Governance Information • Mar 15, 2022
Governance Information
Open in ViewerOpens in native device viewer
| 2 Description of the composition and operations of the Board and Board committees 2 2.1 The board 2 2.2 Composition of the Board2 2.3 Description of the Board's operations3 Board committees Audit committee3 2.4 3 Managing Director and Management team 4 4 Internal control and risk management in Reka Industrial Plc 4 4.1 Internal control and risk management framework4 4.2 Internal control and risk management pertaining to the financial reporting process5 4.2.1 Internal control environment 5 4.2.4 Information and communication6 4.2.5 Monitoring6 4.3 Development of internal control and risk management in financial reporting 6 5 Insider administration6 6 Related-party and related-party events 7 7 Salary and incentive report for the financial year 20217 |
1 | Corporate governance statement2 | |
|---|---|---|---|
| 8 | Auditor and fees paid8 |
Corporate Governance Statement of Reka Industrial Plc has been drawn up in accordance with the recommendation 51 of the Finnish Corporate Governance Code. The statement has been issued as a separate report and the Group's Audit Committee has reviewed the statement. Furthermore, the statement is available on Reka Industrial's website at www.rekaindustrial.fi. Finnish Corporate Governance Code itself is publicly available on the website of the Securities Market Association, address www.cgfinland.fi.
KPMG Ltd, as the company's auditor has checked that the statement has been issued and that the description of the main features of the internal control and risk management systems in relation to the financial reporting process is consistent with the financial statements.
Reka Industrial complies with the Finnish Corporate Governance Code.
The Annual General Meeting appoints according to articles of association 3 – 7 members until the end of the next Annual General Meeting. The Annual General Meeting appoints the Chairman and the Vice Chairman. The Board has defined principles regarding the diversity of the Board, according to which the Board should, if possible, include knowledge supporting the company's development and both sexes.
The 2021 Annual General Meeting of Reka Industrial appointed following people to the Board: Markku E. Rentto (Chairman), Ari Järvelä (Vice Chairman), Matti Hyytiäinen, Olli-Heikki Kyllönen ja Leena Saarinen. No deputy members were elected.
The following people have served as Reka Industrial Board members in 2021:
Markku E. Rentto
Ari Järvelä
Matti Hyytiäinen
Olli-Heikki Kyllönen
The Board will evaluate its members' independence of the company according to the Corporate Governance recommendation.
Board's evaluation from 8 April 2021 as follows: According to the Board ́s evaluation, the majority of the Board members Ari Järvelä, Matti Hyytiäinen, Olli-Heikki Kyllönen and Leena Saarinen are independent of the company and the company ́s significant shareholders.
The Board is responsible for proper organization of the administration and operations of the company and considers and decides on all major matters concerning the company's operations. The Board appoints the company's Managing Director. Moreover, the Board of Directors is responsible for the following duties:
During the financial year 2021, the Board convened 11 times. The participation activity of the members was 98 %.
In 2021, the Board concentrated on development of Group strategy, financing, ensuring profit development and sustainability.
The Group's Audit Committee in 2021 consisted of Marjo Matikainen-Kallström (Chairman) and Ari Järvelä until 8 April 2021, Ari Järvelä (Chairman as of April 8, 2021) and Leena Saarinen as of April 8, 2021.
The Board annually appoints the chairman and members of the Audit Committee. The Audit Committee reports to the Board.
The duties of the Audit Committee are:
In 2021, Reka Industrial Plc's Audit Committee focused on operational risks, balance values, financing and liquidity, and test calculation. In guidance to internal audit measures emphasis to securing continuity as well as process and ICT risks management played major role.
During 2021, the Audit Committee convened four times. The participation activity of the members was 100 %.
Jukka Poutanen, Reka Industrial Plc's Managing Director
The Managing Director elected by the Board of Directors is responsible for the day-to-day management of the company according to instructions and orders issued by the Board. The Managing Director must ensure that the company's bookkeeping complies with the law and that financial matters are handled in a reliable manner. The Managing Director is in charge of the company's investment activities.
Reka Industrial's management team consists of Managing Director Jukka Poutanen and CFO Sari Tulander.
Internal control is a process effected by the Board of Directors, management and all levels of personnel. The goal of internal control is to ensure that management has reasonable assurance that the company's operations are effective, efficient, and aligned with strategy; financial reporting and management information is reliable, complete and timely; and the Group is in compliance with applicable laws and regulations.
