INTRODUCTION
The Rules of Procedure for the Board of Directors were prepared as a guideline for the work of the Board of Directors. The Rules of Procedure are updated whenever necessary. Material changes to the Rules of Procedure are subject to approval by the Board of Directors.
The work of the Board of Directors is governed by the Finnish Limited Liability Companies Act, Teleste Corporation’s Articles of Association, the decisions of General Meetings, the laws applicable to accounting and the securities market as well as the stock exchange rules provided by Nasdaq Helsinki Ltd.
The Board of Directors represents all the shareholders and always acts in the best interests of the company and its shareholders. The objective of the Board of Directors is to guide the company’s business in such a manner that it provides the company’s shareholders with the best possible return in the long run.
COMPOSITION AND ELECTION OF THE BOARD OF DIRECTORS
According to the Articles of Association, Teleste’s Board of Directors has a minimum of three and a maximum of eight members. The Annual General Meeting (AGM) decides on the number of Board members and their election. The Board of Directors elects a Chairman of the Board from among its members. A person designated by the Board of Directors acts as the secretary of the Board.
The candidates for the Board of Directors are chosen in co-operation between the Chairman of the Board and the major shareholders of the company. In addition to the required experience and areas of expertise, the guidelines on the diversity of the Board are taken into account when choosing candidates.
The majority of the members of the Board of Directors must be independent of the company, and at least two of the members must also be independent of the company’s significant shareholders; independence is interpreted according to the definition provided in the Finnish Corporate Governance Code approved by the Securities Market Association.
The term of office of Board members is one year, and it ends at the close of the Annual General Meeting following the election of Board members. The number of terms of a Board member is not limited.
RESPONSIBILITIES OF THE BOARD OF DIRECTORS
The duties and responsibilities of the Board of Directors are based on the Limited Liability Companies Act, Teleste Corporation’s Articles of Association and other laws and regulations.
The Board of Directors regularly monitors the achievement of the company’s financial and strategic targets as well as the development of the company in accordance with the long-term goals. The Board of Directors provides the company management with external opinions and support. The Board is also responsible for ensuring that accounting, financial management and risk management in the company are appropriately organised. In addition, as applicable, the Board of Directors is responsible for matters related to the preparation of the shareholders’ meeting and the implementation of its decisions.
The Board of Directors considers matters that have a significant and long-lasting effect on the company and defines the powers of the Chief Executive Officer (CEO). Matters requiring approval by the Board are listed in Appendix 1 to the Rules of Procedure for the Board of Directors. The appendix is regularly reviewed. In addition, the Board of Directors:
- confirms the company’s ethical values and policies and monitors their implementation;
- monitors the company management’s communications with shareholders and the security market and, when necessary, discusses the formation of shareholder interest and the response of the market;
- defines the company’s dividend policy;
- annually confirms the company’s basic strategy as well as the business objectives for the planning period derived from the basic strategy;
- annually studies the technical development as well as the general demand and competition environment in the industry and assesses the company’s key risks on the basis of the analysis prepared by the CEO;
- reviews and approves interim financial statements and interim reports as well as the annual financial statements and the Report of the Board of Directors;
- holds a meeting with the chief auditors at least once a year;
- appoints and, when necessary, dismisses the CEO;
- makes the necessary proposals to the shareholders’ meeting;
- grants authorisation to sign for the company and power of procuration;
- establishes Board committees, when necessary;
- approves proportional principles and processes for related party transactions and monitors and assesses transactions between the company and its related parties;
- considers any other matters that the Chairman of the Board and/or CEO have decided to place on the agenda for a meeting and matters that Board members have requested to be considered at a meeting by informing the Chairman about their request; and
- performs any other duties required by the Limited Liability Companies Act, the Articles of Association and other regulations.
REPORTING TO THE BOARD OF DIRECTORS
CEO’s review
The CEO’s review describes the most important events affecting the business operations of the different business areas.
Reports are prepared monthly.
Performance reporting
Performance reports include the result of the Group as well as the cost development, performance forecast, budget comparison, the most important financial indicators for the company and the financial situation.
Reporting on the most important events in the company
The company management ensures that the Board members are informed of any important events in the company without delay. Information of stock exchange releases is provided in advance whenever possible and in any event no later than simultaneously with public communication.
WORK OF THE BOARD OF DIRECTORS
Board meetings
The Board of Directors meets regularly throughout the year in accordance with the annual calendar approved by the Board. The most important matters to be considered at each meeting are listed in the calendar. In addition, the Board of Directors meets whenever necessary when convened by the Chairman or when at least two Board members request a meeting. Meetings of the Board of Directors may also be held as remote conferences, and the Board may make decisions via email statements of approval without convening in a physical location.
The Chairman of the Board chairs the meetings of the Board of Directors.
The secretary of the Board keeps minutes of the meetings. The minutes are checked and signed at the next Board meeting. The minutes are checked and signed by the Chairman of the Board and one Board member. If a decision is made without convening physically, all the members of the Board of Directors sign the minutes. The minutes of the Board Meetings may also be signed electronically.
Decisions by the Board of Directors
The Board of Directors shall constitute a quorum when more than half of its members are present. The Board of Directors always tries to reach a consensus when making decisions. If this is not possible, decisions are made by a simple majority vote. In the event of a tie, the Chairman of the Board of Directors has the casting vote.
Items requiring a decision by the Board of Directors are specified as decision items on the notice of the Board meeting, and they are recorded as decisions in the minutes of the Board.
Board members who are subject to a conflict of interests with respect to a decision shall not participate in the making of the decision in question. A Board member may have their dissent recorded in the minutes of the Board. A dissent must be communicated immediately after the decision is made.
Agenda and materials for Board meetings
The Chairman of the Board prepares the agenda, assisted by the CEO of the company and the secretary of the Board of Directors. The Board of Directors does not consider any matters that have not been placed on the agenda, unless the Board unanimously decides at the meeting to do so. The topics of Board meetings consist of topics specified in the annual calendar and other current matters. Board members may make proposals on placing matters on the agenda to be considered at a meeting.
The agenda and materials for a meeting are delivered to the Board members approximately one week before a meeting on a date specified in the annual calendar of the Board.
Committees
When considered necessary, the Board of Directors establishes committees to support its work. The Board of Directors decides on the members, chairpersons and rules of procedure of the committees.
Audit Committee
At its organising meeting held on 5 April 2018, Teleste Corporation’s Board of Directors established an Audit Committee for the company. The work and duties of the Audit Committee are determined in the Rules of Procedure for the Audit Committee that is subject to approval by the Board of Directors. The Chair of the Audit Committee reports the meetings of the Audit Committee to the Board of Directors in a summary.
Evaluation of the Board of Directors’ work
The Board of Directors continuously aims to develop its work and performs annual self-evaluation.
Rules of procedure for the Board
Original approved by the Board of Directors on 18 September 2018.
Updates approved by the Board of Directors on 18 December 2019 and 10 February 2021.