This statement on Finnish Fur Sales’ Management and Control System was given as a separate report and, concurrently with the Report by the Board of Directors, issued on 27 November 2009 on the Company’s Internet site.
Finnish Fur Sales (Turkistuottajat Oyj) complies with the Finnish Corporate Governance Code for Listed Companies issued by the Board of the Securities Market Association in October 2008.
Non-compliances with the recommendation
The Company has deviated from the Code in respect of the following recommendation:
RECOMMENDATION 14: Only one out of the six Board members is independent. The Company considers that the nature of its business requires that the majority of the Board members are profoundly familiar with, and committed to, the fur trade.
The Code is available to the public at the Company’s website www.ffs.fi -> English -> Company -> Corporate Governance
Board of Directors
The Annual General Meeting elects a minimum of 5 and a maximum of 8 members to the Board of Directors. The directors are elected for a term of one year that commences at the end of the Annual General Meeting at which they are elected and ends upon the adjournment of the next Annual General Meeting.
After hearing the largest shareholders, the Board of Directors makes a proposal for the composition of the Board of Directors. The Company reports the biographical details of the director candidates on its website and in the notice of the Annual General Meeting.
According to the prevailing practice, a person who is 65 or older cannot be elected as a director. Personal deputies are elected for the directors.
Finnish Fur Sales’ Board of Directors, as of 20 January 2009
Jorma Kauppila (1961)
Board member and Chairman as of 2003. Fur farmer since 1976. Chairman of the local Board of Directors of Kokkola Osuuspankki.
Markku Koski (1948)
Board member as of 1994 and Vice Chairman as of 2001. Fur farmer since 1969.
Pentti Lipsanen (1963)
Board member as of 2007. Fur farmer since 1980. Deputy Board member of the Finnish Fur Breeders’ Association.
Esa Rantakangas (1972)
Board member as of 2005. M.Sc. (Agr. & For.). Fur farmer since 1997. Vice Chairman of the Board of Directors of Lappajärven Osuuspankki.
Rainer Sjöholm (1970)
Board member as of 2008. M.Sc. (Econ). Fur farmer since 1995.
Helena Walldén (1953)
Board member as of 2004. M.Sc. (Eng.). Previous experience: Director, Pohjola Vakuutus Oy 2006-2009; Managing Director, A-vakuutus Oy 2007-2008; Member of Management Group, Pohjola Pankki Oyj 2006-2008; Member of Executive Board of OKO Osuuspankkien Keskuspankki Oyj 1994-2006; Bank Manager, OKO Yrityspankki 1992-1994; OKO Company Analyst, Head of Section, Head of Department 1976-1992; Board member of Metsähallitus, Alko Oy, and Raskone Oy; and Chairman of the Administrative Board of Lännen Tehtaat Oyj.
Board members independent of the Company or its significant shareholders
Director Helena Walldén is independent of the Company and its significant shareholders as referred to in the Corporate Governance Code. Being fur breeders, the other directors have a customer relationship with the Company.
Duties of the Board of Directors
In accordance with the legislation and the Articles of Association, the Board of Directors is responsible for the Company’s administration and for the due arrangement of its operations. The Board of Directors appoints the Managing Director and, as necessary, his or her deputy. The other duties of the Board of Directors include:
• Deciding on strategy
• Deciding on strategically significant investments, acquisitions, and sales of assets
• Reviewing the financial statements and the Report by the Board of Directors
• Reviewing the budget
• Specifying the Company’s dividend policy and submitting a proposal on the annual dividend to the Annual General Meeting
• Reviewing the Company’s sales policy in its auctions
• Deciding on the basic pricing of the skin brokerage services the Company offers to its customers
• Supervising the Company’s risks
• Approving the composition of the Company’s Management Group on the proposal of the Managing Director
• Evaluating the operations of the executives
• Deciding on the Company’s personnel incentive schemes
• Deliberating on other matters, if the Company’s Managing Director considers it prudent
In accordance with its charter, over and above the aforementioned duties, the Board of Directors gains information on the international market situation for raw skins, becomes familiar with the issues regarding interest safeguarding in different market areas, and monitors the skin flows into and out of the Company.
