Verkkokauppa.com Oyj (hereinafter, the “Company” or “Verkkokauppa.com”) is a public Finnish limited liability company, the shares of which are traded on the official list of Nasdaq Helsinki Ltd. (“Nasdaq Helsinki”). Verkkokauppa.com adheres to the corporate governance principles by complying in all its activities with the relevant laws and regulations and by implementing the corporate governance recommendations. Verkkokauppa.com’s governance is subject to the Company’s Articles of Association and the laws of Finland, in particular the Companies Act, the Accounting Act, securities markets legislation, and other regulations and provisions related to the governance of a public limited liability company. Furthermore, Verkkokauppa.com’s operations are guided by the Company’s values and its internal operating principles.
In addition, Verkkokauppa.com also complies with the Corporate Governance Code 2020 adopted by the Securities Market Association (the “CG Code”). If the Company in the future departs from any of the recommendations of the CG Code, it shall disclose the departure and provide reasons therefor. The Corporate Governance Code is available online at www.cgfinland.fi.
The Company’s Corporate Governance Statement is available on the Company’s website https://investors.verkkokauppa.com/en/governance.
Verkkokauppa.com Oyj, domiciled in Helsinki, Finland is the sole operating company and it has no subsidiaries.
The Company’s governance is organised through the General Meeting, the Shareholders’ Nomination Board, the Board of Directors (the “Board”), and the Chief Executive Officer (the “CEO”). Further, the Company has a management team led by the CEO. The Company has one reporting segment.
The highest decision-making power in Verkkokauppa.com is exercised by the Company’s shareholders at General Meetings, in which the shareholders may exercise their right to speak, ask questions and vote. The Annual General Meeting is held by the end of June each year and it handles the matters that fall under its authority according to the Articles of Association as well as any matters proposed to a General Meeting.
Usually General Meetings handle the matters placed on its agenda by the Board and its committees. According to the Finnish Companies Act, shareholders may also request the Company’s Board to place a matter on the agenda of the next General Meeting. The Company states well in advance on its website investors.verkkokauppa.com/en the date by which a shareholder must declare his or her demands for matters to be dealt with at the Annual General Meeting.
Major matters subject to the decision-making power of a General Meeting include:
- Adoption of the financial statements;
- Decision on the use of profit, such as dividends;
- Decisions on the number, election and remuneration of members of the Board;
- Discharging the members of the Board and the CEO from liability;
- Election of the Auditor and the decision on the Auditor’s remuneration; and
- Other proposals made by the Board or a shareholder, such as:
- Amendments to the Articles of Association; and
- Special authorizations to the Board (e.g. authorization to decide on payment of an additional dividend, on a share issue or on the repurchase of the company’s own shares)
At the General Meeting, the decisions are primarily made by a simple majority vote. The CEO, the chairperson and the members of the Board shall attend the General Meeting. In addition, the auditor shall be present at the Annual General Meeting. A candidate proposed to be elected to the Board shall participate in the General Meeting that decides on his or her election.
A notice of the General Meeting is published as a company release three weeks to three months before the General Meeting. The agenda, decision-making proposals and other meeting documents are available afterwards at investors.verkkokauppa.com/en.
Shareholders registered in the Company’s shareholder register kept by Euroclear Finland Ltd on the record date of the General Meeting have the right to attend the General Meeting and exercise their voting rights. Shareholders may exercise their rights at the General Meeting either in person or through an authorized proxy representative.
The minutes of the General Meeting including the voting results and any appendices that are part of a decision made by the General Meeting shall be posted on the Company website within two (2) weeks after the General Meeting. The decisions of the General Meeting are also published by means of a company release immediately after the General Meeting. The documents related to the General Meeting shall be available on the Company´s website at least for five (5) years after the General Meeting.
Shareholders' nomination board
The Annual General Meeting of the Company resolved on 31 March 2020 that a shareholders’ nomination board consisting of the Company’s major shareholders or persons appointed by such shareholders be established for the purpose of preparing, annually and otherwise when appropriate, proposals concerning the composition of the Board of Directors and the election and remuneration of the members of the Board of Directors. The Shareholders’ Nomination Board operates and its charter applies until otherwise decided by the General Meeting.
The Shareholders’ Nomination Board consists of four members, three of whom represent the three largest shareholders of the Company and who hold the largest number of votes of all votes in the Company on the last banking day in May preceding the next Annual General Meeting. The chairman of the Company’s Board of Directors acts as the fourth member of the Nomination Board of the shareholders.
