PRINT CORPORATE GOVERNANCE
Scanfil plc is a publicly listed company, managed in accordance with the company’s Articles of Association, the Finnish Companies Act and other legislation relating to the company. In addition, the company follows the Finnish Corporate Governance Code issued by the Securities Market Association on 15 June 2010, excluding recommendations, 14 (Number of independent directors), 26 (Independence of the members of the audit committee) and 29 (Members of the nomination committee and appointment of members).
The supreme decision-making bodies are the Annual General Meeting of parent company Scanfil plc, the Board of Directors and the President.
ANNUAL GENERAL MEETING
The shareholders exercise their right of decision in the company’s affairs at the Annual General Meeting, which is the company’s supreme decision-making body. It decides on the matters determined in the Finnish Companies Act and the company’s Articles of Association. The main matters to be decided at the Annual General Meeting are the approval of financial statements, granting a release from liability, deciding on the distribution of profit, election of members of the Board of Directors and auditors and deciding on their remuneration.
The Annual General Meeting is held annually by the end of June. Extraordinary general meetings can be held to discuss special business as the Board of Directors sees fit or when an auditor or a shareholder with a minimum of 1/10 of the shares so demands in writing.
Under the Articles of Association, summons to an Annual General Meeting shall be delivered by publishing the invitation on the company's website or a newspaper decided upon by the Board of Directors or by sending invitations to shareholders by post. In order to participate in the meeting and exercise voting rights, shareholders are required to notify the company in advance of their participation.
THE BOARD OF DIRECTORS AND COMMITTEES
Under the Companies Act, the Board of Directors is responsible for the management of the company and proper organisation of operations. The General Meeting elects the members of the Board of Directors. According to the Articles of Association, Scanfil plc’s Board of Directors shall include a minimum of three and a maximum of seven regular members. The Board of Directors elects a Chairman from among its members. The Board of Directors is responsible for deciding on significant matters relating to business strategy, investments, organisation and finance, as well as supervising the company’s management and operations. The Board of Directors shall also ensure that supervision of the company’s accounts and asset management is properly organised.
Scanfil plc’s Extraordinary General Meeting on 19 April 2012 re-elected Jorma J. Takanen, Tuomo Lähdesmäki and Jarkko Takanen as Members of Board of Directors and Päivi Marttila as a new Board Member. The term of office of the Board expires at the close of the next Annual General Meeting..
The Board of Directors has established two committees: a Nomination Committee and an Audit Committee.
The purpose of the Nomination Committee is to make preparations for the appointment and remuneration of the members of the Board of Directors and, when necessary, find suitable new members for it. The Committee consists of two members: Jorma J. Takanen, who acts as the Chairman, and Tuomo Lähdesmäki.
The entire Board of Directors takes care of the tasks of the Audit Committee, with Jorma J. Takanen as the Chairman. The purpose of the Audit Committee is to supervise the financial reporting process and the reporting of the financial statements and interim reports and to monitor the functionality of the company's internal supervision and risk management. It also evaluates the appropriateness of auditing and prepares the proposal for the appointment of an auditor.
In the evaluation of independence carried out by the Board, two Board members, Päivi Marttila and Tuomo Lähdesmäki, are independent of the company and major shareholders and one Board member (Jarkko Takanen) independent of the company. The board member Jorma J. Takanen is not independent of the company. He is the largest shareholder of the company. For the sake of entrepreneurship and financial risk related to the ownership it is justifiable that he supervises the benefit of the owners as a member of the board and audit committee. In addition, Jorma J. Takanen is the founder, CEO and President during 1976 to 2005, so he has very broad experience in the operation in the company and in the field, which can be used by the entire company and for the shareholders through working on the Board.
In the Nomination Committee, Jorma J. Takanen is the largest shareholder and Tuomo Lähdesmäki is independent of the company. The composition of the Committee is considered to secure the interests of the shareholders in committee work.
