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COMPOSITION AND ELECTION OF THE BOARD
Under the Articles of Association, Consti’s Board of Directors has a minimum of three (3) and maximum of nine (9) members. The term of office of a member of the Board of Directors shall commence from the Annual General Meeting at which the Director was elected and end at the close of the next Annual General Meeting. The Board elects a Chairman from among its members.
A first-time candidate for membership of the Board must participate in the General Meeting at which the election takes place unless there are good reasons for his/her absence.
The Board of Directors assesses the independence of its members. The majority of the members of the Board of Directors shall be independent of the Company. At least two members of the Board of Directors who are independent of the Company shall also be independent of the significant shareholders of the Company.
A proposal for the composition of the Board of Directors is prepared by the Nomination and Remuneration Committee established annually by the Board of Directors. The Company’s diversity criteria are taken into consideration when establishing the proposal for the composition of the Board of Directors.
Requirements set by operations as well as the Company’s development stage are taken into consideration in the composition of the Board of Directors. As stated in the Corporate Governance Code, the members of the Board of Directors must have required competence for the position and sufficient time to take care of Board responsibilities. The number of members of the Board of Directors and the Board’s composition must enable efficiently taking care of the Board’s responsibilities. As recommended by the Corporate Governance Code, there shall be balanced representation of women and men in the Board.
The diversity of the Board is based on Consti’s business strategy and future needs. Diversity criteria include the members’ experience in the Company’s strategic business areas, the cultures that the Company operates in, as well as education, age and gender.
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DUTIES OF THE BOARD OF DIRECTORS
Under the Finnish Limited Liability Companies Act, it is the task of the Board of Directors to attend to Consti’s administration and organization of its operations. The Board of Directors must also ensure that there is due monitoring of bookkeeping and financial administration. The Board of Directors monitors Consti’s financial development from monthly executive reports, other information presented by the management and, where necessary, by other means.
The Board of Directors makes decisions on strategically or financially important investments, acquisitions, commitments and other significant issues for the Group’s business. The Board of Directors also decides on principles by which the management may make decisions on investments, acquisitions and disposals, contract agreements and guarantees.
The Board of Directors
- confirms its own Rules of Procedure;
- confirms the Company’s operating model and monitors how it is carried out;
- approves the Company’s strategy, the related goals, including sustainability goals, and monitors how they are carried out;
- defines the Company’s dividend policy;
- appoints and discharges from their duties the CEO and the members of the Management Team and decides on their terms of employment and incentive schemes;
- confirms the Group’s organizational structure;
- considers and approves interim reports, the report of the Board of Directors (including the sustainability report, should one be prepared), the annual financial statements, and the Corporate Governance Statement;
- approves annually a business plan and budget based on the strategy and monitors how they are carried out;
- sets personal goals for the CEO annually and assesses how they are achieved as well as approves the targets for the members of the Management Team and assesses how those are achieved;
- defines the operating principles for the risk management system and internal control;
- monitors management succession planning;
- prepares draft resolutions as necessary for the General Meeting of Shareholders concerning remuneration schemes for management and personnel and approves the Remuneration Policy and Remuneration Report;
- decides on donations within the framework of the Finnish Companies Act;
- considers other matters that the Chairman of the Board or CEO has submitted on the agenda. Members of the Board are also entitled to bring matters before the Board by informing the Chairman of this.
The Chairman
- makes sure that the meetings marked in the Board’s schedule are convened;
- convenes extra meetings of the Board if necessary;
- approves the agenda and the persons presenting items on the agenda as well as the invitation of other necessary people to the meetings;
- ensures that the meeting minutes correspond to the proceedings of the meeting;
- keeps in contact as necessary with members of the Board between meetings;
- keeps in contact as necessary with the Company’s owners and other stakeholders;
- is responsible for planning the activities of the Board and for assessing these;
- acts as the CEO’s administrative supervisor.
When the Chairman is unable to carry out his/her duties, his/her duties shall be carried out by another person separately designated by the Board.