The duties of the Shareholders’ Nomination Board of the shareholders include:
- to prepare and present to the General Meeting a proposal on the remuneration of the members of the Board of Directors and the Board committees, in accordance with the remuneration policy;
- to prepare and present to the General Meeting a proposal on the number of the members of the Board of Directors;
- to prepare and present to the General Meeting, in consideration of the Company’s diversity policy, a proposal on the members of the Board of Directors; and
- to seek for prospective successors for the members of the Board of Directors.
The Nomination Board of the shareholders convenes when summoned by the chairman of the Shareholders’ Nomination Board of the shareholders.
Should a shareholder choose not to use the right to appoint a member, the right is as a rule transferred to the next largest shareholder in the shareholder register, who would not otherwise have the right to appoint a member.
The Company’s Shareholders’ Nomination Board will be formed for the first time during 2020.
Board of Directors
The Board oversees the management and operations of the Company. It also decides on significant matters related to strategy, investments, organization and finances.
The Board has two committees that report to the Board: the Audit Committee and Remuneration Committee. The Board elects the members of these committees from among the Board members at its constitutive meeting after the Annual General Meeting. The Board has confirmed written charters for both committees.
Composition and term
Under the Articles of Association, the Board consists of at least four (4) and at most eight (8) members. The members of the Board are elected by the Annual General Meeting of the shareholders and the term of office of the members of the Board expires at the end of the Annual General Meeting following their election.
The Articles of Association set no limitations regarding the number of terms that Directors may serve, nor do they restrict in any other way the decision-making power of the General Meeting in electing members of the Board. However, the General Meeting may take into account all recommendations stipulated by the CG Code regarding the composition of the Board, especially with regards to meeting the independence and other requirements applicable to the companies listed on a regulated market or on a multilateral trading facility in Finland. The Board elects one of its members as the chairperson of the Board and may elect a deputy chairperson.
Current composition of the Board of Directors
The Board consists of the following six (6) members elected at the Annual General Meeting held March 31, 2020 for a term until the close of the next Annual General Meeting: Christoffer Häggblom, Robert Burén, Mikael Hagman, Kai Seikku, Samuli Seppälä and Arja Talma. At the constitutive meeting of the Board, convened after the Annual General Meeting, Christoffer Häggblom was elected as the Chairman of the Board.
Based on the evaluation of independence, the Board concluded that Christoffer Häggblom, Robert Burén, Mikael Hagman, Kai Seikku and Arja Talma are both independent of the Company and its significant shareholders. Samuli Seppälä is neither independent of the Company nor of its significant shareholder as he has been the CEO of the Company in the last three years and he himself is a significant shareholder of the Company.
Information reported on the members of the Board can be found under the heading “Board of Directors”.
Duties of the Board of Directors
The duties of the Company’s Board are set forth in the Companies Act and other applicable legislation. The Board is responsible for the management of the Company. Its responsibilities include, inter alia, to:
- deliberate and decide on the Company’s strategy;
- confirm the business plan and budget as well as financing transactions (as far as not falling into the responsibility of the shareholders);
- deliberate on and approve interim reports and/or interim management statements, the annual accounts and the reports by the Board;
- confirm internal control and risk management systems and reporting procedures;
- decide on possible bonus and incentive schemes for the management and possible general or special pension schemes, profit sharing schemes or bonus schemes for employees of the Company;
- decide on any contracts which, given the scope and nature of activities of the Company, are of unusual nature, or significant importance such as long-term lease contracts;
- follow-up on related party transactions; and
- appoint or dismiss the CEO. Other employees belonging to the management team of the Company are appointed by the CEO and approved by the Board.
Duties of the Board Committees
The Audit Committee shall prepare the monitoring and supervision duties of the board in matters related to the Company's financial reporting, efficiency of internal control and audit and risk management function and the independence of the Company's auditor. During 2020, the Audit Committee consists of Kai Seikku (Chairman), Arja Talma (Vice chairman), Christoffer Häggblom and Samuli Seppälä. The majority of the members of the Audit Committee are independent of the Company and the Company’s significant shareholders. Qualification requirements regarding the members of the committee have been taken into consideration when appointing the members.
