Administrative iInstructions will be revised and updated in line with the Market Abuse Regulations (MAR), effective as of July 3, 2016.
On June 21, 2004, Raute Corporation's Board of Directors issued Administrative Instructions for the company. They comprise the Charter for the decision-making bodies; instructions on the division of responsibilities among the Board of Directors, the President and CEO, and the Executive Board; as well as guidelines for organizing internal control and risk management to complement the provisions of the Companies Act and Raute's Articles of Association. The Administrative Instructions are reviewed annually.
Raute Corporation ("the Company") has prepared this Charter for decision making bodies, accompanied by instructions both on the division of responsibilities among the Board of Directors, the President and CEO, and the Executive Board and on the organization of risk management ("the Charter"), to complement the provisions of the Companies Act and the Company's articles of association.
The Corporate Governance Recommendation for Listed Companies published on December 2, 2003 by NASDAQ OMX Helsinki Ltd , the Central Chamber of Commerce, and the Confederation of Finnish Industry and Employers ("the Recommendation") constitutes the minimum-level instructions followed in the Company.
The Company's Board of Directors approved this Charter on 5 June 2008. The Charter will be effective until further notice. When necessary, the Board of Directors may revise the Charter and approve any necessary amendments.
A copy of the Charter is distributed to members of the Board, the secretary to the Board, the President and CEO, the Company's Executive Board, and the Company auditor. Relevant sections of the Charter will be published on the Company's website.
2 ANNUAL GENERAL MEETING
The Company's shares are divided into ordinary shares (series K) and A shares (series A). The difference between the series is that a series K share entitles the holder to twenty (20) votes and a series A share to one (1) vote at the Annual General Meeting. A Series K share can be converted to a series A share in compliance with section 3 of Raute Corporation's Articles of Association. If a series K share is transferred to a new owner, other shareholders of series K shares have the right to redeem the share according to the conditions of Article 4 of the Company's Articles of Association
Shareholders exercise their decision-making powers in the Annual General Meeting, which is the Company's highest decision-making body. According to the Company's articles of association, the Annual General Meeting must be held not less than six months from the end of the fiscal year. The calendar year serves as the Company's fiscal year. The Company aims to hold its Annual General Meeting by the end of March every year. Extraordinary shareholders' meetings will be held whenever decision-making so requires.
The Companies Act and the Company's articles of association list the measures to be taken in an Annual General Meeting, which include:
a) Approving the financial statements
b) Deciding on the handling of profit or loss
c) Deciding whether the Board of Directors and the President and CEO should be released from liability
d) Deciding on the remuneration payable to the Board of Directors and the auditors
e) Deciding on the number of Board members
f) Electing the Chairman, the Vice Chairman, and the members of the Board of Directors, and the Company auditors
g) Deciding on the newspapers in which the Summons to a General Meeting will be published
h) Share issues and share issue authorizations
i) The purchase and surrender of own shares
j) Amendments to the articles of association
3 BOARD OF DIRECTORS
3.1 Responsibilities of the Board of Directors
According to the Companies Act, the Board of Directors is responsible for the appropriate organization of corporate governance.
The Board must also ensure that the supervision of accounting and asset management is duly organized. The key task of the Board of Directors is to manage Company operations in such a way as to ensure meeting the long-term return on investment targets while taking all the different stakeholder groups into consideration.
In addition to its statutory and other regulatory duties, the Board of Directors is responsible for the following:
a) Deciding and annually revising the Charter of the Board of Directors
b) Deciding the Raute Group's values and supervising their translation into practice
c) Deciding the Raute Group's key strategy and supervising its implementation and updating
d) Deciding on the dividend distribution policy
e) Making a proposal at the Annual General Meeting concerning the distribution of dividends, the amount of dividends, and the payment date
f) Deciding the annual strategy-based business plan and budget, and supervising their implementation
g) Reviewing and evaluating regularly the profitability of the business and deciding on resource allocation
h) Deciding total annual investments as well as individual investments that are not included in said total
i) Deciding all investments included in the budget with a value in excess of EUR 100,000
j) Deciding all corporate acquisitions and divestments
k) Deciding the general organizational structure of the Raute Group
l) Appointing and dismissing the Company's President and CEO and deciding the terms of his or her employment contract
m) Preparing and deciding the annual remuneration payable to the President and CEO
n) Approving appointments and dismissals of Executive Board members
o) Approving the annual remuneration payable to Board members
p) Approving interim reports, financial statements, and the annual report
q) Meeting with the external auditor at least once a year and accepting the annual audit plan
r) Approving the annual program for internal audits, risk management, and reporting
s) Preparing proposals for the shareholders' meetings
t) Evaluating the work of the President and CEO, members of the Board, and Chairman of the Board annually
u) Deciding key operational policies such as the remuneration system and the risk management policy
v) Discussing other strategic and operational issues raised by the Chairman of the Board or the President and CEO
3.2 Election And Composition of the Board of Directors
According to the Company's articles of association, the Board of Directors shall comprise no fewer than five and no more than seven members. The Chairman, the Vice Chairman, and members are elected for a term of office starting from the Annual General Meeting at which they were elected and ending at the following Annual General Meeting. Members of the Board may be elected and dismissed only by a decision of the Annual General Meeting.
The majority of the Board members must be independent of the Company. In addition, at least two of the members representing this majority must be independent of the Company's major shareholders. The Board of Directors must evaluate the independence of its members and, as instructed in the Recommendation, report which members they consider independent. When dealing with the Company in a capacity other than as a Board member, a member is always required to act in a manner similar to that any outsider would follow in the same situation. Board members must disqualify themselves from discussing a matter as soon as any grounds for disqualification come to their attention.
