CapMan Oyj — Governance Information 2016

Feb 23, 2016

CAPMAN ANNUAL REPORT 2015 / CORPORATE GOVERNANCE STATEMENT

Corporate Governance Statement 2015

APPLICABLE RULES AND REGULATIONS

CapMan Plc (“CapMan”) complies, in accordance with comply or explain principle, with the Finnish Corporate Governance Code (the “Code”) for listed companies issued by the Securities Market Association and entered into force on 1 January 2016. The deviations from the Code are explained below in section 2. Furthermore, CapMan’s corporate governance is in compliance with the laws of Finland, its articles of association and the rules and directions of NASDAQ Helsinki Ltd. This Corporate Governance Statement (the “Statement”) has been prepared in compliance with the Code’s Corporate Governance reporting guidelines A pertaining to the Corporate Governance Statement. The Code as a whole is publicly available on the website of the Securities Market Association at www.cgfinland.fi.

The Statement is reviewed by the Audit Committee of CapMan’s Board of Directors (the “Board”) and it is issued separate from the report by the Board. CapMan’s auditor PricewaterhouseCoopers Oy has checked that the Statement has been issued and that the description of the main features of the internal control and risk management systems pertaining to the financial reporting process contained in the Statement is consistent with the Financial Statements.

For further information regarding CapMan’s corporate governance, please visit the company’s website at www.capman.com/capman-group/governance.

DEVIATIONS FROM THE CODE

The Board of Directors has decided, in accordance with the Code’s Recommendation 15, that due to the overall small size of the Board, the Audit Committee comprises only two members.

BOARD OF DIRECTORS

COMPOSITION

All members of the Board are elected by the general meeting. There is no specific order for the appointment of Board members in the articles of association. According to the articles of association, the Board comprises at least three and at most nine members, who do not have deputies. Members are elected for a term of office of one year, which starts at the close of the general meeting at which they were elected and ends at the close of the AGM following their election. The Board elects a Chairman and a Vice Chairman from among its members.

The AGM held on 18 March 2015 elected five members to the Board. Mr Koen Dejonckheere, Mr Claes de Neergaard, Mr Karri Kaitue, Ms Nora Kerppola and Mr Ari Tolppanen were re-elected to the Board. The Board elected from among its members Karri Kaitue as the Chairman of the Board and Nora Kerppola as the Vice Chairman of the Board.

The composition of the Board of Directors is diverse pertaining to the age and gender as well as the professional, educational and international background of its members. The objective of the company is to maintain the diversity of its Board of Directors in the current extent, taking into account the competences of member candidates that are relevant for CapMan’s business, such as know-how of the financial sector. The principles concerning the diversity of CapMan’s Board of Directors are defined in accordance with the Code’s recommendation 9.

The biographical details of the directors are presented in the table on page 19.

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CAPMAN ANNUAL REPORT 2015 / CORPORATE GOVERNANCE STATEMENT

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INDEPENDENCE OF THE BOARD MEMBERS

The Board has in its organizing meeting on 18 March 2015 assessed its members' independence of the company and of its significant shareholders. Koen Dejonckheere, Karri Kaitue, Nora Kerppola and Claes de Neergaard were independent of both the company and its significant shareholders. Ari Tolppanen, CapMan's Senior Partner and member of CapMan Buyout investment team, was non-independent of both the company and its significant shareholders.

Shares and share-based rights of each director and corporations over which he/she exercises control in the company and its group companies are presented in the table on page 19.

DUTIES AND RESPONSIBILITIES

Under the Finnish Companies Act and CapMan's articles of association, the Board is responsible for the administration of the company and the proper organisation of its operations. The Board is also responsible for the appropriate arrangement of the control of the company's accounts and finances. The Board has confirmed a written charter for its work, which describes the main tasks and duties, working principles and meeting practices of the Board, and an annual self-evaluation of the Board's operations and working methods.