The Remuneration Committee shall ensure the efficient preparation of nomination and remuneration matters in relation to Board members, the CEO and the other senior members of executive management. During 2020, the Remuneration Committee consists of Christoffer Häggblom (Chairman), Kai Seikku and Samuli Seppälä. The majority of the members of the Remuneration Committee are independent of the Company and the Company’s significant shareholders.
The Nomination ad Remuneration Committee was amended to Remuneration Commitee due to the establishment of the shareholders’ nomination board by the Annual General Meeting held March 31,2020.
Participations in Board and Committee meetings 2019
|Name||Position||Board||Audit Committee||Nomination and Remuneration Committee|
|Christoffer Häggblom||Chair, Chair of Nomination and Remuneration Committee||21/21 (Chairman)||5/5||3/3 (Chairman)|
|Kai Seikku||Member, Chair of Audit Committee||18/21||3/5||3/3|
|Arja Talma||Member, Vice Chair of Audit Committee||20/21||5/5||-|
The Board held 21 meetings during 2019 (2018: 21 meetings). The average ratio of attendance at the meetings was 97 percent (2018:96 percent). In addition to the duties specified in the Board’s charter, in 2019, the Board focused on improvements in the financial reporting process and on the effective implementation of the strategy. In addition to the duties specified in the charter, the Nomination and Remuneration Committee’s work was linked to the preparation of the remuneration policy to be presented at the Annual General Meeting 2020, as well as to the development of long-term incentive structures. The Audit Committee focused on financial reporting process as well as the development of risk management procedures.
Meetings of the Board are convened by its chairperson. The Board constitutes a quorum when more than half of the members are present at the meeting. When votes are cast, the majority opinion will be the Board’s decision and, in the case of a tie, the chairperson will have the casting vote.
The Board is always obliged to act in the Company’s interests and in such a way that its acts or measures are not likely to produce unjustified benefit to any shareholder or other third party at the cost of the Company or another shareholder.
A member of the Board is disqualified from participating in the handling of a matter pertaining to a contract or other transaction between the member of the Board and the Company or of such matter where the member is to derive an essential benefit and that benefit may be contrary to the interests of the Company. In principle, a member of the Board may not participate in the handling of a matter if the member of the Board is involved in the matter under assessment in another capacity.
The Board shall convene as frequently as necessary to discharge its responsibilities. The CEO ensures that the Board is provided with sufficient information to assess the operations and financial situation of the Company.
The secretary of the Board is Robert Tallberg.
The Board conducts annual performance self-evaluations, in addition to brief feedback sessions following each physical meeting.
Principles concerning the diversity of the Board of Directors
The Company has defined the principles concerning the diversity of the Board in accordance with the recommendation 9 of the CG Code.
It is in the Company’s and its shareholders’ interest that the members of the Board have a broad expertise from different fields and business areas. The diversity of the Board supports the Company’s business and its development, open discussion and independent decision-making.
In the preparation of the proposal for the composition of the Board, the requirements placed by the Company’s strategy, operations and development phase as well as the sufficient diversity of the Board are taken into account. The diversity of the Board is examined from different perspectives. Important factors for the Company are the age and gender distribution, academic and professional background as well as strong, versatile and mutually complementary expertise, experience and knowledge in the different business areas important to the Company.
The proposal regarding the composition of the Board is based on the competence of the candidate and the Company aims to elect Board members whose experience and profile correspond with the Company’s current and future business needs. The Board members are elected annually at the Annual General Meeting of the shareholders.
The Company’s goal is that both genders are represented on the Board and that in the long-term a more balanced representation of both genders on the Board is achieved. As means to achieve this objective, the Board seeks to include representatives of both genders in the Board candidate search and evaluation process and to actively communicate this objective to the shareholders of the Company.
During 2020 one Board member is female and the remaining members male.
Principles concerning related party transactions
The Board has adopted the principles concerning related party transactions. In accordance with the principles, the Audit Committee of the Board is tasked with monitoring and supervising the Company’s policies for related party transactions. The Audit Committee monitors and assess how agreements and other legal acts between the Company and its related parties meet the requirements of ordinary activities and arm’s-length terms. The Audit Committee also reviews the reporting of related party transactions in the financial statements and reports to the Board on regular basis. The Board maintains a list of the Company’s related parties.