The roles and responsibilities of Reka Industrial's internal control and risk management framework are defined in the Group's internal control and risk management principles. The principles are based on the components of the common internal control frameworks as well as models for enterprise risk management.
Reka Industrial's governance and internal control framework consists of:
Enterprise risk management in Reka Industrial is a continuous process which is integrated in the Group's monitoring operations. Risk management is designed to ensure that the most business relevant risks are identified, assessed and monitored on a continuous basis.
Reka Industrial Plc's risk management is based on Risk Management Principles set by the Board of Directors. The principles include a description of the Group's risk management framework and responsibilities regarding risk management in Reka Industrial. In addition, the Group's risk management process is described on a more detailed level. The process itself consists of risk identification, assessment, risk management actions, monitoring, and risk reporting.
Internal control and risk management systems in relation to the financial reporting process are a part of Reka Industrial Group's overall internal control and risk management framework. Systems are designed to provide reasonable assurance of the reliability of financial reporting. Reliable financial reporting process ensures that the financial information to the stakeholders is accurate, timely and complete and the financial statements are prepared in accordance with applicable laws and regulations.
The accounts of the Group's subsidiaries are prepared according to the local accounting standards. The financial reporting of the subsidiaries is operating in various systems and the information is consolidated on Group level. Reka Industrial applies IFRS standards in its consolidated interim reports and financial statements and the IFRS adjustments are booked on Group level.
Internal control in Reka Industrial is based on efficient control environment. It sets the tone of an organization, influencing the control consciousness of its people. Control environment factors include the integrity, ethical values and the way management assigns authority and responsibility.
Common working methods and policies form the basis for internal control in financial reporting process. The description of interim report and financial statement process guides the financial reporting in Reka Industrial. The description includes high level definitions of roles, responsibilities, and timetables of the process. In Finland, the companies have a common chart of accounts, as well as several guidelines and listings of the working methods applied in financial reporting process. In addition, the Group is in process of creating a controller's manual to further unite the working methods.
Risk management of financial reporting process is designed to identify financial reporting risks and to determine adequate risk management methods. The risk identification and assessment is a continuous process which is designed to detect the changes occurring in Reka Industrial's business environment, as well as in the Group's operations.
Reka Industrial Plc is developing and implementing the Group's risk management process. The risk identification and assessment will be conducted annually in business units, as well as on Management Group level. The business units will be identifying risks related to the unit's operations and the results of the assessments will be reported to the Management Group. On Management Group level, the risk identification and assessment will be carried out together with strategic planning. The results of the assessment shall be used as material for Reka Industrial's risk reporting in half year financial reports and financial statements releases.
Control activities are the policies and procedures that help Reka Industrial's management to ensure the effectiveness and reliability of the company's operations. Controls also help to ensure that the risks threatening the achievement of the company's objectives are management adequately.
Besides Finland, Reka Industrial operates in Poland, Sweden, Denmark, Estonia, Russia and Norway. The subsidiaries report to the parent company monthly, quarterly, and before closing of the accounts. The consolidated interim reports and financial statements are prepared at Group level.
Business controllers/ persons in charge of business unit finance activities as well the chief accountant of the Group review the figures of half year financial reports and financial statements before reporting them to the Group's Chief Financial Officer. CFO reviews the figures and analyses the reasons for possible deviations in order to assure the reliability of financial reporting.
After the CFO's review, the Audit Committee gives their comments on the figures and the text draft. The revised material is then commented by the Board of Directors, Managing Director, CFO and the auditors. In case the comments are incompatible, The Audit Committee gives the final statement on the matter.
Subsequent to the comment round, the final versions of the figures and the text are drafted and the Board handles them in its meeting. If changes are needed at this stage of the process, the changes will be taken into account in press releases and in printed versions of the reports. The material is published on the same day.
The Group's Audit Committee monitors the financial reporting of interim reports and financial statements by continuously evaluating the level of internal control and risk management pertaining to the reporting process. In addition, the Audit Committee analyses the reported figures and follows up the changes in IFRS standards.
In terms of internal control, external communication refers to authority reporting and financial reporting, whereas internal communication includes information provided to employees through e.g., Intranet and training.
External communication is meant to provide the market with information on Reka Industrial's business operations, finances and the changes happening of the Group's business environment.
The effectiveness of Reka Industrial's internal control is monitored with different activities. e.g., through ongoing follow-up activities, separate evaluations or internal audits.
