Brims' Board of Directors and representatives are committed to good corporate governance to ensure that the work of the Board of Directors as well as the company's operations as a whole fulfill the criteria of good business practices.

The Board's Rules of Procedure and the Statement of Governance can be accessed here:

• Rules of Procedure
• Statement of Corporate Governance (in Icelandic)

The company's corporate governance is primarily based on Act no. 2/1995 on public limited companies, the company's articles of association, rules of procedure, and Guidelines for Corporate Governance, 6th ed., published by the Iceland Chamber of Commerce, NASDAQ Iceland hf., and the Confederation of Icelandic Enterprise.

Brim hf. considers itself to be in adherance with the above guidelines on corporate governance in all general respects, with the exception that the company has not appointed a nomination committee.

GROUP

Brims' aim is to be an integrated fisheries company that combines fishing, processing, and sales and marketing operations. The figure below shows Brims' operations along with its key subsidiaries and affiliates.

TRANSACTIONS OF RELATED ENTITY

Brims' operations are subject to the rules on transfer pricing, which refer to how related legal entities price transactions between the parties. These regulations are intended to ensure that the price determination in transactions between related legal entities is in accordance with prices in comparable transactions between unrelated entities. So that the pricing is in accordance with the so-called “arm's length principle”. The regulations only apply when a certain type of relationship exists between the legal entities that are in a business relationship.

A relationships is considered to exist when there is a direct and/or indirect relationship between the legal entities themselves, or when there is a relationship between majority shareholders of those legal entities, or have administrative control over the legal entities in a business relationship. The relationship between the legal entities can be defined directly or indirectly, as follows:

• When legal entities are part of the same group, they are unequivocally related legal entities.
• When a legal entity is under the direct and/or indirect majority ownership or administrative control of two or more legal entities within a group, it is considered to be connected to all legal entities within the group.
• When a legal entity owns more than a 50% share in another legal entity indirectly, they are considered connected within the meaning of the provision of regulations on transfer pricing. If one legal entity is part of a group, then the other legal entity is considered to be connected to all other legal entities within the group.

BRIM’S POLICIES

Attached are links to Brims' policies.

PURCHASING

Brim defines Iceland as its local community. Products and services from domestic suppliers accounted for 98% of the company's total purchases in 2020. Renewal of the shipping fleet is not included. In most cases, Brim has required suppliers to keep inventory for the company's operations, and that the delivery is in accordance with the intended use at any given time. The cost and reduction of inventory is thus kept to a minimum. The company's rural location means that Brim, in accordance with the company's purchasing policy, seeks out local services at the sites in questions, and thereby supports its local community. This is very important to the company and its staff. When selecting suppliers and service providers, Brim places a strong emphasis on the following factors:

• Competitive Pricing
• Product Quality
• Level of Service
• Competitive Considerations
• Social Responsibility

If these factors go together, as judged by the company, the most efficient price at any given time is the one that enables Brim to maximize quality and service, ensure competition, and promote social responsibility.

SOCIAL RESPONSIBILITY OF SUPPLIERS

Brim has set a policy for socially responsible purchasing practices and it has become a factor in all major purchasing agreements made by the company. It stipulates that the suppliers in question should conduct fair and responsible business practices. Suppliers commit to integrity in their business practices and guarantee that the products they sell, and the services they provide, comply with the provisions of the laws and regulations that apply to them. A supplier must respect human rights in general and commit to complying with all laws and regulations that apply to its business operations, domestically and in foreign markets. Violation of this provision may result in the immediate termination of a supplier’s agreement.

Through its new and dynamic environmental database, designed by Brim and implemented in 2020, the company has begun a systematic collection of information on the environmental impact of the products and services purchased by Brim. Such information gathering gives Brim the opportunity to build up awareness of greenhouse gas emissions from all of the company's business units and its entire value chain. In this way, the company can make informed decisions to focus on doing business only with those suppliers with the least negative environmental impact, and thereby help systematically reduce the negative environmental impact of the company's operations.

Since 2016, Brim has implemented the following environmental provisions for the company's key procurement agreements.

