Corporate governance at Ponsse is based on Finnish legislation, Ponsse’s Articles of Association, and operational guidelines defined by the company’s governing bodies. In addition, the company adheres to the guidelines and regulations issued by the Financial Supervisory Authority. The company follows the Corporate Governance Code for Finnish listed companies, issued by the Securities Market Association. Ponsse Plc’s corporate governance principles are described in the annually published Corporate Governance Statement, which is issued as a separate document from the company’s Board of Directors’ report and approved by the Board of Directors.
Corporate Governance Statement
Corporate Structure
The Group’s parent company is Ponsse Plc, a Finnish public limited company incorporated under Finnish law. Ponsse Plc’s shares are listed on the NASDAQ OMX Nordic list. The parent company is domiciled in Vieremä.
The Ponsse Group includes the parent company Ponsse Plc as well as the wholly-owned subsidiaries Ponsse AB in Sweden, Ponsse AS in Norway, Ponssé S.A.S.in France, Ponsse UK Ltd. in Great Britain, Ponsse Machines Ltd. in Ireland, Ponsse North America Inc. in the United States, Ponsse Latin America in Brazil, Ponsse Asia-Pacific Ltd in Hong Kong, Ponsse China Ltd in China, Ponsse Uruguay S.A. in Uruguay, Ponsse Chile SpA in Chile, Ponsse Czech s.r.o in Czech Republic and Epec Oy in Finland. The Group includes also the EAI PON1V Holding Oy in Finland, Sunit Oy in Finland, which is Ponsse Plc’s associate with a holding of 34 per cent, and Bram Engineers B.V. in the Netherlands, which is a wholly owned subsidiary of Epec Oy.
Annual General Meeting
The shareholders exercise their decision-making power at the Annual General Meeting, where they have the right to speak, present questions and vote. In accordance with the Limited Liability Companies Act and the Articles of Association, the Annual General Meeting decides on matters falling into its competence, including the following:
- the adoption of the financial statements
- the use of the profit shown on the balance sheet
- the election of the members of the Board of Directors and the decision on their
remuneration - discharging the members of the Board of Directors and the President and CEO from liability
- the election of the external auditor and the decision on the external auditor’s compensation
The Annual General Meeting is held once a year on a date determined by the company’s Board of Directors, however, before the end of June. Meetings are held in Vieremä, Iisalmi or Kajaani. The Annual General Meeting is convened by the company’s Board of Directors. A notice of the Annual General Meeting is published on Ponsse’s website and, at the discretion of the Board, in a broad-circulation newspaper, no earlier than three (3) months and no later than twenty-one (21) days before the Annual General Meeting. The agenda and other documents related to the Annual General Meeting are made available on the company’s website no later than twenty-one (21) days before the Annual General Meeting. To be eligible to participate in the Annual General Meeting, shareholders must notify the company of their intention to attend no later than on the day mentioned in the notice of Annual General Meeting, which may be no earlier than ten (10) days before the meeting.
A shareholder may also submit matters for inclusion on the agenda of the Annual General Meeting if the matter falls within the competence of the Annual General Meeting and a written request has been made to the Board of Directors to include the matter on the agenda no later than the date set by the company, which may not be earlier than four weeks before the date of publication of the notice of the meeting. Ponsse’s website contains more detailed information about the rights of shareholders to have a matter of concern to them dealt with at the Annual General Meeting, the rights of shareholders to participate in the Annual General Meeting, and other issues related to the Annual General Meeting.
An extraordinary general meeting is convened if the Board of Directors deems it necessary, or if it is required by the external auditor or shareholders who collectively hold at least one tenth of all shares.
Board of Directors
The Annual General Meeting elects a Board of Directors each year. In accordance with the Articles of Association, the Board consists of five to eight members. The term of office of the Board lasts until the end of the next Annual General Meeting. The Board of Directors is elected annually to allow shareholders to regularly evaluate the activities of the Board of Directors and its members. The Board of Directors will appoint a Chair from among its members and convene at the request of the Chair as often as the company’s business so requires.
The Board of Directors’ powers include the appropriate arrangement of the company’s governance and operations, as well as arranging the monitoring of accounting and asset management. In addition to internal governance, the Board of Directors is responsible for the disclosure policy and representing the company. The right to represent the company is set out in more detail in the company’s Articles of Association.
In addition, key tasks of the Board of Directors include:
- approving the company’s long-term strategy and targets
- approving the annual plan and budget
- appointing, and if necessary, dismissing, the President and CEO
- confirming the appointments of members of the Management Team
- monitoring and evaluating the performance of the President and CEO and deciding on their remuneration and benefits
- deciding on the remuneration and benefits of the members of the Management Team
- ensuring that the supervision of the accounting and financial matters is properly organised, and ensuring proper preparation of the interim and annual financial statements
- monitoring and assessing sustainability reporting and its assurance, and approving the sustainability report as part of the Board of Directors’ report
- ensuring the adequacy of planning, information and control systems for monitoring results and managing risks in operations
- approving related-party transactions that are not part of the company’s ordinary course of business or are not implemented on arm’s-length terms
- convening and preparing proposals to general meetings
- deciding on other matters not belonging to day-to-day operations, such as major investments, acquisitions and divestments, and major joint ventures and loan agreements
In addition to these tasks, Ponsse’s Board of Directors approves all key policies guiding Ponsse’s operations. Key policies are regularly updated and approved.