In accordance with the charter, the main duties of the Board are:

• to appoint and dismiss the CEO
• to supervise management
• to approve strategic goals
• to decide on establishment of new CapMan funds and the level of CapMan's own commitments therein
• to decide on the major changes in the business portfolio
• to ensure that the company has a proper organisation
• to ensure the proper operation of the management system
• to approve annual financial statements and interim reports
• to ensure that the supervision of the accounting and financial management is properly organised
• to ensure that the business complies with relevant rules and regulations
• to approve the principles of corporate governance, internal control, risk management and other essential policies and practices
• to decide on the CEO's remuneration and on the remuneration policy to be followed for other executives and CapMan's key employees
• to confirm the central duties and operating principles of Board committees

The Chairman of the Board ensures and monitors that the Board fulfils the tasks appointed to it under legislation and by the company's articles of association.

WORK OF THE BOARD IN 2015

In 2015, the Board met nine times (seven meetings for the Board elected by the 2015 AGM and two meeting for the Board elected by the 2014 AGM). The table on page 19 presents Board members' attendance at the meetings in 2015.

BOARD COMMITTEES

The committees are generally established and the committee members elected in the Board's organizing meeting to be held after the AGM from among its members for the same term as the Board. As a general rule, the committee shall have at least three members but, in accordance with Recommendation 15 (Appointment of members to the committees), the committee may, due to the limited number of board members, consist of two members only. The charters for each committee shall be confirmed by the Board and the minutes of the meetings shall be delivered to the Board for information. The committees do not have autonomous decision-making power but the Board makes the decisions within its competence collectively.

In its organizing meeting held on 18 March 2015, CapMan's Board established Audit, Nomination and Remuneration Committees.

AUDIT COMMITTEE

The Audit Committee has been established to improve the efficient preparation of matters pertaining to financial reporting and supervision.

The duties of the Audit Committee include:

• monitoring the reporting process of financial statements
• supervising the financial reporting process
• monitoring the efficiency of the company's internal control and risk management systems
• reviewing the description of the main features of the internal control and risk management systems pertaining to the financial reporting process
• monitoring the statutory audit of the financial statements and consolidated financial statements
• evaluating the independence of the statutory auditor or audit company, particularly the provision of related services
• preparing the proposal for resolution on the election of the auditor.

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CAPMAN ANNUAL REPORT 2015 / CORPORATE GOVERNANCE STATEMENT

The Board has in its organizing meeting on 18 March 2015 elected Nora Kerppola (Chairman) and Karri Kaitue as members of the Audit Committee. The composition of the Committee did not change during 2015. In 2015, the Audit Committee met five times. The table on page 19 presents the Committee members' attendance at the meetings.

NOMINATION COMMITTEE

The Nomination Committee has been established to improve the efficient preparation of matters pertaining to the nomination and remuneration of Board members. The main duty of the Committee is to give proposals to the AGM on the composition of the Board and on the remuneration of the Board members.

The Board has in its organizing meeting on 18 March 2015 elected Karri Kaitue (Chairman), Koen Dejonckheere and Ari Tolppanen as members of the Nomination Committee. The composition of the Committee did not change during 2015. In 2015, the Nomination Committee met two times in this composition. The table on page 19 presents the Committee members' attendance at the meetings.

REMUNERATION COMMITTEE

The Remuneration Committee has been established to improve the efficient preparation of matters pertaining to the remuneration and appointment of the CEO and other executives of the company as well as the remuneration policy covering the company's other personnel.

The main duty of the Remuneration Committee is to assist the Board by preparing the Board decisions concerning:

• CEO remuneration
• company executive remuneration principles and individual situations as required
• company's overall principles for total compensation structure.

The Committee shall further contribute to:

• securing the objectivity and transparency of the decision-making regarding remuneration issues in the company
• the systematic alignment of remuneration principles and practice with company strategy and its long-term and short-term goals
• the appointment of the executives of the company.

The Board has in its organizing meeting on 18 March 2015 elected Karri Kaitue (Chairman), Koen Dejonckheere and Claes de Neergaard as members of the Remuneration Committee. The composition of the Committee did not change during 2015 and the Committee met three times in 2014. The table on page 19 presents the Committee members' attendance at the meetings.