It is in Company and shareholder interests that the elected Board members have experience from various fields, such as the Company's line of business, the associated technologies, business management, and international business.
Decisions regarding remuneration of the Board of Directors are made at the Annual General Meeting. It is Company policy that no remuneration be paid to Board members who are employed by the Company.
3.3 Board Meetings And Decision-making
The Board of Directors convenes regularly on an average ten times during the term of office. Additional meetings can be held, if necessary, with a teleconference.
The President and CEO prepares a draft agenda for the Board meetings and delivers it to the Chairman of the Board. The two then prepare the final agenda together.
Material for Board meetings will be distributed to Board members in advance to ensure that the members have sufficient time to study it.
The President and CEO and the CFO regularly attend Board meetings. At its own discretion, the Board may decide to convene without them.
The presence of more than half of the Board members fulfils the requirement for a quorum. In addition, either the Chairman or Vice Chairman of the Board has to be present. Decisions are made based on simple majority. If the votes are distributed evenly, the Chairman's vote will decide the matter.
The Chairman of the Board must ensure that minutes are kept at the Board meetings.
3.4 Board Committees
The Board of Directors has decided that the Company shall not have a separate Supervisory Committee; instead, the Board will be responsible for the work such a committee would do. In this capacity, the Board shall meet with the external auditor at least once a year without the presence of any members of management employed by the Company. In its capacity as a Supervisory Committee, the Board has among its duties reviewing the Company's financial statements and interim reports, monitoring the internal supervision system, and seeing to internal and external audits.
For preparation concerning significant matters, the Board appoints a working committee from among its members, with a Chairman, Vice Chairman, and another Board member.
Furthermore, the Board of Directors annually elects an Appointments Committee, whose task is to prepare a proposal concerning Board members for the Annual General Meeting. Members of the Appointments Committee are either Board members or represent the major shareholders.
The Board may also establish separate committees if necessary.
4 PRESIDENT AND CEO
The Board of Directors appoints the President and CEO, who is responsible for managing Raute's business in accordance with the Companies Act and in compliance with the Board's decisions and instructions. The President and CEO provides reports to the Board of Directors on developments in the business environment; these address clients, the competitive and market situation, Raute's financial position, and other significant issues. The President and CEO is responsible for making sure that accounting meets legal requirements and that the Company's assets are managed reliably. The President and CEO also acts as the Chairman of Raute's Executive Board and as the Chairman of the subsidiaries' Boards of Directors, unless the Board in individual cases decides otherwise.
5 MANAGEMENT TEAM
5.1 Responsibilities of the Executive Board
The Executive Board prepares the Company strategy and is responsible for its implementation. Members are responsible for the day-to-day management of the Company in their respective areas of responsibility.
5.2 Composition of the Executive Board
The Executive Board consists of the President and CEO and a variable number of members appointed by the Board of Directors. The President and CEO acts as the Chairman of the Executive Board.
The objective is for the Executive Board to make a unanimous decision on the matters at hand. The President and CEO or the Board of Directors approves the Executive Board's decisions.
6 PERFORMANCE EVALUATION FOR THE BOARD OF DIRECTORS AND THE PRESIDENT AND CEO
The Board of Directors performs an annual evaluation of the performance of the President and CEO using a specific evaluation form approved by the Board. In addition, the Board conducts an annual performance evaluation of its own performance in its entirety.
7 REMUNERATION SYSTEMS
The Company's remuneration system is divided into three components – namely, the base salary, a profit- and performance-related bonus system, and a long-term incentive scheme. Different variations of the above three elements are applied, depending on the employee's position. The remuneration payable to an individual employee is always approved by the supervisor of the employee's supervisor. Remuneration payable to those employees reporting directly to the President and CEO who are not members of the Executive Board is approved by the Chairman of the Board.
When acting as a member of a Raute Group subsidiary's Board of Directors, an employee is not entitled to separate remuneration for the position.
The Board of Directors prepares a proposal on and decides the President and CEO's annual remuneration, and approves the remuneration payable to members of the Executive Board based on the President and CEO's proposal.
8 INTERNAL CONTROL, RISK MANAGEMENT, AND INTERNAL AUDITS
The Board of Directors and the President and CEO determine the policies serving as the guidelines for the Company's operations. According to the internal control procedure, the Company's Executive Board must ensure compliance with these policies.
The key risks associated with the Company's international business are the financing, product liability, and contractual risks. The Company has a risk management policy, which has been approved by the Board of Directors.
The Company has no separate organization for internal audits. This is taken into account in planning financial audit and audits based on quality control systems. The Board of Directors approves the annual external and internal audit plans.
According to the articles of association, the Company must elect two regular auditors and their deputies. However, the shareholders have exercised their legal right to choose a public accountant company instead of two deputy auditors. At its discretion, the Company's Board of Directors requests bids from different public accountant companies at regular intervals for performing an audit of the Raute Group. The Board of Directors supervises the content and implementation of the audit plan.
10 INSIDER ISSUES
The Company follows the insider instructions according to standard 5.3 of Financial Supervision Authority and Guidelines for Insiders provided by OMX Nordic Exchange Helsinki Oy. The Company also follows insider instructions approved by the Board of Directors. Persons subject to the disclosure requirement are the Board of Directors, President and CEO, and his or her deputy, auditors and their deputy, and members of the Executive Board. Company-specific insiders are those Group employees and other persons working for the company on the basis of some other contract, who, owing to their position or duties, handle regularly non-disclosed information affecting the share price. In addition to the people mentioned above, the Company maintains a project register specifying project-specific insiders. The Chief Financial Officer is responsible for the Company's insider issues.
Updated on 12 February 2013