The Board of Directors constitutes a quorum when more than half of the members of the Board of Directors are present. Decisions are made with a simple majority. In the event of a tie, the Chairman’s vote is decisive.
The meetings of the Board of Directors may be held at the Company’s registered office in Helsinki or at another location determined by the Board of Directors or the person convening the meeting. Where necessary, meetings may also be held as virtual meetings, or matters may be decided without holding an actual meeting by written resolution signed by all members of the Board of Directors.
A member of the Board of Directors may not participate in the consideration of any matter concerning an agreement between himself/herself and the Company. Neither may he/she take part in the consideration of any matter concerning an agreement between the Company and a third party, where he/she is likely to have a substantial interest in the matter and when this might be at odds with the interests of the Company.
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BOARD MEETINGS
The Board of Directors shall convene in accordance with a previously agreed schedule, normally 7–8 times a year and shall consider the matters set out in the separately agreed annual calendar in its meetings. When necessary, the Board of Directors can hold additional meetings, which may be held as virtual meetings, or matters may be decided without holding an actual meeting by means of decision minutes signed by all members of the Board of Directors. Minutes shall be kept at the meetings and numbered sequentially for each financial year.
The notice of a Board meeting shall be delivered to all members of the Board of Directors in the most appropriate manner. The notice shall specify the matters to be considered at the meeting. The members of the Board of Directors shall be provided with materials on the matters to be considered at the meeting in good time before the meeting, so that they are able to familiarise themselves with the matters thoroughly and make informed decisions. Matters not included on the agenda may be taken up for consideration on the initiative of a member of the Board of Directors or the CEO. Decisions on such other matters may be made only if all members of the Board of Directors are present at the meeting or if the absent members subsequently approve the decisions made, for example by signing the minutes.
The Audit Committee shall maintain regular contact with the Company’s auditor. In addition, the Board of Directors or the Audit Committee shall meet with the Company’s auditor at least once a year, where necessary without the presence of the Company’s operative management.
The Board of Directors shall seek to make unanimous decisions. In the event of disagreement, the matter shall be decided by vote. The decision of the Board of Directors shall be the opinion supported by a majority of the members of the Board of Directors present at the meeting. In the event of a tie, the proposal supported by the Chairman of the meeting shall become the decision, except in elections of the Chairman, where the decision shall be made by drawing lots.
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THE BOARD’S COMMITTEES
The Board of Directors has set up a Nomination and Remuneration Committee and an Audit Committee to improve the efficiency of board work. The Board of Directors elects annually the members and the Chairpersons of the Committees from among its members and confirms the Committees’ written charters. The Committees have no independent decision-making power; they prepare matters to be presented to the Board, with the exception of the proposal for composition and remuneration for the Board of Directors, which the Nomination and Remuneration Committee directly presents to the Annual General Meeting. The Board of Directors is responsible for the performance of the duties assigned to the committees.
If necessary, the Board may establish committees and working groups from among its members to prepare other important decisions.
The Nomination and Remuneration Committee
The Nomination and Remuneration Committee shall prepare the matters related to the appointment and remuneration of the members of the Board of Directors as well as the matters related to the remuneration and appointment of CEO and other executives and remuneration schemes for other personnel.
The Nomination and Remuneration Committee is composed of three members, one of whom is appointed as Chairperson of the Nomination and Remuneration Committee. The majority of the committee members must be independent of the Company.
The duties of the Nomination and Remuneration Committee include
- preparation of the proposal for the appointment of members of the Board of Directors to be presented to the General Meeting;
- preparation of the proposal to the General Meeting on matters pertaining to the remuneration of members of the Board of Directors;
- identify successor candidates for members of the Board of Directors;
- presentation of the proposal for the appointment of members of the Board of Directors to the General Meeting;
- preparation of matters pertaining to the appointment of the CEO, any deputy CEO, and other executives as well as the identification of their possible successors;
- preparation of matters pertaining to the remuneration and other financial benefits of the CEO, any deputy CEO and other executives;
- preparation of matters pertaining to the Company’s remuneration schemes;
- evaluation of the remuneration of the CEO, any deputy CEO and other executives as well as seeing to it that the remuneration schemes are appropriate;
- answering questions related to the Remuneration Policy and Remuneration Report at the General Meeting.
