Governance Information • Mar 26, 2020
Governance Information
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The obligations of Enedo's (formerly Efore Plc) decision-making bodies are defined in accordance with the Finnish legislation and the principles established by the Board of Directors. Enedo's (formerly Efore Plc) corporate governance complies with the provisions of the Companies Act. In addition, Enedo (formerly Efore Plc) complies with the Insider Guidelines issued by Nasdaq Helsinki Ltd and the Finnish Corporate Governance Code 2015 issued by the Securities Market Association. The Corporate Governance Code 2020 will enter into effect on January 1, 2020. This Corporate Governance Statement has been prepared in accordance with the Finnish Corporate Governance Code 2015. This statement has been issued separately from the report by the Board of Directors. The Corporate Governance Code is publicly available at www.cgfinland.fi. This statement was approved for publication by the Board of Directors of Enedo Plc (formerly Efore Plc) on March 24, 2020. It is included in the Annual Report and also available on the company website at www.enedopower.com.
CORPORATE GOVERNANCE
As set out in the Articles of Association, the Board of Directors shall have no fewer than three and no more than ten ordinary members. The company's President and CEO is not a member of the Board of Directors. The composition shall take into account the company's operational needs and stage of development. A person to be elected to the Board shall have the qualifications required by the duties as well as sufficient knowledge of financial matters and business operations. A person to be elected to the Board shall have the possibility to devote a sufficient amount of time to the work.
The majority of the members of the Board shall be independent of the company. In addition, at least two of the members representing this majority shall be independent of the company's significant shareholders.
The Annual General Meeting held on April 11, 2019, re-elected Tuomo Lähdesmäki, Antti Sivula, Taru Narvanmaa and Matti Miettunen to the Board of Directors. Marjo Miettinen served as a Board member until April 11, 2019.
*Share ownership information as of December 31, 2019
The Chairman of the Board was paid a fee of EUR 3,750 per month and the members EUR 2,000 per month. The Chairman of the Audit Committee was paid a fee of EUR 750 per month.
EFORE'S YEAR 2019 1
CORPORATE GOVERNANCE
The Board of Directors has general decision-making authority in all company matters that are not stipulated (by law or under the Articles of Association) to be decided or acted on by another party. The Board is responsible for the governance of the company and for duly organizing its operations. It also approves the corporate strategy, the risk management principles, the Group's corporate values, the operating plan and related annual budget, and decides on major investments.
The main duties and operating principles of the Board of Directors are laid out in a separate Charter, which covers the declaration of a quorum at Board meetings, the writing and approval of minutes, and the preparations needed on matters for decision.
More specifically, the Board:
2 EFORE'S YEAR 2019
The Board of Directors reviews its own working procedures by means of an annual self-evaluation process or in co-operation with an external party.
The Annual General Meeting elects the members of the Board of Directors by a simple majority vote for a term of office that ends at the close of the next Annual General Meeting following their election. The Board of Directors elects a Chairman and a Vice Chairman from among its members.
The composition of the Board of Directors must take into account the company's operational objectives and stage of development. The diversity of the Board of Directors supports the development of the business. When preparing the composition of the Board of Directors, the way in which the members' skills, education and experience complement each other is also assessed. The objective is that both genders are represented on the Board as well as the members at different ages and with a different educational background and experience.
The Board of Directors decides on establishing committees as necessary and appoints the members and chairmen of committees from among its members. The committees regularly report to the Board of Directors on their work.
The Audit Committee shall consist of at least three Board members who are independent of the company. In addition, at least one member shall be independent of the company's significant shareholders. The members shall have the qualifications required for the performance of the responsibilities of the committee, and at least one member shall have special expertise in accounting, bookkeeping or auditing.