"Brim is a party to the climate declaration of Festa, composed by the Center for Corporate Social Responsibility and Reykjavík City, and signed by 104 companies at Höfði in 2015. With that declaration, the company has committed itself to reducing greenhouse gas emissions over the coming years. Part of that resolution is to map the impact of service providers and their operations on Brims' operations, which will be reflected in the Environmental Statement, published by the company on an annual basis. In order to support these goals, service providers must undertake, at the beginning of each year or on a regular basis, the disclosure of their environmental impact on Brim's operations that passing year.”

Today, nineteen agreements with the company's largest suppliers contain this provision.

SUPPLIER EVALUATION

Brim performs an annual assessment of the company's 100 main suppliers, large and small, which are defined on the basis of their operational security vis-à-vis Brim’s operations (i.e. those companies that could have a minor or lasting negative impact on Brim's operations). One of the questions in the assessment is whether the supplier in question has established a formal code of conduct.

The number of suppliers that could have a minor or lasting effect on the company's operations was 61 in 2020. Of these 61 suppliers, 19 suppliers (31%) had implemented a written code of conduct.

Brim has been a leader in environmental issues and is now publishing the company’s fourth environmental statement.

This is the first time that the company also publishes a Social Statement, in accordance with Nasdaq's ESG Reporting Guide 2.0. The results are divided into three components: Environmental, Social, and Governance.

The attached table shows the Governance Statement according to Nasdaq’s ESG Reporting Guidelines, which apply to the operations of Brims and its subsidiaries.

The listed share capital of Brims hf. was ISK 1,956 million at the end of 2020. By the end of the year, the company had equity with a nominal value of ISK 35 million, while equity shares with a nominal value of ISK 22.1 million were sold in 2020. Outstanding share capital amounted to ISK 1,921 million. The number of shareholders at the beginning of the year was 854 but was 880 at the end of the year. At the end of 2020, four shareholders owned more than a 10% share in the company, Útgerðarfélag Reykjavíkur hf. (UR Seafood) owned 34.53%, the State Employees' Pension Fund Division A owned 13.31%, the Pension Fund of Commerce owned 10.88%, and RE-13 ehf. owned 10.23%.

The share price was 50.1 at the end of 2020 and 39.1 at the beginning of the year. The real return on shares during the year, including dividends in the company, turned out to be positive by 26.4%. It is based on bonds bought at the closing price of 2019 and sold at the end of 2020, taking into account the payment of dividends and inflation during the year. In the long run, the real return on equities, which was bought at the end of 2000 and sold at the end of last year, averaged 10.3% per year.

Registered trading in Brim hf. shares amounted to ISK 9,423 million in 2020. Listed transactions in 2019 amounted to ISK 20,485 million. The nominal increase in the OMX Iceland index was 20.48% in 2020 and 21.91%, after accounting for dividends.

ANNUAL GENERAL MEETING 2020

Brim hf. held its Annual General Meeting on Friday, March 31, 2020. It was an online meeting and was attended by 92.7% of the active share capital or 1,760,411,586 shares.

Chairman of the Board, Kristján Þ. Davíðsson, presented the Board's report and reported on the company's operations and performance during the past operating year. Guðmundur Kristjánsson, CEO, presented the company's annual accounts and clarified various aspects of the company’s operations during the past year, as well as fielding questions.

The Board's proposal was that ISK 1.0 per share would be paid in dividends from share capital and it was approved unanimously.

The board of the company was self-elected. The following were elected to the Board: Anna G. Sverrisdóttir, Guðmundur Kristjánsson, Kristján Þ. Davíðsson, Kristrún Heimisdóttir, and Magnús Gústafsson.

Deloitte ehf. was the elected auditing firm.

At the first board meeting, following the annual general meeting, the board divided its roles. Kristján Þ. Davíðsson was elected Chairman and Anna G. Sverrisdóttir Vice Chairman.

There are two sub-committees of the Board of Directors, the Audit Committee and the Remuneration Committee. The Audit Committee for Ships, Gunnar Þ. Ásgeirsson chairman, Anna G. Sverrisdóttir, and Kristrún Heimisdóttir. The Remuneration Committee for Ships, Magnús Gústafsson, Chairman, Kristján Þ. Davíðsson, and Kristrún Heimisdóttir.