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Jorma J. Takanen, Chairman of the Board of Directors Jorma J. Takanen, Member of the Board of Directors since 2012. He is the founder of Sievi Capital plc has acted as President of the company during years 1976 – 2005 and since 1 January 2012. He was the Group CEO of Sievi Capital Group during years 2006 – 2011. Member of the Board of Directors of Sievi Capital plc since 1976. He is a Qualified Chemical Engineer. Not independent of the company and major shareholders. Chairman of Board of Directors: Foundation of Riitta and Jorma J. Takanen, Ultraprint Oy Vice Chairman of the Board of Directors: PPO-Yhtiöt Oy, Pohjanmaan Puhelinosuuskunta PPO Member of Supervisory Board: Varma Mutual Pension Insurance Company Member of Board of Directors: iLoq Oy, IonPhasE Oy, Lännen Tehtaat Oyj Holdings of the permanent insiders |
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Päivi Marttila Päivi Marttila (1961), Member of the Board since 2012, Managing Director of Edina Oy. Päivi Marttila is a founder of QPR Software Oyj and held management positions of the company in Finland and USA during years 1991 – 2001. She acted as Board Member of QPR during years 1991 – 1999. After QPR Marttila was Managing Director of Plamec Oy, a subsidiary of Microcell Group, during years 2002 – 2005. As a result of Microcell acquisition Marttila transferred to Flextronics Group, where she acted in management positions of sales and marketing during years 2005 – 2011. Marttila acted as a Board Member of Flextronics ODM Finland Oy during years 2010 – 2012. Päivi Marttila holds a Master's Degree in Economics. Independent of the company and major shareholders. Holdings of the permanent insiders |
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Tuomo Lähdesmäki Tuomo Lähdesmäki M.Sc. (Eng), MBA (INSEAD), (1957), a member of Board of Directors since 2012. Tuomo Lähdesmäki is Founding Partner and Senior Partner of Boardman Oy since 2002. Prior to that he has worked among others in Elcoteq Network Corporation as President and CEO 1997-2001 and in Leiras Oy as Managing Director 1991-1997. Independent of the company and major shareholders. Chairman of the Board of Directors at Aspocomp Group Oyj, Terästorni Oy, Turun yliopistosäätiö, Liedon Vanhalinna –säätiö, West Welding Oy, Viafin Oy, Reneva Oy, Ovenia Oy, Nesco Invest Oy Member of the Board of Directors at Meconet Oy, Metsä Tissue Oyj, Yliopiston Apteekki, Vaaka Partners Oy Holdings of the permanent insiders |
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Jarkko Takanen Jarkko Takanen (1967) a member of Board of Directors since 2012. He has worked for Sievi Capital Group during 1995 – 2004 among others as Customer Service Manger, Works Manager, Quality Manager, IT Manager and Director of Sourcing and Logistics. As Managing Director of Belgian subsidiary Scanfil N.V. he acted between 1 April 2003 and 30 June 2004. Jarkko Takanen is a Qualified Production Engineer and holds a Commercial College Diploma in Management Accountancy. Independent of the company. |
PRESIDENT
The Board of Directors elects a President for the company. The President’s duties are determined in accordance with the Companies Act. The President is in charge of the company’s operative management in accordance with guidelines and orders given by the Board of Directors. The President shall ensure that the company’s accounting practices comply with legislation and that asset management is organised in a reliable manner. The President is the Chairman of the company’s Management Team.
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Harri Takanen, CEO Scanfil Oyj and Scanfil EMS Oy Harri Takanen (1968) has acted as a President of Sievi Capital plc during 15 May 2007-31 December 2011. Prior to that he worked for Sievi Capital Group from 1994 among others Director of China Operations, Managing Director of Scanfil (Hangzhou) Co., Ltd., Vice President of Technology, Director of Customer Relations, Customer Service Manager and Plant Manager of Sievi Mechanics. Harri Takanen holds Master's Degree in Engineering. |
MANAGEMENT TEAM, SCANFIL EMS OY
The principal duty of the Management Team is to assist the President in the company’s operative management. Other duties include matters relating to long-term planning, planning and monitoring of investments, and allocation of resources to key operations.
The Management Team comprised seven members: Harri Takanen, Marjo Nurkkala, Reijo Pöllä, Markku Kosunen, Petteri Jokitalo, Tomi Takanen and Aki Viljamaa. The President is Chairman of the Management Team.