In the financial year 2019 the members of the Audit Committee were Taru Narvanmaa (Chairman), Tuomo Lähdesmäki and Matti Miettunen until April 11, 2019. In its constitutive meeting held after the Annual General Meeting on April 11, 2019, the Board of Directors decided to establish a separate Audit Committee and appointed Taru Narvanmaa (Chairman), Tuomo Lähdesmäki, Matti Miettunen and Antti Sivula as its members.
The Audit Committee assists the Board of Directors by preparing the tasks assigned to the Board of Directors. The Committee regularly reports to the Board of Directors on the matters it has discussed and the measures it has taken. The Committee submits decisions proposals to the Board of Directors when appropriate. The primary tasks of the Audit Committee are to review the company's financial reporting and supervise compliance with laws and regulations.
CORPORATE GOVERNANCE
of supplementary services to the company
In its first meeting following the Annual General Meeting, the Board of Directors shall appoint the members of the Audit Committee from among its members and appoint one of them to be the Chairman of the Audit Committee. The members' term of office shall be one year, ending at the conclusion of the Annual General Meeting following their appointment.
A total of 30 Board meetings and 7 Audit Committee meetings were held during the financial year 2019.
The Annual General Meeting 2017 decided to establish a permanent Shareholders' Nomination Board to prepare proposals concerning the election and remuneration of the members of the Board of Directors to the General Meetings. The Annual General Meeting 2017 also adopted the charter of the Shareholders' Nomination Board.
The Nomination Board consists of four (4) members, with the company's three (3) largest shareholders each having the right to nominate one member. The Chairman of the Board of Directors of the company shall serve as the fourth member. The company itself cannot be a member of the Shareholders' Nomination Board.
On January 14, 2019, the following shareholders appointed the following members to the Nomination Board that submitted proposals to the Annual General Meeting 2019:
EFORE'S YEAR 2019 3
| Board meetings |
Audit Committee meetings |
|
|---|---|---|
| Tuomo Lähdesmäki | 29/30 | 7/7 |
| Marjo Miettinen (member of the Board until April 11, 2019) | 8/30 | |
| Matti Miettunen | 30/30 | 7/7 |
| Taru Narvanmaa | 29/30 | 7/7 |
| Antti Sivula (member of the Audit Committee from April 11, 2019) |
30/30 | 3/7 |
In its constitutive meeting, the Nomination Board elected Jarkko Takanen as its Chairman.
CORPORATE GOVERNANCE
The Nomination Board submitted its proposal regarding the composition and remuneration of the Board of Directors on January 16, 2019.
The Nomination Board convened three times in 2019, with all of the members attending the meetings.
The Board of Directors appoints the company's President and CEO and supervises his actions. The main terms and conditions governing the President and CEO's appointment are detailed in a written contract approved by the Board of Directors. The President and CEO manages and supervises the Group's business operations within the guidelines and directives issued by the Board of Directors, and ensures that the company's accounting accords with the law and that the financial management system is reliable.
Vesa Leino, who had previously served as the Group CFO since summer 2017, was appointed as Enedo Plc's (formerly Efore Plc) new President and CEO effective from January 1, 2019.
4 EFORE'S YEAR 2019
The corporate management of Enedo Group (formerly Efore Plc) consists of the Chief Executive Officer (CEO) and the Executive Management Team.
The Executive Management Team has no powers based on law or the Articles of Association. The Executive Management Team assists the CEO in the development of the Group's business. The Executive Management Team's duty is to prepare strategy proposals for the Board and execute the approved strategy. The Executive Management Team members are accountable for the performance and development of their respective areas of responsibility and they supervise the operations of the units belonging to their areas.
Members of the Executive Management Team and their areas of responsibility on December 31, 2019:
Vesa Leino, b. 1969, M.Sc. (Econ.)
Olli Mustonen, b. 1985, M.Sc. (Econ.)
Carlo Rosati, b. 1966, M. Degree in Business and Economics
Ruben Tomassoni, b. 1974, LL.M.
