take-over offer.

• Capital structure: Shareholders should have the right to approve the issuance of shares for corporate purposes in order to ensure that such actions serve a valid purpose. We will support the board’s proposals on capitalization provided the measure balances corporate needs for flexibility against reasonable shareholder control and equitable treatment of shareholders. We hold “one share – one vote” as a general principle, and will vote against other capital structures unless they are well-founded.

• Climate change: proposals in this category typically come from other shareholders and relate to companies enhancing their disclosure or change certain business practices. We will evaluate these resolutions individually and on its own merits and may support those where we believe there is a logical and demonstrable link to the long-term shareholder value of the company. Some of the factors considered include the materiality of the issue, the quality of disclosures, current business practices, and any progress by the company toward the adoption of best practices and/or industry norms.

• Executive compensation: We assess the performance objectives established by compensation committees, and support well-designed compensation plans that can be effective in aligning management with shareholder interest.

We encourage the Board and the management to buy shares at their own expense.

Specific situations may call for unique responses and we will always take market and company conditions into consideration. To the extent that voting rights have been exercised in controversial cases or where we have voted against the board’s or management’s recommended course of action, we will disclose the voting rationale.

A vote disclosure is sent to the Board and the unit holders are informed via the respective web sites. If SKAGEN has voted against the companies’ proposal, the information will refer to the guidelines above. Unique responses will be explained.

Voting Process

The SKAGEN has selected Institutional Shareholder Services (“ISS”), an independent service provider, the platform for our proxy voting activities. ISS provides notices of general meetings and comprehensive information about the companies, the voting items on the agenda and recommendations.  Funds managed by the group will vote according to our own voting policy, and always in what we deem to be the best interest of our funds. When we do not have a policy in place for a specific ballot item, we will typically follow the ISS recommendation. We will on an annual basis review the relationship with ISS, including the quality and effectiveness of the services provided. Each fund has a custodian approved by the Financial Supervisory Authority of Norway. The custodian bank also provides information related to general meetings.

Conflicts of Interests

Each of the funds has its own mandate and is managed independently from the others. However, portfolio managers may choose to invest in the same company, resulting in several funds holding a stake and voting rights in that company.

Each fund is free to vote in accordance with its own convictions as to what is in the best interests of unit holders of that fund. Consequently, no conflict of interest should arise between the funds regarding the use of voting rights.

The SKAGEN’s portfolio managers are subject to strict rules when it comes to investing in financial instruments. However, with prior approval, the portfolio managers may invest in companies which are part of the funds’ portfolios. In cases where portfolio managers have invested on their own account in companies in which they are to exercise voting rights on behalf of the unit holders, portfolio managers must contact the Investment Director for advice on whether they may also exercise a voting right on behalf of the funds. In case of conflicting interests, the CEO must request new authorisation from the Board. Hence, no conflict of interest should arise between the fund and the portfolio manager regarding the use of voting rights.

Employees of SKAGEN may not sit on the board of companies quoted on a stock exchange or regulated market. In exercising corporate governance on behalf of the funds, SKAGEN may be represented in a company's corporate assembly and election committee. The decision of whether or not to seek such representation must be based on the specific assessment that this is in the unit holders' interests. SKAGEN may be represented by employees or by persons nominated by SKAGEN.