President and CEO
The Board of Directors appoints and, if necessary, dismisses the President and CEO. The President and CEO carries out the company’s daily governance tasks in accordance with Finnish law, corporate governance rules and the instructions issued by the Board of Directors. The President and CEO is responsible for ensuring that the company’s accounting complies with the law, and that its asset management has been arranged reliably. In addition to these tasks, the President and CEO:
- is responsible for the operational management of the company’s business operations
- provides the Board of Directors and the members of the Board with the information necessary for carrying out their duties
- acts as rapporteur at Board meetings
- is responsible for the implementation of decisions taken by the Board of Directors.
President and CEO of Ponsse Plc
Management Team
The primary task of the Management Team is to assist the President and CEO. The Management Team generally meets weekly, but at least once a month. It assists the President and CEO in the planning and implementation of the company's strategy, in the preparation of the annual action plan, in operational management and in the preparation of matters to be discussed by the Board of Directors. The Management Team’s members monitor and review from time to time the company’s internal policies and procedures, including reporting, financial management, investments, risk management, insurance policies, information systems, general procurement, industrial property rights, contractual risk management, human resources management, quality, environmental matters, occupational safety, insider guidelines, and communication. The Management Team is responsible for the implementation of the key policies and guidelines approved by the Board of Directors that govern Ponsse’s operations.
Internal control and risk management systems
The internal control and risk management systems related to financial reporting are designed to provide adequate assurance regarding the reliability of financial reporting, and they aim to ensure compliance with the applicable laws and regulations. Ponsse’s risk management and internal control processes follow the principles of the COSO (Committee of Sponsoring Organisations) framework where applicable.
Control environment
The control environment forms the basis of internal control. Ponsse’s internal control framework is built on the company's core values: we truly care; we work for our customers; we are honest; and we are open for renewal. The control environment includes the guidelines and policies that guide Ponsse Group’s operations, such as corporate governance principles, the company’s disclosure policy and the Code of Conduct. The role of internal control is to ensure that employees and administrative bodies perform their duties professionally, carefully and in a timely manner and follow the guidelines provided and approved practices.
Internal control is an essential part of the company’s daily operating activities, covering all levels and processes. In addition to financial control, it includes an appropriate and balanced allocation of tasks, ensuring that each employee’s input contributes to the achievement of the targets set for both the company and internal control.
Risk assessment and risk management principles
At Ponsse, risk management means management system procedures that identify and assess uncertainties related to Ponsse Group’s operations, prepare for risks and seize opportunities. The objective of the risk management process is to support the achievement of the targets determined in the company’s strategy and to secure the company’s financial performance, sustainable development and business continuity. Ensuring a balance between risk management and business interests is essential in the company’s risk management. Risk management is seen as being part of internal control, and so the implementation of internal control also promotes the implementation of risk management.
The company’s key strategic targets underlying risk management include social, economic and environmental responsibility. The fulfilment of responsibilities is monitored regularly, and responsibility goals are monitored using key indicators. The company’s sustainability work is described in the annual sustainability report published together with the annual report.
Control functions
The responsibility for organising internal control lies with the Board of Directors and the President and CEO.
The company’s management or a separately designated responsible party ensures that the Board of Directors has access to sufficient and up-to-date information for decision-making. The reliability of financial reporting is ensured by organising the distribution of tasks and responsibilities efficiently. Each responsible party must be aware of guidelines and comply with them. Financial reporting is regularly audited by an external auditor. The sustainability report is assured by an authorized sustainability auditor.
The President and CEO, the members of the Management Team and the directors of the company’s country organisations are responsible for ensuring that the accounting and administration of their respective areas of responsibility comply with the applicable laws and the company’s guidelines.
The company has an internal auditor, who supports the company in achieving its targets by assessing internal control and risk management and the implementation of good corporate governance. An external service provider serves as the internal auditor. The Board of Directors annually determines the internal audit focus areas together with the internal auditor, who reports regularly to the Board of Directors on audit results.
Internal communication and provision of information
Ponsse aims to ensure the openness, transparency, accuracy and timeliness of the company’s internal and external communication. These principles also support ensuring the completeness and accuracy of financial reporting. The company’s disclosure policy determines how and when information must be provided and who provides it, as well as the accuracy and completeness of the information provided, so that the company’s disclosure obligations are fulfilled. The company also has insider guidelines and a Code of Conduct, which contains guidelines related to Ponsse’s business environment, employees, business partners and obligations to society. Through the whistleblowing channel, employees and external stakeholders can anonymously report any misconduct or suspected misconduct they have detected. A team appointed by the company’s Board of Directors investigates all reported cases and, if necessary, reports any identified issues to the Management Team or the Board of Directors, taking into account the regulations on whistleblower protection. Ponsse’s country organisations regularly prepare financial and operational reports for the management, which include analyses and reviews of financial performance and risks. Financial reports are provided to the Board of Directors at least in connection with regular Board meetings.