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CAPMAN ANNUAL REPORT 2015 / CORPORATE GOVERNANCE STATEMENT
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BOARD OF DIRECTORS IN 2015

Name	Personal information	Shares and share-based rights as of 31 Dec 2015	Attendance at the Board meetings	Attendance at the Committee meetings
Karri Kaitue	Chairman of the Board since 7 August 2013.
Vice Chairman of the Board during 20 March – 7 August 2013.
Member of the Board since 2012.
Born 1964, LL. Lic.
Main occupation: Board professional.
Chairman of the Nomination Committee and Remuneration Committee, member of the Audit Committee.
Independent of the company and significant shareholders.	0	9/9	Audit Committee: 5/5
Nomination Committee: 2/2
Remuneration Committee: 3/3
Nora Kerppola	Vice Chairman of the Board since 7 August 2013.
Member of the Board since 2011.
Born 1964, MBA.
Main occupation: CEO of Nordic Investment Group Oy.
Chairman of the Audit Committee, Chairman of the Remuneration Committee until 19 March 2014.
Independent of the company and significant shareholders.	Class B shares: 10,000	9/9	Audit Committee: 5/5
Koen Dejonckheere	Member of the Board since 2010.
Born 1969, MBA, M.Sc. (Eng.).
Main occupation: CEO of Gimv NV.
Member of the Nomination Committee and the Remuneration Committee.
Independent of the company and significant shareholders.	0	6/9	Nomination Committee: 2/2
Remuneration Committee: 2/3
Claes de Neergaard	Member of the Board since 2011.
Born 1949, M.Sc. (Econ.).
Main occupation: Board professional.
Member of the Remuneration Committee.
Independent of the company and significant shareholders.	0	9/9	Remuneration Committee: 3/3
Ari Tolppanen	Member of the Board since 2013.
Born 1953, M.Sc. (Eng.).
Main occupation: Senior Partner at CapMan.
Member of the Nomination Committee.
Non-independent Board member.	Class A shares: 2,192,296
Class B shares: 4,832,498	9/9	Nomination Committee: 2/2

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CAPMAN ANNUAL REPORT 2015 / CORPORATE GOVERNANCE STATEMENT

CHIEF EXECUTIVE OFFICER (CEO)

The Board elects the company's CEO. The CEO's service terms and conditions are specified in writing in the CEO's service contract, which is approved by the Board. The CEO manages and supervises the company's business operations according to the Finnish Companies Act and in compliance with the instructions and authorisations issued by the Board. The CEO shall see to it that the accounts of the company are in compliance with the law and that its financial affairs have been arranged in a reliable manner. Generally, the CEO is independently responsible for the operational activities of the company and for day-to-day decisions on business activities and the implementation of these decisions. The CEO appoints the heads of business areas. The Board approves the recruitment of the CEO's immediate subordinates. The CEO cannot be elected as Chairman of the Board.

In 2015, CapMan's CEO was Senior Partner Heikki Westerlund (born 1966, M.Sc. (Econ.)). His shares and share-based rights and those of the corporations over which he exercises control are presented in the table on page 20.

MANAGEMENT GROUP

The main tasks of the Management Group consist of (i) coordination of team strategy, fundraising, resources as well as marketing and brand issues, (ii) implementation of decisions by the Board and the CEO/ Management Group, (iii) giving input by providing information for the decision making and participate in discussion, and (iv) spreading information within the teams as agreed in the Management Group. The composition of the Management Group, responsibilities and the shares and share-based rights of the members of the Management Group and of the corporations over which he/she exercises control are presented in the table on page 20.