Internal Audit is subordinated to Audit Committee. Internal Audit encompasses the examination and evaluation of the adequacy and effectiveness of the organization's systems of internal control and the quality of performance in carrying out assigned responsibilities. In practise, the Managing Director is responsible for initiating separate internal assignments. The audits are usually carried out with organization's own resources. The person performing the audit shall be independent of the audited business operation. Additionally, external specialists can be used as an internal auditor if required by the nature of the assignment.
In 2021, the emphasis of the internal audit was on management of process and ICT risks. Random tests were made to the financial process. Essential defects were not found.
Reka Industrial Plc follows the insider guidelines of NASDAQ Helsinki Ltd. The company also has its own insider guidelines.
According to the Finnish Securities Market Act, the Company's permanent insiders include, according to the Finnish Securities Markets Act, the members of the Board of Directors, the President and CEO, the members of the Management Team and the auditor. The company maintains a permanent company-specific insider register in addition to the public insider register and a project-specific insider register. Persons employed by the company who regularly receive insider information on their position or duties constitute the company's permanent company-specific insider. Hearing insiders include persons who work on behalf of a work or other contract and obtain information on the project.
Permanent insiders may not trade in the company's shares between the end of the reporting period and the publication of the interim report. The trading of project-specific insiders in company shares is prohibited until the project expires or is publicized.
The maintenance of Reka Industrial's insider register is under the supervision of the President and CEO.
The Group ́s related parties include the subsidiaries and associated companies, other companies belonging to the Reka Group, Reka Pension Fund, the Group ́s Board of Directors and their close family members as well as management group and their close family members. Also related parties include companies, that have ownership connection through the owner who has significant decision power, or that belong to the related-party companies via the management or board members. Reka Industrial's management group consists of Managing Director and CFO.
Reka Industrial Plc, and therefore also the Reka Industrial Group, belong to the Reka Group. Reka Ltd has a 50.16 percent holding of shares and a 65.36 percent holding of votes.
The company maintains a list of related parties. The Company evaluates and monitors transactions with its related parties to ensure that applicable laws and regulations, including the Corporate Governance Code, are complied with, among other things, to ensure that potential conflicts of interest are taken into account in the Company's decision-making.
This salary and incentive report is made according to the Finnish Corporate Governance Code.
The Board members are paid an annual remuneration according to the Annual General Meeting's decision. The Board members do not have other benefits. The Board members do not have retirement agreements with the company. A part of the annual remuneration and bonus can be paid with company's shares if so decided by the Annual General Meeting. The remuneration paid with shares is always separately announced.
Due to Reka Industrial's ownership structure company's member of the Board of Directors can be member of the Board of Directors in subsidiaries and get compensation. In addition, the Board of Directors can decide of separate remuneration, when member of the Board of Directors is taking additional measures and time for implementing company's important project (financing, acquisition, contract).
The Annual General Meeting 2021:
| Board | Remuneration in shares |
Remuneration in cash | Remuneration total |
|---|---|---|---|
| Markku E. Rentto | 733 | 25,667 | 28,297 |
| Ari Järvelä | 527 | 22,259 | 24,153 |
| Matti Hyytiäinen | 527 | 20,091 | 21,984 |
| Olli-Heikki Kyllönen | 527 | 20,091 | 21,984 |
| Leena Saarinen | 20,625 | 20,625 | |
| Marjo Matikainen-Kallström | 527 | 1,634 | 3,528 |
| Total | 2,841 | 110,367 | 120,571 |
The remuneration of the Board members during the financial year 2021, EUR:
The CEO of Reka Cables Ltd. is also the Managing Director of the Group. The Managing Director has a written Managing Director's agreement with Reka Cables Ltd. According to the Managing Director's agreement the salary consists of a fixed salary and a separate bonus. The pension of the Managing Director is according to the Finnish retirement legislation (TyEL). In addition, Managing Director has a separate medical expenses insurance.
According to the Managing Director's agreement the term of notice is 3 months and the dismissal pay corresponds to 9 months' salary.
During the financial year 2021 the Managing Director's annual salary and other benefits were EUR 413,964 divided as follows:
| Managing Director | Fixed salary | Bonus and incentives | Total |
|---|---|---|---|
| Jukka Poutanen | 268,265 | 145,699 | 413,964 |
The company's auditor is KPMG OY AB, with Jukka Rajala, Authorized Public Accountant, as the principal auditor. In 2021, KPMG Oy Ab was paid EUR 98 (128) thousand in audit fees, EUR 7 (0) thousand in assurance services, EUR 11 (27) thousand in tax services and EUR 12 (5) thousand in other services.
Have a question? We'll get back to you promptly.