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Harri Takanen, CEO Scanfil Oyj and Scanfil EMS Oy |
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Reijo Pöllä, Director, Investment Projects Reijo Pöllä (1951) is responsible of investment projects of the company. Previous he has been in similar tasks in Sievi Capital Group during 2006 - 2011 and also as Vice President, Internal Operations during 2001 – 2006 and prior to that he acted as Plant Manager of Sievi electronics plant and Äänekoski plant. Reijo Pöllä is a Qualified IT Engineer. |
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Marjo Nurkkala, Director, Finance Marjo Nurkkala (1959) is company's financial director. Previous she has been Financial Manager of the Sievi Capital Group during 1997 - 2000 and Director of Finance during 2000 - 2011. Prior to that she worked as Financial Manager at Oy M-Filter Ab 1993-1997 and as Office Manager at Osuuskauppa Jokiseutu 1986-1992. Marjo Nurkkala holds a Master's Degree in Economics. |
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Petteri Jokitalo, Director, Sales and Marketing Petteri Jokitalo (1963) is company’s sales and marketing director. Earlier Petteri Jokitalo has worked in Meka Pro Oy as Managing Director during 2007 – 2011, in Scanfil Oyj in management tasks of sales and business development during 2003 – 2007 and in international tasks in Nokia Networks during 1998 – 2003. Petteri Jokitalo holds Master's Degree in Engineering. Holdings of the permanent insiders |
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Tomi Takanen, Director, Materials and Logistics Tomi Takanen (1972) is company's materials and logistics director. Previous he worked in similar tasks in Sievi Capital Group during 2009 – 2011. and and prior to that among others as a Managing Director of Scanfil (Hangzhou) Co., Ltd 2007- 2009, a Key Account Manager 2004 – 2007, a production manager and plant manager of Sievi Electronics plant 2000 – 2004 and different project tasks in Sievi Mechanics plant. Tomi Takanen holds a Bachelor's Degree in Industrial Management. Holdings of the permanent insiders |
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Aki Viljamaa, Director, Operational Excellence Aki Viljamaa (1967) is company's operational excellence director. Previous he has worked in similar tasks in Sievi Capital Group and also as a Quality Manager of Scanfil China Operations and as a Logistic Manager of Scanfil (Hangzhou China) Co., Ltd. Before changing to Sievi Capital Group he has worked in Flextronics during 2002 – 2004 as Quality Manager of Finland Enclosures plants and as a Quality Manager of Flextronics Enclosures (Changzhou China) during 2001-2002. Aki Viljamaa holds Bachelor Degree in Machine Automation. Holdings of the permanent insiders |
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Markku Kosunen, Director, Operations Markku Kosunen (1967) is responsible of company's operations. Previous he has worked in similar tasks in Sievi Capital Group during 2010 – 2011. Before that he has worked in Mecanova Oy as Vice President of Business Development 2005 - 2007, Director of Operations during 2008 - 2010 and in different management positions in mechanics plants of Flextronics and Ojala-yhtymä in Finland during 1993-2005. Holdings of the permanent insiders |
COMPENSATION
Management's salary and bonuses
Board
The Extra Ordinary General Meeting of Scanfl plc held on 19 April 2012 decided that the remuneration of Members of the Board of Directors is EUR 1,300/month. No other benefit is paid to the members of the board on the ground of this task.
President
The salary and other forms of compensation of the President are confirmed by the Board. The President agreement is valid and in force till further notice and both parties have a 6 month period of notice. If the company decides to end the President agreement signed with the President, a separation payment is made equal to a 12 month salary according to the terms of the President agreement. Pension age is according to regulations. The President has a voluntary pension insurance with a pension forecast of about EUR 1,000 a month. The President is covered by a compensation system, which is described in chapter "Other upper management".
Other upper management
The President decides the salaries and compensation of upper management. The Board decides upon the compensation system for management. The members of the Management Team are covered by a compensation system, which is based on both the Group’s performance and on achieving personal targets. The targets to be met are set on annual basis. Half of the bonuses are paid as the company’s shares or cash after paye while the other half is transferred to the person’s bonus bank. Transferred shares are set for conveyance injunction for a period of one year. Any new bonuses received in the subsequent years are added to the bonus bank and half of the total amount is paid as shares or cash after paye. The number of shares granted is calculated using the share’s closing rate on the day the financial statements are released.
RISK MANAGEMENT, INTERNAL CONTROL AND AUDIT
RISK MANAGEMENT
The risk-management of Scanfil Group is based on the risk management policy approved by the Board in which the risks are classified as a strategic and operational risks. The goal is to have a comprehensive and predictive risk management.