MANAGEMENT GROUP IN 2015

Name	Responsibilities	Personal information	Shares and share-based rights of each member and corporations over which he/she exercises control as of 31 Dec 2015
Heikki Westerlund	CEO	Born: 1966
Education: M.Sc. (Econ.)	Class A shares: 1,253,896
Class B shares: 1,718,260
2013A options: 400,000
2013B options: 400,000
2013C options: 400,000
Jerome Bouix	Senior Partner,
Head of Fund Advisory	Born: 1971
Education: M.Sc. (Econ.)	Class A shares: 31,250
2013A options: 200,000
2013B options: 200,000
2013C options: 200,000
Niko Haavisto	CFO	Born: 1972
Education: M. Sc. (Business)	2013A options: 200,000
2013B options: 200,000
2013C options: 200,000
Mika Matikainen	Senior Partner,
Head of CapMan Real Estate	Born: 1975
Education: M. Sc. (Econ),
M.Soc.Sc	Class B shares: 45,000
Hans Christian Dall Nygård	Senior Partner,
Head of CapMan Russia	Born: 1968
Education: M. Sc. (Econ),
MBA, CEFA	Class A shares: 31,250
Markus Sjöholm	Senior Partner,
Head of CapMan Buyout	Born: 1971
Education: M. Sc. (Econ),
LL.M.	Class A shares: 31,250
Class B shares: 250,000

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CAPMAN ANNUAL REPORT 2015 / CORPORATE GOVERNANCE STATEMENT

INTERNAL CONTROL AND RISK MANAGEMENT PERTAINING TO THE FINANCIAL REPORTING

The internal control and risk management pertaining to the financial reporting process is part of CapMan's overall internal control framework. The key roles and responsibilities for internal control and risk management have been defined in the group's internal guidelines which are approved and updated by the management of the company.

CapMan's internal control and risk management concerning financial reporting is designed to provide reasonable assurance concerning the reliability, comprehensiveness and timeliness of the financial reporting and the preparation of financial statements in accordance with applicable laws and regulations, generally accepted accounting principles and other requirements for listed companies.

The aim of CapMan's internal control is to:

• focus on the most relevant risks from a strategic and operational effectiveness point of view
• promote ethical values and good corporate governance and risk management practices
• ensure compliance with laws, regulation, and CapMan's internal policies
• ensure the production of reliable financial reporting to support internal decision-making and service the needs of shareholders

GENERAL DESCRIPTION OF THE FINANCIAL REPORTING PROCESS

CapMan's business model is based on having a local presence in Finland, Sweden and Russia, and operating the organisation across national borders. CapMan's subsidiaries in seven countries report their results on a monthly basis to the parent company. The accounting function is outsourced except for Finland and Sweden.

Financial information is assembled, captured, analysed, and distributed in accordance with existing processes and procedures. The group has a common reporting and consolidation system that facilitates compliance with a set of common control requirements. The group accounting maintains a common chart of accounts that is applied in all units. Subsidiaries submit their figures monthly to the group accounting where the figures are inserted to the group reporting system for consolidation. The reported figures are reviewed in subsidiaries as well as in group accounting. The group accounting also monitors the balance sheet and income statement items by analytically reviewing the figures. The consolidated accounts of CapMan are prepared in compliance with International Financial Reporting Standards (IFRS) as adopted by the EU.

FINANCIAL REPORTING PROCESS CONTROL

The Board has the overall responsibility for the proper arrangement of internal control and risk management over financial reporting. The Board has appointed the Audit Committee to undertake the more specific tasks in relation to financial reporting process control such as monitoring the financial statements reporting process, the supervision of the financial reporting process and monitoring the efficiency of the company's internal control. The Audit Committee also reviews regularly the main features of the internal control and risk management systems pertaining to the financial reporting process.

The management of the group is responsible for the implementation of internal control and risk management processes and for ascertaining their operational effectiveness. The management is also responsible for ensuring that the company's accounting practices comply with laws and regulations and that the company's financial matters are managed in a reliable and consistent manner.

The CEO leads the risk management process by defining and allocating responsibility areas. The CEO has nominated the group's CFO as risk manager to be in charge of coordinating the overall risk management process. The risk manager reports regularly to the Audit Committee on matters concerning internal control and risk management. The management has allocated responsibility for establishing more specific internal control policies and procedures to personnel in charge of different functions. Management and accounting department possess appropriate levels of authority and responsibility to facilitate effective internal control over financial reporting.

