CORPORATE GOVERNANCE statement 2015
This Corporate Governance Statement has been reviewed at the meeting of the Audit Committee of Kesko Corporation’s Board of Directors on 1 February 2016.
This is the separate Corporate Governance Statement, referred to in Recommendation 54 of the Finnish Corporate Governance Code issued by the Securities Market Association effective on 1 October 2010, which refers to the Report by the Board of Directors. This statement and the other information to be disclosed in accordance with the Corporate Governance Code, and the Company’s financial statements, the Report by the Board of Directors and the Auditor’s Report are available on Kesko’s website at http://www.kesko.fi/en/investor/corporate-governance/.
Regulations and Corporate Governance Code observed by Kesko
Kesko Corporation (“Kesko” or “the Company”) is a Finnish limited liability company in which the duties and responsibilities of management bodies are defined according to Finnish laws. Kesko Group comprises the parent company, Kesko, and its subsidiaries. The Company is domiciled in Helsinki.
Kesko’s decision-making and corporate governance are guided by Kesko’s values and responsible operating practices. Decision-making and corporate governance are in compliance with the Finnish Limited Liability Companies Act, regulations concerning publicly quoted companies, Kesko’s Articles of Association, the charters of Kesko’s Board of Directors (“the Board”) and its Committees and the rules and guidelines of Nasdaq Helsinki Ltd.
Kesko applies the Finnish Corporate Governance Code for Listed Companies in force at any given time. This statement has been prepared in compliance with the Finnish Corporate Governance Code 2010 (“Corporate Governance Code”). The Corporate Governance Code 2010 can be read in full at www.cgfinland.fi/files/2012/01/suomen-listayhtioiden-hallinnointikoodi-cg2010.pdf. As provided by the ‘Comply or Explain’ principle of the Corporate Governance Code, the Company departs from the Corporate Governance Code's recommendation concerning a Board member’s term of office.
In autumn 2015, the Securities Market Association published the new Finnish Corporate Governance Code for listed companies, which Kesko adopted as of 1 January 2016. A Corporate Governance Statement in compliance with the new Code will be published in spring 2017. The new Corporate Governance Code can be read at http://cgfinland.fi/en/.
Departure from Recommendation 10 of the Corporate Governance Code (Term of Office of the Board of Directors, Recommendation 6 in the new Corporate Governance Code) and explanation for departure
The term of office of Kesko's Board members departs from the one-year term pursuant to Recommendation 10 (Term of Office of the Board of Directors, Recommendation 6 in the new Corporate Governance Code) of the Corporate Governance Code. The term of office of the Company’s Board of Directors is determined in accordance with the Company’s Articles of Association. The General Meeting decides on amendments to the Articles of Association. According to the Company’s Articles of Association, the term of office of a Board member is three (3) years, starting at the close of the General Meeting electing the member and expiring at the close of the third (3rd) Annual General Meeting after the election.
A shareholder which, together with related entities, represents over 10% of votes attached to all Kesko shares, has informed the Company's Board of Directors that it considers the term of office of three (3) years good for the Company's long-term development and has not seen any need to shorten the term stated in the Articles of Association.
Kesko Group’s Corporate Governance
The highest decision-making power in Kesko is exercised by the Company's shareholders at the Company's General Meeting.
At the Annual General Meeting, the Company’s shareholders elect the Company’s Board of Directors and the Auditor. Kesko Group is managed by the Board of Directors and the Managing Director, who is the President and CEO. The President and CEO is appointed by the Board of Directors. The Company uses a so-called one-tier governance model.
The Annual General Meeting is held annually by the end of June, on a date designated by the Company's Board of Directors. The most significant matters falling within the decision-making power of the General Meeting include the election of the Board members and the Auditor, the adoption of the financial statements, the resolution on discharging the Board members and the Managing Director from liability, and the resolution on the distribution of the Company's assets, such as distributions of profit.
The Company has share series A and B, which differ with respect to the number of votes attached to the shares. An A share carries ten (10) votes and a B share carries one (1) vote at the General Meeting. When votes are taken, the proposal for which more than half of the votes were given will normally be the resolution of the General Meeting, as prescribed by the Limited Liability Companies Act.
Shareholders are invited to attend the General Meeting by a Notice of the General Meeting published on the Company’s website. The notice of the meeting and other General Meeting documents, including the Board of Directors’ proposals to the General Meeting, are made available to shareholders no later than three weeks prior to the General Meeting at the Company's headquarters and on its website at http://www.kesko.fi/en/. The notice of the meeting and the proposals of the Company's Board of Directors to the General Meeting are also published as stock exchange releases.
The Company aims for all members of Kesko's Board of Directors, the President and CEO, and the Auditor to be present at the Annual General Meeting. The minutes of the General Meeting are made available to shareholders at http://www.kesko.fi/en/within two weeks of the General Meeting. The resolutions of the General Meeting are also published in a stock exchange release without delay after the meeting.