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 20 October 2008, excluding recommendations 9 (Number, composition and competence of the directors), 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 an announcement in a newspaper designated 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.
Scanfil plc’s Annual General Meeting was held on 8 April 2010. The meeting addressed the matters that must be submitted to the Annual General Meeting, and authorised the Board of Directors to decide on the acquisition and transfer of the Company’s own shares.
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 Annual 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 five 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. The Board of Directors had a total of 16 meetings in 2009, some of which were telephone meetings. The average attendance rate at Board meetings was 95%.
At the Annual General Meeting held on 8 April 2010, the following Board members were re-elected: Jorma J. Takanen, Asa-Matti Lyytinen, Reijo Pöllä, Jarkko Takanen and Tuomo Lähdesmäki. Jorma J. Takanen was elected as the Chairman of the Board. The term of office of the Board members expires at the close of the first Annual General Meeting following the one at which they were elected. The Nomination Committee has considered the possibility of proposing a suitable female candidate, in accordance with the Corporate Governance Code concerning the gender parity of the board. The Nomination Committee has so far found no suitable candidate who is also familiar with the company's main line of business.
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 Asa-Matti Lyytinen. The Committee convened a total of two times during 2009. The attendance rate of the Committee members was 100%.
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. The entire Board of Directors takes care of the tasks of the Audit Committee, with Jorma J. Takanen as the Chairman. The Committee convened a total of 11 times during 2009. The attendance rate of the Committee members was 100%.
In the evaluation of independence carried out by the Board, two Board members, Asa-Matti Lyytinen and Tuomo Lähdesmäki, are independent of the company. The board members Jorma J. Takanen, Reijo Pöllä and Jarkko Takanen are not independent of the company. They are a part of the six biggest owners of the company. For the sake of entrepreneurship and financial risk related to the ownership it is justifiable that they supervise the benefit of the owners as members of the board and audit committee. In addition, Jorma J. Takanen is the founder, CEO and President during 1976 to 2005, Reijo Pöllä has been working in the company as a developer in electronics manufacturing since 1983, Jarkko Takanen has worked in the company in different duties from 1995 to 2004 so they all have 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 single shareholder and Asa-Matti Lyytinen 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 (1946), who is a Qualified Chemical Engineer, is the founder of Scanfil Oy and has been the company's President & CEO during 1976 - 2005 and Group CEO of Scanfil Group since 1 February 2005. He has also been a member of the Board of Directors since 1976. Chairman of Board of Directors: Foundation of Riitta and Jorma J. Takanen Member of Supervisory Board: Varma Mutual Pension Insurance Company Member of Board of Directors: Pohjanmaan Puhelin Oy, Pohjanmaan Puhelinosuuskunta PPO, iLoq Oy, IonPhasE Oy Holdings of the permanent insiders |
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Asa-Matti Lyytinen, Vice Chairman of the Board of Directors. Asa-Matti Lyytinen, M.Sc. (Econ.), (1950), has been a member of company’s Board of Directors since 2000. He has been a partner in Mecrastor PricewaterhouseCoopers Oy and the CEO of that company between 1992 and 2002. He was Mecrastor Oy's President and CEO between 1990 and 1992 and Deputy CEO between 1988 and 1990. Chairman of Board of Directors: Panphonics Oy, Fermlab Oy, Fuko Pharma Oy Holdings of the permanent insiders |
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Tuomo Lähdesmäki Tuomo Lähdesmäki M.Sc. (Eng), MBA (INSEAD), (1957), has been a member of company’s Board of Directors since 2005. 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. Chairman of the Board of Directors at Aspocomp Group Oyj, Terästorni Oy, Turun yliopistosäätiö, West Welding Oy, Viafin Oy, Reneva Oy Member of the Board of Directors at Citycon Oyj, Meconet Oy, Metsä Tissue Oyj and Yliopiston Apteekki. Holdings of the permanent insiders |
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Reijo Pöllä
Reijo Pöllä (1951) has been a member of company’s Board of Directors since 1983. Since May 2006 he has been responsible for the most important investment projects of the Group. He has been the company's Vice President, Internal Operations during 2001 - 2006. 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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Jarkko Takanen Jarkko Takanen (1967) has been a member of company’s Board of Directors 1997 – 2003 and from 2005. He has worked for Scanfil plc 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. |
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, President Scanfil Oyj and Scanfil EMS Oy Harri Takanen (1968) has acted as a President of Scanfil plc since 15 May 2007. Prior to that he has been 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, Lasse Pylväs, Keijo Anttila, Tomi Takanen and Aki Viljamaa. The President is Chairman of the Management Team.