RISK ASSESSMENT AND CONTROL ACTIVITIES

CapMan has defined financial reporting objectives in order to identify risks related to the financial reporting process. The risk assessment process is designed to identify financial reporting risks and to determine how these risks should be managed.

The control activities are linked to risk assessment and specific actions are taken to address risks and achieve financial reporting objectives. Financial reporting risks are managed through control activities performed at all levels of the organisation. These activities include guidelines and instructions, approvals, authorisations, verifications, reconciliations, analytical reviews, and segregation of duties.

In the annual strategy process, the identified risks are reviewed, the risk management control activities are audited and effects of potential new identified risks on the strategy are evaluated.

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CAPMAN ANNUAL REPORT 2015 / CORPORATE GOVERNANCE STATEMENT
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INFORMATION AND COMMUNICATION PERTAINING TO THE FINANCIAL REPORTING

CapMan has defined the roles and responsibilities pertaining to financial reporting as an essential part of group's information and communication systems.

In terms of internal control and financial reporting information, CapMan's external and internal information is obtained systematically, and the management is provided with relevant information on the group's activities. Timely, current and accessible information relevant for financial reporting purposes is provided to the appropriate functions, such as the Board, the management group and the monitoring team. All external communications is handled in accordance with the group disclosure policy, which is available on the company's website www.capman.com/capman-group/governance/disclosure.

THE ORGANISATION OF INTERNAL CONTROLS AND MONITORING

To ensure the effectiveness of internal control pertaining to financial reporting, monitoring activities are conducted at all levels of the organisation. Monitoring is performed through ongoing follow-up activities, separate evaluations or a combination of the two. Separate internal audit assignments may be initiated by the Board or management. The scope and frequency of separate evaluations depend primarily on the assessment of risks and the effectiveness of ongoing monitoring procedures. Internal control deficiencies are reported to the management, and serious matters to the Audit Committee and the Board.

The group accounting performs monthly consistency checks of income statement and balance sheet for subsidiaries and business areas. The group accounting team also conducts management fee and cost analysis, quarterly fair value change checks, impairment and cash flow checks as well as control of IFRS changes. The Audit Committee and the Board regularly review group-level financial reports, including comparison of actual figures with prior periods and budgets, other forecasts, monthly cash flow estimates and covenant levels. In addition, the Audit Committee monitors in more detail, among others, the reporting process (including the management's discretionary evaluations), risk management, internal control and audit.

The monitoring team is responsible for collecting the monthly reporting of the funds' portfolio companies, monitoring and forecasting fair value movements and preparing the models for and calculating carried interest income.

OTHER INFORMATION

INSIDER ADMINISTRATION

CapMan complies with the guidelines for insiders issued by NASDAQ Helsinki that came into force on 1 July 2013. CapMan has supplemented the general guidelines with its own set of internal insider guidelines, which are stricter in some areas. The Group's General Counsel is responsible for insider issues.

According to the definition of public insiders specified in the Securities Market Act, CapMan's public insiders are the members of the Board of Directors, the CEO, the members of the Management Group, and the Auditors including the Lead Auditor. In addition, the permanent company-specific insider register includes at least the CEO's Executive Assistant, the CFO, certain members of the Accounting team, the Monitoring team, the Communications team, certain members of the Fund Advisory team, Legal Counsels, Insider Assistant and IT team. The public and company-specific insider registers for CapMan are held by Euroclear Finland Ltd. Separate non-public project-specific insider registers are held for material projects as defined in insider regulations. A list of CapMan's public insiders and their holdings of shares and stock options is updated monthly in the table below.

Employees belonging to the Group's public or company-specific insider registers are not permitted to trade the company shares or stock options without the permission of the person responsible for insider issues. Trading by the personnel is completely forbidden in the 30-day period prior to publication of the company's financial results.

AUDIT FEES

In 2015, the audit fees paid to the auditor amounted to 227,700 euros and the fees related to other non-audit related services amounted to 171,200 euros.

INTERNAL AUDIT

CapMan has not organised internal audit as a separate function.