Principles of risk management
The goal of Group's risk management is to recognize and analyze the factors that have a negative effect on achieving the company's goals in the short and long term, and to start procedures to minimize risks and to postpone or to remove them completely. Risk-management is part of business processes and management systems that are controlled by the board’s inspection committee.
Strategic risks
Strategic risk management is a part of the board’s strategic process which defines in the business idea, market area and business sector.
Operational risks
The President and the Management Team is responsible for the operational risk management as a part of business process management and development. Risk management is an integrated part of the concern's management, follow-up and reporting system. The main operational risks are customer, material, staff, and financial risk.
Financial risk management
The Group’s treasury operations and financial risks are managed centrally in the parent company based on the principles approved by the Board. Subsidiaries are financed through intercompany loans or local bank loans. The goal is cost-efficient risk management and optimisation of cash flows.
Currency risk
The Group’s currency risks consist of transaction risks related to trade receivables and payables, translation risks related to foreign subsidiaries and financial risks related to exchange rate changes. Currency risks are mainly caused by the changes in the USD/EUR exchange rates. Currency risks can be hedged with forward exchange contracts. The parent company is responsible for all hedging measures. The investments in foreign subsidiaries have not been hedged.
Interest risk
Interest-bearing liabilities and return on financial investments carry an interest rate risk. The changes in interest rate will affect the Group's result.The interest rate risk of loans can be controlled with the proportion between variable rate and fixed-interest loans.
Credit risk
The credit risks of trade receivables are the responsibility of business units. Scanfil EMS Subgroup's current customer base, the evaluation of creditworthiness of new customers, and the active collection of late receivables reduce the risk of credit loss. The company has no significant risk of credit loss.
Liquidity risk
Considering the Scanfil Group's balance sheet structure, the liquidity risk is very small.
INTERNAL CONTROL AND AUDIT
Scanfil Group's internal control is a continuous process aimed at ensuring uninterrupted and profitable operations. Control minimises risks by ensuring that reporting is reliable and that the company adheres to laws and regulations.
The Group’s operating principles and guidelines are derived from shared values, ethical regulations and industry legislation, and form the foundation for Sievi Capital plc's internal control. The guidelines include procedures for core operations, such as drawing up sales and procurement contracts, recruiting and conducting business, and also cover exceptional circumstances.
Group and unit management hold the responsibility for the company’s internal control system. Internal control forms a proactive part of Sievi Capital’s management and administration. The Group’s operational management holds responsibility for developing the control system’s standardised operating processes. The Group’s financial administration supports and coordinates the financial management of the company.
The controls contained in Sievi Capital’s operating processes form the basis for the company’s financial control. They enable the company to quickly identify and react to any deviations from the norm. Management’s monthly reporting is a fundamental part of financial control. It includes rolling forecasting, the result of business operations carried out, and an analysis of the differences between the forecast and actual result. The benchmarks for monthly reporting highlight the requirements for control measures and have been set so as to support the targets of both the Group as a whole and its individual units. Due to the nature of Sievi Capital’s business, the company does not employ budgeting in the traditional sense.
The interpretation and application of accounting standards is carried out centrally by the Group’s financial administration. These standards form the basis for the Group’s reporting and accounting standards and shared recognition principles. In order to ensure reliable financial reporting, core functions are conducted using shared reporting tools and a globally consistent ERP. The use of standardised tools enables continual control and successful change management.
Considering Group's structure and extent company does not have an separate internal audit organization. Company's controller function is responsible for internal auditing and reports regularly to President and the Board of Directors.
INSIDER GUIDELINES
Scanfil plc has insider guidelines that comply with the Guidelines for Insiders of the Helsinki Exchanges. The guidelines prohibit permanent insiders, any persons in their custody and any organisations over which they have control from trading in shares of the company for 21 days prior to the publication of interim reports and financial statements.
Under the Securities Markets Act, insiders include the members of the Board of Directors, the President and the main auditor. In addition to statutory insiders, members of the Management Team, Managing Directors of subsidiaries and persons designated separately by the Board of Directors owing to their duties are defined as permanent insiders. The company can also maintain a project-specific register of insiders.