In accordance with the principles, the management team member in charge of the transaction in the Company’s operations has the responsibility to, in advance, investigate, assess and identify whether the transaction in question is potentially a related party transaction. Given the Company’s business model in the retail sector, the nature of its day-to-day operations and use of standardized general terms and conditions, the related party transactions mainly apply to the procurement of services or potentially significant one-time offers or tender processes. The Company estimates that related party transactions, which would be outside the ordinary course of business or made on other than arm’s length basis are fairly infrequent and limited in extent.
Should the management team member or other individual involved identify a transaction to be made with a related party or have reason to believe that the transaction is to be made with a related party, that person should escalate the matter to the Board secretary and the Company’s Finance department. Together with the Company’s Finance department, the Board secretary shall analyse the nature of the transaction (whether it is part of the Company’s ordinary course of business and implemented under arm’s-length terms) and its materiality as well as to assess whether the transaction warrants a decision by the Board. The Audit Committee prepares such matters concerning related party transactions for the Board decision.
Management team members during 2020
|Panu Porkka||CEO||January 1, 2020 –|
|Mikko Forsell||CFO||January 1, 2020 –|
|Miika Heinonen||Logistics Director||January 1, 2020 –|
|Vesa Järveläinen||Commercial Director||January 1, 2020 –|
|Seppo Niemelä||Marketing and Communications Director||January 1, 2020 –|
|Kalle Koutajoki||Chief Sales Officer||January 1, 2020 –|
|Taina Suorsa||HR Director||January 1, 2020 –|
|Henrik Weckström||CTO||January 1, 2020 –|
The management team members handle the issues that concern managing of the Company in their respective areas and on the basis of the guidance provided by the Board. The management team assists the CEO in running the Company. The management team members prepare matters that are to be put before the Board for decision-making, e.g. the Company’s strategies, budgets and policies as well as significant acquisitions and divestments. In addition, the management team handles matters pertaining to reporting, internal and external communication, personnel development, hiring of employees and their terms of employment as well as investor relations. The management team has no formal status under company law.
Information reported on the members of the management team and the CEO can be found under the heading “Management team”.
Chief Executive Officer
The CEO is responsible for the day-to-day management of the Company in accordance with the instructions and guidance given by the Board and ensuring that the accounting practices of the Company comply with the law and that the financial management of the Company has been arranged in a reliable manner.
The CEO primarily presents the matters handled in meetings of the Board and is responsible for preparing draft resolutions. The Board elects the CEO and decides on the remuneration of the CEO and on other terms of the CEO contract.
Remuneration Policy and Remuneration Report
In accordance with the CG Code, the Company presented its Remuneration Policy for governing bodies to the Annual General Meeting held March 31, 2020. The general meeting approved the remuneration policy and it is available on the Company’s website The Company will present a remuneration report for governing bodies to the Annual General Meeting to be held in 2021.
Internal control and risk management
Internal control is under the responsibility of the Board, and its function is, among other things, to ensure the efﬁciency and proﬁtability of operations, the reliability of information, and the adherence to rules and regulations. Internal control is a part of day-to-day management and Company administration.
Internal audits are an integral part of internal control. The Board is responsible for organising the internal audit, and the internal audit services are purchased from an external service provider. The internal audit reports its observations to the Audit Committee and the Board. The internal audit supports the management in directing operations by inspecting and evaluating the efﬁciency of business operations, risk management and internal control, and by producing information and recommendations to enhance efﬁciency. The internal audit also inspects the processes of business operations and ﬁnancial reporting. The operations of the internal audit are based on a risk-focused approach and the focus areas of the business operations and its development.
The Company’s Board has approved a risk management operating model for the Company. According to the Company’s risk management operating model, the objective of risk management is to raise risk awareness and enhance proactive risk management in the organisation, increase the competitiveness of the organisation by reducing negative risks and increasing positive risks, ensure a sufficient level of risk management for the whole organisation, manage risks as part of business activities and define responsibilities of risk management in the organisation. The Board decides on the Company’s risk management policy, which defines the framework and principles for the risk management. The Audit Committee monitors and regularly evaluates the risk management systems. The Company’s operative management is responsible for actual measures related to risk management in accordance with the Company’s risk management policy.
Main features of the internal control and risk management systems pertaining to the ﬁnancial reporting process
The Board and the CEO have the overall responsibility for organising the internal control and risk management systems for financial reporting. The Company’s Chief Financial Officer and the Finance and Control Department are responsible for the financial reporting.