* shareholding information as of December 31, 2019
The principal auditor of Enedo Plc (formerly Efore Plc) is responsible for the Group's audit and the related directions and coordination. The principal auditor prepares an annual audit plan and presents it to the Board of Directors. The plan specifies the focus areas of the audit and is subject to approval by the Audit Committee. The auditor issues an auditor's report on the consolidated financial statements and the report of the Board of Directors to the company's shareholders as required by law. Furthermore, the auditor reports their findings to the Audit Committee.
The Annual General Meeting held on April 11, 2019, re-elected KPMG Oy Ab as the company's auditor. Authorized Public Accountant Henrik Holmbom served as the responsible auditor during the financial year 2019.
The fees for auditing the official financial statements amounted to EUR 101,304 in 2019. The auditing company charged the Group a total of EUR 34,567 for other services during the financial year.
The Board of Directors is responsible for ensuring that the internal control and risk management are adequately and effectively arranged. In addition, it is the responsibility of the Board to ensure that the internal control of the company's accounting and financial management is appropriately arranged. The Audit Committee is responsible for the control of the financial reporting process. The financial management function communicates its findings to the relevant members of the management.
CORPORATE GOVERNANCE
The Group has financial reporting systems for monitoring business operations, financial management and risks. The Board of Directors has approved the management organization and principles, decision-making authorizations and approval procedures, operating policies of the various areas of the company's administration, financial planning and reporting as well as remuneration principles.
The Group does not have a separate internal audit function. Instead, the internal audit is part of the Group's financial administration. Representatives of the Group's financial administration perform certain control functions when they visit the subsidiaries. The financial management reports the findings to the President and CEO and the Audit Committee which, in turn, report to the Board.
The Group's financial management, together with the other management, prepares a monthly financial report. The report contains a summary of the net sales, gross profit, costs level, results, net working capital, cash flow and personnel development for the previous month, the year to date and a forecast for the remainder of the year. The report also includes the company's key risks and opportunities. The report is delivered to the Board of Directors, Executive Management Team and the financial management of the largest subsidiaries. It is also delivered to the auditors when it concerns interim reports. In addition to the monthly reporting, the management follows certain items more actively in weekly meetings. The Group aims to further simplify its financial processes and main business processes as well as reduce risks related to maintaining several parallel systems.
The Group's financial management oversees the centralized interpretation and application of accounting standards (IFRS). The Group's financing and hedging against currency risks are centralized in the head office in Finland. The Board's Audit Committee evaluates the financial statements and interim statements as well as certain other areas that are of significance to the result of the Group's business operations. The Audit Committee reports its findings to the Board, which monitors that the necessary measures are taken.
The aim of Enedo's (formerly Efore Plc) risk management system is to identify the Group's strategic, operational and financing risks as well as any conventional risks of loss. In its operations, the Group takes risks related to the pursuit of its strategy and goals. Risk management seeks to control these risks in a proactive and comprehensive manner. The measures taken can include risk avoidance, risk reduction or risk transfer by insurance or agreement.
Risk management forms an integral part of the Group's business processes in all of its operational units. In this way, the risk management process is tied to internal controls. The Group and its operational units assess the risks of their operations, prepare risk management plans and report risks in accordance with the organizational structure.
The Group CFO oversees that risk management is arranged efficiently and that the effectiveness of its performance is ensured. The CFO is responsible for the general development of Enedo's (formerly Efore Plc) risk management. The CFO reports the Group's risk status to the Audit Committee and acts as a representative of the Executive Management Team in Audit Committee meetings.
The Audit Committee and the Board of Directors address risks in connection with addressing other business operations. Risk management is taken into consideration in the Group's quality systems, which also include contingency plans. A more detailed statement on the Group's risks and their management is available in the Investors section of the Efore website.