The Nomination and Remuneration Committee shall also prepare the independence assessments of the members of the Board of Directors to be carried out in connection with the presentation of the proposal concerning the members of the Board of Directors and annually. The Committee shall also prepare the Company’s diversity policy. In addition to the tasks listed above, the Nomination and Remuneration Committee may have other duties.
The committee convenes at least three times a year in order to prepare the proposals to be presented to the Annual General Meeting and as necessary.
The CEO will participate in the Committee meetings except when matters regarding him/her or the appointment of the members of the Board of Directors are discussed.
The committee shall report on its work to the Board.
Remuneration paid for the committee work shall be resolved by the General Meeting of shareholders.
The Audit Committee
The Audit Committee assists the Board with its duties related to financial reporting and monitoring as well as the preparation of matters concerning audit and possible sustainability reporting. The Audit Committee also assists the Board with the preparation of matters related to financing, internal control and audit, and risk management.
The Audit Committee is composed of three members, one of whom is appointed as Chairperson of the committee. However, the Committee may consist of only two members if the Board deems this appropriate, taking into account the structure and size of the Board.
The members of the Committee must possess the expertise and experience required by the Committee’s area of responsibility and relevant legislation, and at least one member must have expertise in accounting or auditing. The majority of the Audit Committee members must be independent of the Company, and at least one member must be independent of the Company’s significant shareholders. The CEO and the members of the Management Team may not be elected as members of the Audit Committee.
The duties of the Audit Committee include, among other things:
Financial reporting processes
- monitoring and assessing the financial reporting processes, including the preparation of interim, half-year and financial statements reports;
- handling and assessing, before approval by the Board of Directors, the financial statements, Board of Directors’ report and the included sustainability report (if prepared and assured), as well as the financial statement, half-year and interim reports;
- reviewing the accounting policies applied in the preparation of the financial statements and the changes in them;
- preparing the proposals for the resolutions on the election and remuneration of the auditor;
- monitoring the statutory audit of the financial statements and the consolidated financial statements;
- reviewing the reports prepared by the auditor and maintaining the necessary contact with the auditor;
- monitoring and assessing the independence of the auditor and, in particular, the non-audit services provided by the auditor;
Sustainability reporting and its assurance
The duties listed below apply in a situation where the Company prepares a formal sustainability report and such report is assured.
- preparing the proposals for resolutions on the election and remuneration of the sustainability reporting assurer;
- monitoring and assessing the sustainability reporting process and the assurance of sustainability reporting and its implementation;
- reviewing the reports prepared by the sustainability reporting assurer and maintaining the necessary contact with the sustainability reporting assurer;
- monitoring and assessing the independence of the sustainability reporting assurer and, in particular, the non-sustainability reporting assurance services provided by the sustainability reporting assurer;
Risk management and internal control
- monitoring and assessing the Company’s financial and funding position;
- discussing significant financial risks and the measures to monitor, manage and report on them;
- monitoring and assessing the effectiveness of the Company’s internal control and audit as well as the risk management system;
- reviewing the internal audit’s operating guidelines, plans and reports and assessing the performance of internal audit, provided that the Company has a separate internal audit function.
- monitoring and assessing the principles and processes for related-party transactions;
- monitoring and assessing compliance with laws and regulations as well as the Company’s corporate governance principles and policies; and
- reviewing the Company’s annual Corporate Governance Statement.
The Audit Committee may also take up any other matter or duty that it may need to be familiar with in order to oversee the internal control or audit, financial reporting, possible sustainability reporting or risk management as well as compliance with laws and regulations.
The Audit Committee convenes at least four times a year in connection with the preparation of the interim, half-year and financial statements reports. The CFO and, where necessary, the CEO attend the meetings of the Audit Committee.
The Committee reports on its work to the Board of Directors.
Remuneration paid for the committee work shall be resolved by the General Meeting of shareholders.