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Rapala’s Corporate Governance is based on Finnish Companies Act, other regulations concerning publicly listed companies, Rapala’s articles of association and the rules and advice concerning listed companies of the NASDAQ OMX Helsinki. Rapala adheres also to the new Finnish Corporate Governance Code that was approved by the Finnish Securities Market Association in October 2008. The full version of Rapala’s Corporate Governance document is available at the website www.rapala.com.
The Articles of Association provide that the Board consists of no fewer than five and no more than ten members.
A person elected as a member of the Board shall have the qualifications required to perform the Directors’ duties and the possibility to devote sufficient time to the work. The current Board comprises seven members: the Group President & CEO, the Head of Rapala’s Chinese Manufacturing Operations and Hong Kong Office, and five non-executive independent members: Mr. Emmanuel Viellard, Mr. Eero Makkonen, Mr. Jan-Henrik Schauman, Mr. Marc Speeckaert and Mr. Christophe Viellard. In addition, all members of the Board, other than Mr. Emmanuel Viellard, Mr. Christophe Viellard and Marc Speeckaert, are independent of significant shareholders of the Company. Rapala does not follow the Corporate Governance recommendation for the independency of Board members to the extent that the Group President & CEO as well as Head of Group Chinese Manufacturing Operations and Hong Kong Office are members of the Board in addition to their executive positions. Their membership in the Board is based on their significant shareholding in the Company as well as a broad know-how and long-term experience in fishing tackle industry. The Board does not have deputy members.
The members of the Board are elected by the AGM. The term of a member of the Board lasts until the date of the next AGM. The Board elects a Chairman to serve until the date of the next AGM. During the financial year 2008, the Board met 15 times. The average attendance rate at these meetings was 95%.
The duties and responsibilities of the Boards are principally based on the Finnish Companies Act and the Company’s Articles of Association. All significant issues concerning the Company are decided by the Board. These include, but are not limited to, appointing and removing the CEO, approving strategic guidelines, approving the financial statements and the interim reports and approving business plans, annual budgets, stock exchange releases and considerable investments or divestments.The Board has only one Board committee, the Remuneration Committee.
In December 2008, the Board decided that since the Company does not have a separate Audit Committee, the entire Board is responsible for the tasks of an Audit Committee. These include the control of the financial reporting, external accounting, internal control and risk management issues. Of the seven Board members, at least three have the necessary financial expertise to assume these duties. The Board is regularly in contact with the auditors of the Company.
The Remuneration Committee is chaired by the Chairman of the Board, Emmanuel Viellard. Its members are drawn from the Company’s non-executive and independent Directors and currently consist of Jan-Henrik Schauman and Eero Makkonen. Committee members’ appointments run concurrently with a Director’s term as a member of the Board. In 2008, the Committee met four times. The attendance rate at these meetings was 100%.
The Remuneration Committee operates under its charter and its main responsibility is to prepare the decisions of the Board relating to the remuneration of key employees of the Group. The Committee’s other tasks include reviewing and making recommendations with respect to the terms of employment of the CEO and reviewing the remuneration packages of the Executive Committee members.
The Board has not appointed a Nomination Committee due to the size of the Group and the significant shareholding represented by the current members of the Board. Nomination issues are managed by the Board.
The CEO is appointed by the Board. Since 1998, Mr. Jorma Kasslin has acted as the CEO and as a member of the Board.
The CEO also acts as the Group’s President. The duties and responsibilities of the President are set forth in the Finnish Companies Act. The President and CEO are responsible for the day-to-day management of the Group in accordance with the instructions and rules given by the Board. Unless separately authorized by the Board, the CEO shall not take actions, which may be considered unusual or far-reaching in view of the scope and nature of the Company’s business. The CEO is entitled to represent the Company in any matter within his/her authority. The CEO chairs the Executive Committee. The CEO’s service terms and conditions have been specified in writing in a service agreement approved by the Board.
The Executive Committee assists the CEO in planning and managing the operations of the Group. The members of the Executive Committee report to the CEO. The Executive Committee convenes under the leadership of the CEO and is composed of different Executive Committee members depending on the matters at hand.
The Group comprises the parent company and the manufacturing and distribution subsidiaries. The head offices of the Group are located in Helsinki and Brussels. The share of the Company is quoted on the NASDAQ OMX Helsinki.
Responsibility for the management of these subsidiaries rests with each company’s Board, which typically comprises, the Group President, the Group Chief Financial Officer, and the Company Counsel and the subsidiary’s President. In addition, they have management teams of their own. The Group’s business organization can be divided among the manufacturing and distribution activities and, moreover, into six different product lines: Lures, fishing hooks, fishing lines and fishing accessories, as well as third party fishing products and other products.
The Group’s guidelines on insider administration follow the Guidelines for Insiders issued by the NASDAQ OMX Helsinki. Under the Group’s guidelines on insider administration, both permanent and project specific insiders are subject to trading restrictions regarding the Company’s securities. The permanent insiders as well as persons under their custody and the corporations controlled by them are prohibited from trading with the securities three weeks prior to the publication of an annual or quarterly report of the Company. The project specific insiders are prohibited from trading with the securities during their project participation. The Company arranges internal information, training and supervision of insider issues.
Information on persons included in the public insider register can be found on the Company’s website.
The Board monitors the business activities of the Company and is responsible for ensuring that accounting, reporting and asset management are organized appropriately.
The objective of Rapala’s risk management is to support the implementation of the Group’s strategy and execution of business targets. This is done by monitoring and mitigating the related threats and risks while simultaneously identifying and managing opportunities. The Board evaluates the Group’s financial, operational and strategic risk position on a regular basis and establishes related policies and instructions to be implemented and coordinated by Group management.
The CEO and Group Risk Management continuously monitor changes in business environment and coordinate the management of the Group’s strategic, operational and financial risks. Group Risk Management consists of Group CFO, Group Treasurer and Group Risk Manager and convenes on a regular basis. The daily risk management activity is primarily allocated to the management of the business units, who are responsible for managing the local strategic, operational and financial risks.
The President and Controller of each subsidiary meet annually with the local auditor to discuss internal control and statutory compliance issues. The auditors of each subsidiary provide an audit opinion to the auditors of the Company at the conclusion of each annual audit. Each annual audit may also give rise to the preparation of a management letter to the Company outlining their audit findings in greater detail and recommending any improvements in internal controls.
The Group does not have a separate Internal Audit organization due to the size of the Group’s operations. The Group Finance, lead by the CFO, is responsible for regular reviews of financial performance and internal control procedures at Group companies and reporting significant findings to the CEO and the Board. From time to time, management conducts or buys external services, if needed, to conduct specific and limited internal audits. In 2008, three such internal audits were performed. The absence of an in-house internal audit organization is also taken into account in the external audit.
Ernst & Young is responsible for the audit of the majority of Group companies globally. The auditors of the parent company, Ernst & Young Oy, are responsible for instructing and coordinating the audit in all Group companies. The auditor in charge is Mikko Järventausta, CPA. The fact that the Group has no separate internal audit function of its own is reflected in the scope and content of the audit.
In 2008, the Group arranged a competitive bidding for providing audit services for the Group. Based on the results of this process, the Annual General Meeting held in April 2009 elected Ernst & Young as the Group auditor for the financial year 2009.To read the full version of the corporate governance, please see that attached PDF file.
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