Efore maintains a list of its related parties. The company evaluates and moni-
EFORE'S YEAR 2019 5
tors transactions carried out between the company and its related parties and ensures that it identifies, decides on, approves, reports, and monitors related party transactions in accordance with appropriate procedures. Related party transactions are reported in accordance with the Finnish Limited Liability Companies Act and regulations concerning the drawing up of financial statements and published, when certain conditions are satisfied, in accordance with the rules of the Helsinki Stock Exchange.
CORPORATE GOVERNANCE
In decision-making pertaining to potential related party transactions, the company ensures that decisions are based on exceptionally careful preparatory work and appropriate reports, opinions and/or assessments. In arranging preparatory work, decision-making, and the evaluation and approval of individual transactions, the company takes into account all relevant disqualification provisions and the appropriate decision-making body in each individual matter to ensure that a representative of a related party does not participate in the decision-making.
An absolute guarantee issued for a loan in 2016 by Jussi Capital Oy is still valid. The arrangement was carried out on acceptable grounds for the Group's business interests and under ordinary market terms. During the financial year 2019, Jussi Capital Oy granted Enedo (formerly Efore Plc) a loan of EUR 1.0
6 EFORE'S YEAR 2019
million and put up security for the withdrawal of a credit limit of EUR 1.0 million. The arrangement involving the pledging of security was carried out on acceptable grounds for the Group's business interests and under ordinary market terms.
Enedo (formerly Efore Plc) has drawn up Group-level Insider Guidelines, which cover topics including the prohibition on unlawful disclosure and the abuse of inside information, insider lists, notification requirements and trading restrictions. The Insider Guidelines have been confirmed by the Board of Directors of Enedo (formerly Efore Plc). The Group CFO is responsible for insider administration.
The Group does not maintain a list of permanent insiders. A project-specific insider list according to the Nasdaq Helsinki Guidelines for Insiders is prepared when Efore has an ongoing project.
The persons discharging managerial responsibilities in the Group are the members of the Board of Directors, the President and CEO and the CFO. The persons discharging managerial responsibilities in the Group and persons closely associated with them have an obligation to notify the Group and the FIN-FSA about transactions relating to the Group's financial instruments. The Group then discloses the information as a separate stock exchange release.
Enedo (formerly Efore Plc) has organized regular supervision of the trading and the notification requirement concerning persons included in insider lists as well as persons discharging managerial responsibilities and persons closely associated with them in such a way that the company annually checks the information to be notified with the persons discharging managerial responsibilities and the persons closely associated with them. Enedo's (formerly Efore Plc) duty of supervision also extends to any external advisors registered in the insider list who have taken on the duty of drawing up and maintaining the insider list. It is therefore recommended that the company agree in writing (e.g. by e-mail) with such external advisors on the maintenance of the insider list and assure that such parties are aware of the obligations and duties under MAR and the Group's Insider Guidelines.
The persons discharging managerial responsibilities at Enedo (formerly Efore Plc) are not allowed to trade in Enedo's (formerly Efore Plc) financial instruments for their own account or for the account of a third party during the closed period, which begins 30 days before the disclosure of financial statement releases and half-year financial reports and ends on the day following the disclosure of such information. In the exceptional event that the financial statements release does not include all of the relevant information regarding the financial position of the company, in which case the closed period also applies during the 30 days prior to the publication of the financial statements, the company will separately inform the parties concerned.
Trading in Enedo's (formerly Efore Plc) financial instruments is allowed outside closed periods, provided that the person in question is not entered into a project-specific insider list and they do not otherwise possess inside information at the time. Prior to trading, the person in question also needs to have received a statement, in writing by e-mail, from the person responsible for insider administration at Enedo (formerly Efore Plc), indicating that there is no obstacle to trading.
Persons in the service of Efore Plc may, via an independent channel, report any suspected infringements of rules and regulations concerning the financial market, including violations of the company's Insider Guidelines and the Nasdaq Helsinki Guidelines for Insiders. Such reports are made by a freeform letter (anonymously, if necessary) addressed to the President and CEO.
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