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Harri Takanen, President Scanfil Oyj and Scanfil EMS Oy Harri Takanen (1968) has acted as a President of Scanfil plc since 15 May 2007. Prior to that he has been 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. |
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Lasse Pylväs, Vice President, Operations Lasse Pylväs (1972) has worked for the company since 1994. He has acted in his present position since 1 April 2007. Previously he has worked in Scanfil among others as a General Manager of Scanfil (Suzhou) Co., Ltd, as a Director of Key Account Management and as an Operative Director. Lasse Pylväs is a Mechanic of Information Technology. |
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Reijo Pöllä, Director, Investment Projects Reijo Pöllä (1951) has worked for the company since 1977. He has been the company's Director of Investment Projects since 1 May 2006. He has acted previously as Director of Internal Operations, 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) has been Financial Manager of the company since 1997 and Director of Finance since 2000. Prior to that she worked as Financial Manager at Oy M-Filter Ab 1993-1997 and as Office Manger at Osuuskauppa Jokiseutu 1986-1992. Marjo Nurkkala holds a Master's Degree in Economics. |
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Keijo Anttila, Sales Director Keijo Anttila (1966) joined the company in 2008. Before changing to Scanfil he has worked in Mecanova Oy during 2001 – 2007 in different positions among others as Sales and Marketing Director and in Electronet Oy during 1999 – 2001 among others as Marketing Manager. Keijo Anttila holds the Masters Degree in Engineering. Holdings of the permanent insiders |
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Tomi Takanen, Director, Materials and Logistics Tomi Takanen (1972) has worked for Scanfil plc since 1997. He has acted in his present position since 1 March 2009. Prios to that he has worked among others as a Managing Director of Scanfil (Hangzhou) Co., Ltd he 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, Quality and Process Development Aki Viljamaa (1967) has worked for the company since 2004. He has acted in his present position since 1 January 2009. Previously he has worked in Scanfil among others as a Quality Manager of Scanfil China Operations and as a Logistic Manager of Scanfil (Hangzhou China) Co., Ltd. Before changing to Scanfil 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 |
COMPENSATION
Management's salary and bonuses
Board
The annual general meeting decides on the salary and bonuses of the Board. It was decided in the annual general meeting on the 8 April 2010 that the board member’s salary is 2,000 euros per month and salary of board members working for the company, others than Chairman of the Board, is 500 euros per month and the salary for chairman of the board is 1,500 euros per 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 share-based scheme, which is described in chapter "Other upper management". According to the financial results of 2009 1,075 shares are transferred to the President. No other benefit is paid to the President.
The company will report the salaries and other compensation paid to the President during the fiscal year in the Annual Report in notes to consolidated financial statements in note 34.
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 share-based scheme, 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 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 after paye. The number of shares granted is calculated using the share’s closing rate on the day the financial statements are released. According to the financial results of 2009 3,447 company’s shares are transferred to the management of the company.
RISK MANAGEMENT, INTERNAL CONTROL AND AUDIT
RISK MANAGEMENT
The risk-management of Scanfil Oyj is based on the risk management policy approved by the Board in which it 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 Scanfil Oyj’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 financial matters and financial risk management is centered and managed at the parent company. The financing of the subsidiaries and financial risk management is handled with internal loans. The goal is to have cost effective risk-management and the optimization of cash flow.
Currency risk
The Group's currency risks are formed by the transaction risks associated with accounts receivable and accounts payable and the translation risk related to the subsidiaries abroad. Currency risk is mainly caused by the changes in relation of USD/EUR. Currency futures can be used to protect from transaction risk. The parent company is responsible for the level of protection. Investments in foreign subsidiaries are not protected.
Interest risk
Interest risk is included in the interest of debt on the balance sheet. Interest rate swap is used for controlling the risks caused by changes in interest.
Credit risk
Each business unit is responsible for the credit risk of the accounts receivable. The Group's current customer base, the evaluation of credit of new customers, and the active collection of late receivables reduce the risk of credit loss. . Investments are allowed only for securities with no liquidity risk and in which the other party has a good credit rating.
Liquidity risk
Taking that balance sheet structure of the Scanfil Group into consideration, the liquidity risk is very low. The finance operations of the parent company is responsible for the liquidity of the Group. Effective cash management supports in part the management of liquidity.
INTERNAL CONTROL AND AUDIT
Scanfil’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 Scanfil’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 Scanfil’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 Scanfil’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 Scanfil’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’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 to two regular auditors that must be auditors or auditing companies approved by the Central Chamber of Commerce. One or two deputy auditors may also be elected. The auditors are 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.
The company will report the compensation paid to the auditor during the fiscal year in the Annual Report in notes to consolidated financial statements in note six.
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 office
The 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 fields of business are investment and industrial activities. The company can act as a parent company of the Group and own, manage and sell securities, shares and facilities.
3§ 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 (5) 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. In the event of a tied vote, the Chairman shall be selected by drawing lots.
The term of office of members of the Board of Directors shall expire at the close of the first Annual General Meeting following the one at which they were elected.
4§ Managing DirectorThe company shall have a Managing Director, who is elected by the Board of Directors.
5§ AuditorsThe company shall have between one and two (1-2) regular auditors, who shall be auditors or auditing firms certified by the Central Chamber of Commerce. In addition, between one and two (1-2) deputy auditors can be appointed. If only one regular auditor is appointed, one deputy auditor must be appointed. When an auditing firm certified by the Central Chamber of Commerce is appointed to perform auditing, however, a deputy auditor shall not be appointed.
Auditors shall be elected to their duties for an indefinite period.
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§ Invitation to shareholders’ meeting and attendance at a shareholders’ meetingAn invitation to a shareholders' meeting must be delivered at the earliest three (3) months and at the latest three (3) weeks before the meeting, however not later than nine (9) days before the matching date for the shareholders' meeting, by publishing the invitation on the company's website or a newspaper published in Helsinki selected by the Board of Directors or by sending letters to shareholders by ordinary post at the addresses recorded in the shareholders' register.
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.
8§ 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 in the balance sheet;
(3) release from personal liability for 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,
(6) any other issues listed in the invitation.
The company's shares are included in the book-entry securities system.