Matters related to the appointment, evaluation, salaries, remuneration, or benefits of senior executives are prepared by the Chairman and Vice Chairman of the Board of Directors, after which they are deliberated on by the Board of Directors. The Board of Directors may establish any committees it deems necessary.
The Board of Directors has not established any committees. The Board of Directors manages the duties of the Review Committee.
According to its working order, the Board of Directors convenes a minimum of 10 times per financial year. During the 2008-2009 financial year, the Board met 19 times. The Board members’ average attendance rate at the meetings was 99,1 per cent.
The Board of Directors evaluates its operations and working methods annually.
The Company does not have an Administrative Board.
In accordance with the Companies Act, the Board of Directors appoints a Managing Director for the company. The Managing Director attends to the day-to-day administration of the company. In accordance with the instructions and regulations laid down by the Board, the Managing Director sees to the legality of the company’s accounts and to the reliable organisation of treasury management.
Only with the consent of the Board of Directors, the Managing Director may take measures deviating from the Company’s normal business activities, except in case the time needed for getting the Board’s approval would land the Company in a situation to suffer considerable damage. In the latter case, as soon as possible in practice, the Board of Directors shall be informed about the measures possibly taken. A written Managing Director Contract has been prepared for the Managing Director.
For the period 1991 – 31 August 2009, Pirkko Rantanen-Kervinen (1949), Bachelor of Economic Sciences, was the Managing Director of Finnish Fur Sales. Mrs. Rantanen-Kervinen has been employed by Finnish Fur Sales since 1974: Director of Auction Services 1983; Financial Manager 1990; Deputy Managing Director 1990. Mrs. Rantanen-Kervinen is a member and Treasurer of the Board of Directors of the International Fur Trade Federation, a member of the Administrative Board of Tapiola Mutual Life Insurance Company, a Board member of the Vantaa Branch of Helsinki Chamber of Commerce, and a Board member of Saga Furs of Scandinavia.
Since September 1, 2009, Pertti Fallenius (1962) is the Managing Director of Finnish Fur Sales. He has been working for Finnish Fur Sales since 1985: Marketing Manager 1991; Marketing Director 1998; Vice Managing Director’s 2003; and Marketing Director for Saga Furs 2007. No shares. No debt from Finnish Fur Sales or its subsidiaries 31 August 2008.
Internal Control and Risk Management
Risks related to Finnish Fur Sales’ operations are divided into four categories: 1) business risks, 2) hazard and property risks, 3) financial risks and 4) operational risks. Within these risk categories, the Company has specified new market areas, violation of the SAGA trademark, image risks and political risks, changes in clientele, financial risks, economic and exchange rate fluctuations and personnel availability and structure as the major risks and uncertainties at the moment.
The Company seeks to manage and limit the risks by applying a consistent policy, which aims to ensure appropriate risk identification, assessment, management, and supervision throughout the Group. It is an integral part of the Group’s planning and management process, decision-making, day-to-day management and operations and supervision and reporting procedures. The Risk Management Process produces information about risks and about the progress in the measures to manage them. Based on the Risk Management Process, rectifying measures are taken or strategic changes are considered. During the financial year, the Company’s Board of Directors adopted a new financial policy and political risk and reputation risk management policy for the Company.
However, should any risks materialise, they could have a significant adverse effect on Finnish Fur Sales’ business, financial position, and results.
Due to its small size, the Company does not have a specific organisation for internal control. The Board of Directors familiarises itself with the auditors’ Control Audit Plan, and possibly gives an additional report in regard thereto. In connection with the Control Audit, the auditors shall present and have presented ways to develop and improve the Company’s internal controls. Based thereon, the Board has required and shall require that the Company’s management develop operative routines and controls. As a result from the changes in the clientele, in the Board operation and in the control audit, special attention has been paid to the valuation of the receivables.