The reporting is based on information from commercial and administrative processes and data produced by the ﬁnancial management systems. The Company’s Finance and Control Department determines the control measures applied to the ﬁnancial reporting process, which include various guidelines, process descriptions, reconciliations, and analyses used for ensuring the validity of the information used in the reporting and the validity of the reporting itself.
The ﬁnancial reporting results are monitored and any anomalies in relation to forecasts or in comparison with the previous year’s ﬁgures are analysed on a regular basis. Such analyses are used to detect any reporting errors and to produce materially accurate information on the Company’s ﬁnances.
The Company’s Finance and Control Department is responsible for the effectiveness of internal control. The Finance and Control Department is responsible for assessments of the reporting processes. The risks pertaining to financial reporting and the related management measures are determined as part of the risk management process.
The key principles of the communication and disclosure of the Company are timeliness, consistency, impartiality, and transparency.
The purpose of the Company’s investor relations function is to support the fair value of Verkkokauppa.com’s financial instruments by providing the financial market with consistent, correct, relevant, and reliable information on the Company to ensure that capital market participants have transparent and clear a picture of the Company, its operations, objectives, strategy and financial situation. The aim is to guarantee that all market participants receive simultaneously the information that the Company communicates.
The primary communication channel for up-to-date information for all stakeholders is Verkkokauppa.com’s website (www.verkkokauppa.com). Verkkokauppa.com aims to provide on its website reliable and extensive information to enable investors to form an accurate understanding of the Company. The Company publishes also materials used in investor and analyst meetings on its website.
The Board has adopted a disclosure policy which governs the disclosures of Verkkokauppa.com.
The Company observes the insider guidelines issued by Nasdaq Helsinki Ltd. and which are applicable to Companies, the shares of which are traded on Nasdaq Helsinki. The Company’s insider policy approved by the Company’s Board complements applicable insider regulation and sets out guidelines for the Company’s insiders and the insider administration. Verkkokauppa.com’s insider policy is regularly updated and compliance therewith monitored on an ongoing basis. The Company has appointed Robert Tallberg, Legal counsel, as the insider officer.
The Market Abuse Regulation (MAR), which entered into force on July 3, 2016, includes provisions on the Company’s duty of disclosure, management of insider information, reporting and disclosure of management’s and their related parties’ transactions and insider lists.
The persons discharging managerial responsibilities in the Company and persons closely associated with them shall notify their transactions in Company’s financial instruments to the Company in accordance with the insider policy in two (2) business days from the transaction and to the Finnish Financial Supervisory Authority in three (3) business days from the transaction. The Company must notify the transactions with a company release in three (3) business days from the transaction. In addition, the persons discharging managerial responsibilities in the Company must notify in writing the persons closely associated with them on the emergence of the duty of notification.
According to MAR, the closed period, during which transactions in the Company’s financial instruments are prohibited, is 30 calendar days before the announcement of financial report and the year-end report of the issuer and applies to the persons discharging managerial responsibilities. The Company applies the closed period after the end of each calendar quarter until the day after the announcement of the Company’s financial report or year-end report (the “Closed Window”). The Closed Window shall, however, always include at least 30 calendar days immediately preceding the announcement of the financial report or the year-end report, as the case may be, and the day of publication of such report. In certain special cases the issuer may on a case-by-case basis allow transactions during the Closed Window.
The main function of the statutory auditing is to verify that the financial statements provide true, accurate and sufficient information on the Company’s performance and financial position for the financial year. The Company’s financial year is calendar year. The auditor reports to the Board at least once a year and quarterly to the Audit Committee. The fees received by the auditor shall be reported to the shareholders of the Company.
According to the Articles of Association, the auditor of the Company shall be an Authorized Public Accountants firm approved by the Patent and Registration Office. The Annual General Meeting elects the auditor and the term of an auditor terminates at the end of the Annual General Meeting following the election. The proposal for the auditor by the Board shall be included in the notice of the General Meeting. The auditor’s fees for 2019 were approximately EUR 94 thousand (2018: 113 thousand) and fees paid to the auditor for non-audit services in 2019 were approximately EUR 24 thousand (2018: 23 thousand).
PricewaterhouseCoopers Oy, a firm of Authorised Public Accountants, has acted as the auditor of the Company since 2016 with Ylva Eriksson, Authorised Public Accountant, being the auditor-in-charge.
The Company is not aware of any shareholders’ agreements regarding the shares of the Company.