Thrane & Thrane's Board of Directors and Management Board are committed to good corporate governance. The main principles are described below, and the company's full corporate governance report is available at www.thrane.com under Corporate Governance.

With a few exceptions of minor importance, the company follows the corporate governance recommendations of the Danish Committee on Corporate Governance. The recommendations were changed in 2010. The exceptions are as follows (reference to the individual recommendations):

Due to the size of the Board of Directors, the Board of Directors has not considered it necessary to appoint a deputy chairman (4.3.1).
The Board of Directors wishes to retain valuable competences and accordingly has not fi xed an age limit (5.8.1).
Due to the size of the Board of Directors, the Board of Directors has not considered it necessary to establish a nomination committee or a remuneration committee. The tasks of the respective committees are handled by the entire Board of Directors (5.10.7 and 5.10.8).

SHAREHOLDERS

The shareholders in general meeting have the supreme decisionmaking authority in the company. All shareholders have the right to attend and vote at general meetings. All shareholders are treated equally, and all shares carry the same voting rights, without any restrictions or division into share classes.

STAKEHOLDERS

Thrane & Thrane's management objective is to promote the longterm interests of the company, and thus of all shareholders, in all respects. The objective of creating long-term value assumes, among other things, that the company sets up durable and constructive relationships with its primary stakeholders: shareholders, customers, employees, suppliers and business partners. Such relations are based on the company's mission and on professional and commercial relations.

Regular customer satisfaction surveys are conducted to ensure that business relationships are rewarding and to retain customers. The surveys are designed to identify the customers' perception of the company as a business partner.

Thrane & Thrane respects all its employees and offers them equal opportunities to learn and develop in accordance with their individual requirements and capabilities and the company's circumstances in general. Employee satisfaction is measured regularly to ensure an adequate environment for and among the company's employees.

OPENNESS

Thrane & Thrane's communication policy defi nes the overall guidelines on how, when and with whom the company communicates. All important information is available in a Danish-language and an English-language version. Within the boundaries of the stock exchange code of ethics, the company endeavors to maintain a high and uniform level of information.

The company's communication policy off ers all shareholders equal, adequate and timely access to information about the company, and also focuses on an open dialogue about the company's activities and fi nancial results.

TASKS AND RESPONSIBILITIES OF THE BOARD OF DIRECTORS

It is the overall task of Thrane & Thrane's Board of Directors

to optimize the company's day-to-day management and organizational structure
to supervise the fi nancial performance and day-to-day management of the company by the Management Board
to participate in the general management of the company and in defi ning the company's strategy

The Board of Directors elects a chairman of the Board. The duties of the chairman and of the other Board members are described in rules of procedure, which the Board of Directors reviews once a year and amends as necessary. Resolutions are generally passed by all members of the Board of Directors.

Board meetings are held at least six times a year. At one long annual meeting, the Board of Directors and the Management Board discuss the overall strategy of Thrane & Thrane. The Board of Directors held six meetings in the past fi nancial year.

The Board of Directors appoints the Management Board, which is responsible for the day-to-day management of the company. The allocation of work between the Board of Directors and the Management Board is defi ned in the rules of procedure.

The Management Board briefs the Board of Directors at meetings and through written and oral communication. For Board meetings in connection with the presentation of interim reports, the Board is issued with written reporting on the past three months including, inter alia, strategic opportunities, developments in the external environment, the company's operations, the fi nancial position, and expectations for the fi nancial performance. In addition, the chairman is regularly briefed on any special events in the company.

COMPOSITION OF THE BOARD OF DIRECTORS

The company's articles of association provide that the Board of Directors consists of from three to seven members elected by the shareholders. At present, the Board has four members elected by the shareholders. Furthermore, the Board has two members elected by the company's employees as provided by the Danish Companies Act.

Three out of the four Board members elected by the shareholders are considered independent. Lars Thrane, one of the founders of the company and its largest shareholder, is a member of the Management Board of the company and thus cannot be considered independent. Lars Thrane is a member of the Board of Directors and of the Management Board. The Board of Directors believes this is appropriate considering that Lars Thrane's extensive knowledge of the company, the market and relevant technologies is crucial to the Board's work.

The Board of Directors believes the current composition of the Board is adequate considering the company's tasks. Before nominating new members, the Board carefully considers the required diversity, in particular with respect to the competencies that can help strengthen the company and its Board of Directors.

Regularly and at least once a year, the Board of Directors performs a structured assessment of its own work and the work of the Management Board and of the collaboration between the Board of Directors and the Management Board. The chairman of the Board of Directors is in charge of this evaluation, which is based on interviews between the chairman and each member of the Board of Directors, followed by a discussion by the entire Board of Directors.

REMUNERATION OF THE BOARD OF DIRECTORS AND THE MANAGEMENT BOARD

Members of the Board of Directors of Thrane & Thrane receive a fi xed annual remuneration for their work as Board members. The company discloses the individual amounts of remuneration and emoluments paid to members of the Board of Directors and the Management Board in its annual report.

The Management Board has an incentive scheme comprising an annual cash bonus plan with a targeted maximum value of 50% of the base salary. The cash bonus is determined based on three elements: growth, profi tability (operating margin) and the company's ability to generate positive cash fl ows. In addition, the company's Management Board and certain management and key employees have been granted warrants. Warrants held by the Management Board are disclosed in the annual report.

On termination of a member of the Management Board, such member is entitled to 12–24 months' salary inclusive of bonus. Walther Thygesen, CEO, and Svend Åge Lundgaard Jensen, CFO, have notice periods of 12 months. Lars Thrane has a notice period of 24 months.

RISK MANAGEMENT AND INTERNAL CONTROLS

Thrane & Thrane is committed to timely and correct reporting as a precondition for professional management and credibility in relation to the company's stakeholders.

The company's risk management and internal controls with respect to the fi nancial reporting process are organized so as to ensure presentation of internal financial statements that make it possible to measure the Group's performance and follow up on goals, plans and budgets; and presentation of external financial statements that are in accordance with the International Financial Reporting Standards as adopted by the EU and additional Danish disclosure requirements for annual reports of listed companies, and which give a true and fair view free from material misstatement.

The company's internal controls and risk management systems are updated on a regular basis and designed to detect and eliminate any errors and omissions in the fi nancial statements. However, as there will always be a risk of misappropriation of assets, unforeseen losses, etc., the internal controls and risk management systems may provide reasonable, but not absolute, assurance that all signifi cant errors and omissions are detected and corrected.

A more detailed description of Thrane & Thrane's risk management and internal controls with respect to the fi nancial reporting process is posted on www.thrane.com/investor/company/corporategovernance. This description together with the description of the company's corporate governance forms the statutory corporate governance reporting required under section 107b of the Danish Financial Statements Act.

AUDIT

The shareholders at the annual general meeting appoint one firm of state-authorized public accountants for a term of one year to audit the company's accounting. The auditor attends meetings of the Board of Directors at least once a year, generally in connection with the review of the annual report and the presentation of the long-form audit report.

The company's audit committee consists of Morten Eldrup- Jørgensen (chairman) and Jim Hagemann Snabe, both members of the Board of Directors.