The secretary of Scanfil plc's Board of Directors observes of compliance with insider guidelines and monitors the duty to declare. The company maintains its register of insiders in the SIRE system of the Euroclear Finland Ltd. The holdings of insiders are on view on the company's web-site in Investors-section.
AUDITOR
The auditing of a limited-liability company is regulated by the Companies Act and the Auditing Act. The Board of Directors bears overall responsibility for the Group's accounts and internal supervision. The President is responsible for the practical organisation of these matters. Under the Articles of Association, Scanfil plc shall have one auditor of firm of auditors as the company auditor, which must be authorizes by the Central Chamber of Commerce. If the selected auditor is not a firm of auditors, one additional deputy auditor shall be elected. The auditor is appointed for an indefinite term.
The company’s auditor is KPMG Oy AB, a company of Authorised Public Accountants, and the main auditor is Authorised Public Accountant Ari Ahti.
COMMUNICATIONS
The company aims to provide the markets with all essential information needed to determine the share price, and to ensure that the company’s management and markets share the same views on the company’s operations and future.
All information that must be published owing to the obligation of a listed company to provide information is posted on the company’s Internet pages in Finnish and English. The company maintains and regularly updates its Internet pages to ensure that investors and shareholders have access to the latest information on the company.
ARTICLES OF ASSOCIATION
1§ Company’s name and registered officeThe name of the company is Scanfil Oyj, in Finnish, and Scanfil plc, in English. The company's registered office is in Sievi, Finland.
2§ Field of businessThe company's line of business is electronics manufacturing services and manufacturing, marketing, trade, import and export of electrotechnical equipment, components and other devices and parts thereof, consulting and design as well as telecommunications and related services. The company may own and possess real estate, shares and securities.
3§ Financial periodThe company's financial period is the calendar year.
4§ Board of DirectorsThe company's administration and proper organisation of operations shall be the responsibility of the Board of Directors, consisting of a minimum of five (3) and a maximum of seven (7) members in accordance with the decision made by the Annual General Meeting. The Board of Directors shall elect a Chairman from among its members. The term of office of the members of the Board of Directors ends at the close of the next Annual General Meeting following their election. The majority's opinion will be the Board's decision. If the votes are even, the Chairman's casting vote shall decide.
5§ Managing DirectorThe company shall have a Managing Director, who is elected by the Board of Directors. The Board of Directors shall decide on the remuneration paid to the Managing Director.
6§ Rights to sign on behalf of the companyThe Managing Director and the Chairman of the Board of Directors each separately, or two members of the Board of Directors jointly, have the right to sign on behalf of the company as well as two persons authorised by the Board of Directors jointly or each jointly with a member of the Board of Directors. The Board of Directors shall decide on granting procuration rights.
7§ AuditorsThe general meeting of shareholders shall elect one (1) auditor of firm of auditors as the company auditor, which must be authorized by the Central Chamber of Commerce. If the selected auditor is not a firm of auditors, one (1) additional deputy auditor shall be elected.
Auditors shall be elected to their duties for an indefinite period.
8§ Invitation to shareholders' meeting and attendance at a shareholders' meetingInvitations to a shareholders' meeting shall be delivered not earlier than three (3) months and not later than three (3) weeks prior to the shareholders' meeting; however, a minimum of nine (9) days prior to the shareholders' meeting reconciliation date as defined in the Companies Act by publishing the invitation on the company's website or a newspaper decided upon by the Board of Directors or by sending the invitation to the shareholders in a letter mailed to the address specified in the company's list of shareholders. In order to attend a shareholders' meeting, shareholders must notify the company of their attendance at the latest on the date specified in the invitation to the meeting, which can be at the earliest ten (10) days before the meeting.
9§ Annual General MeetingThe Annual General Meeting of shareholders shall be held annually on a day determined by the Board of Directors within six (6) months of the end of the accounting period in the same locality as the company's registered office, in Helsinki, in Vantaa or in Oulu.
At the meeting the following shall be decided:
1. ratification of the financial statement, including the consolidated financial statement;
2. allocation of the profit shown on the balance sheet;
3. release from personal liability of the members of the Board of Directors and the Managing Director;
4. election of the members of the Board of Directors and, when necessary, that of the auditor and deputy auditor;
5. the remuneration to be paid to the members of the Board of Directors and to the auditors; and
6. any other issues listed in the invitation.
The company's shares are included in the book-entry securities system.