Monitoring
The effectiveness of the company’s financial reporting is monitored by the Board of Directors, the President and CEO and internal audit. The Board of Directors reviews the interim reports and approves them before they are published. The financial statements and the Board of Directors’ report including the sustainability report are also approved by the Board. The monitoring process includes the regular review of monthly financial reports and the review of continuous forecasts and plans, as well as any reports from internal audit and the auditors. Internal audit serves as an independent control body and regularly assesses the efficiency and effectiveness of the company’s governance, risk management and internal control processes. It assesses the efficiency of operations and the adequacy of risk management, as well as development needs in the control system. Internal audit prepares an annual audit plan and reports regularly on the progress and findings of the plan to the Board of Directors and the Management Team. The Board of Directors is also informed about developments in material risk areas and planned actions to reduce risks. This ensures the continuous development of risk assessment and control processes.
Audit
The task of an external auditor is to verify the company’s accounting, financial statements, governance and Board of Directors’ report. The external auditor assesses whether the financial statements give a true and fair picture of the company’s results and its financial position at the end of the financial period. The company’s financial period is the calendar year. The audit also involves an examination of the consolidated financial statements. The company’s external auditor must ensure that the external auditors of each Ponsse Group company have conducted their audits properly. The external auditor presents the auditor’s report to the Annual General Meeting.
The company has one auditor, which must be a public accounting firm authorised by the Central Chamber of Commerce. It is also required that the external auditor be independent of the company.
Insider management
Ponsse adheres to the insider guidelines of Nasdaq Helsinki Ltd (insider guidelines for the stock exchange) and the Market Abuse Regulation (“MAR”). The company’s Board of Directors has also confirmed Ponsse insider guidelines, which supplement the stock exchange insider guidelines, and which apply to all employees of Ponsse Group, including the members of the Management Team and the Board of Directors. The coordination and control of insider affairs are among the responsibilities of the Chief Financial Officer.
Ponsse’s members of the Board of Directors, the President and CEO, members of the Management Team (“Managers”), and their closely associated persons as defined in MAR have a duty to report any transaction involving Ponsse’s financial instruments. The company maintains a list of Managers and their closely associated persons (individuals and legal entities). The Managers and their closely associated persons are obligated to notify Ponsse and the Finnish Financial Supervisory Authority of every transaction conducted on their own account related to Ponsse’s financial instruments. The notification obligation applies to all transactions after the total amount of EUR 20,000 (EUR 5,000 until 14 December 2024), without netting, has been reached during the calendar year. Ponsse discloses each such transaction as a stock exchange release.
Ponsse’s Managers are prohibited to trade in Ponsse’s financial instruments during a 30-day period immediately prior to the publication of Ponsse’s interim reports or financial statements (“closed window”). The said trading restriction also applies to all such persons who have continuous access to the company’s financial reporting systems. All these persons have been personally informed about the trading restriction and the related obligations.
Ponsse has identified individuals who have continuous access to all insider information about Ponsse as a result of their position or work (“permanent insider”). Permanent insiders include the members of the Board of Directors, the President and CEO, the Deputy CEO, the CFO, the internal auditor, the secretary of the Board of Directors, and the executive assistant.
Project-specific insider lists include those who have access to insider information in conjunction with a certain project. They are under the trading restriction until the termination of the project and/or disclosure of the inside information. Affected persons are always separately informed of their inclusion in project-specific insider lists.
Related-party transactions
The company’s related-party transactions are regulated by the Limited Liability Companies Act, the MAR Regulation, the IAS 24 standard and, in part, the Corporate Governance Code. In accordance with the Finnish Companies Act, the Board of Directors is responsible for the monitoring and assessment of related-party transactions. The company’s Board of Directors decides on related-party transactions that are not part of the company’s ordinary course of business or that are not carried out on normal commercial terms.
The company has determined its related parties, and persons belonging to the company’s own governing bodies have been instructed on how to declare affiliations. Ponsse’s finance department monitors related-party transactions. All transactions outside the scope of the company’s ordinary business are reported to the Board of Directors. All related-party transactions of importance to shareholders are published in a stock exchange release in accordance with the regulations. Individual related-party transactions are disclosed by means of stock exchange releases if the regulations so require. Ponsse discloses information regarding related-party transactions on an annual basis as part of the notes to the company’s consolidated financial statements.
Remuneration
The Finnish Corporate Governance Code requires Ponsse to publish information related to remuneration on its website and to prepare an annual report on the company's salaries and remuneration.
Remuneration report for governing bodies