Applicable statutes, guidelines and recommendations
Administration and governance of Patria is subject to the provisions of the Finnish Companies Act and other legislation relevant to its operations. In addition, Patria follows other guidelines and recommendations concerning good corporate governance applicable to companies in which the Finnish state is the majority shareholder.
Group organisation and administrative system
Patria is operationally divided into business units. Patria Group consists of the parent company, Patria Oyj, and its wholly owned subsidiaries. In addition to the wholly owned subsidiaries, Patria owns 61.8% of Millog Oy and 50% of Nammo AS, a Norwegian company. The statutory bodies of Patria Oyj – the General Meeting of Shareholders, the Board of Directors, and the President and CEO – are responsible for the company’s administration and operations.
The Group’s operating activities are managed by the President and CEO, assisted by the Board of Management. Each business unit has a management group of its own. The statutory boards of wholly owned Group companies other than the parent company are only responsible for the statutory minimum duties specified in the relevant legislation.
According to the Articles of Association, Patria Oyj must have a Consultative Committee appointed by the General Meeting of Shareholders. The Consultative Committee of Patria Oyj is an advisory body serving the Board of Directors and as such does not have statutory duties. The Articles of Association further state that the Board of Directors shall consult the Consultative Committee on matters that concern major decrease or increase of operational activities, material changes in the company´s organization, and on issues which are otherwise of material importance to the industry that the company is engaged in, either in Finland or internationally.
The Consultative Committee consists of a chairman, a vice-chairman, and a maximum of ten other members. During the current financial period, the committee had 11 members. As a general rule, the Consultative Committee has convened four times a year. In 2014, the Consultative Committee has convened three times.
Composition of the Board of Directors and the election procedure
According to the Articles of Association as currently in force, the Board of Directors of Patria Oyj consists of a chairman, a vice-chairman, and a minimum of three and a maximum of seven other members. During the current financial period, the Board had six members. The General Meeting of Shareholders elects the chairman, the vice-chairman, and other Board members, and decides on their remuneration. The Board members are elected for one year at a time, their terms of office ending at the close of the first Annual General Meeting held subsequent to their election. The Board of Directors meets at least eight times a year. The Board has convened fifteen times in 2014.
Principal duties of the Board of Directors and distribution of duties
The Board of Directors is responsible for the governance of Patria and the appropriate organization of Patria´s operations in accordance with applicable legislation, the Articles of Association and any instructions issued by the General Meeting of Shareholders. In addition to its statutory duties, the Board’s principal duty is to make decisions on the Group’s strategic focus, to monitor and steer the Group’s business operations, to ensure that the Group complies with legal provisions applicable to its operations and conducts business in a commercially sustainable manner, providing added value to its owner. The Board also makes decisions on the Group’s key operating principles, approves annually the Group’s financial targets and operational objectives, as well as its financial statement and any interim reports, and decides on material investments of the Group.
The Board confirms the ethical values and operational principles of the Group and monitors compliance with these values and principles. The Board also approves the general setup of the Group’s organizational and operational structure. The Board of Directors has set up a Nomination and Compensation Committee as well as an Audit Committee. The Nomination and Compensation Committee consists of three members. It prepares the Group’s and the management’s payroll structures as well as any bonus and incentive systems. It also approves key appointments and nominations. The Audit Committee also consists of three members. Its responsibility is to monitor e.g. implementation of the Group’s internal controls, risk management, financial reporting and it is responsible for supervising the Group´s compliance and ethics related (including specifically anti-corruption related) program and activities. No other particular distribution of duties has been agreed upon among Board members.
The President and CEO and the Group management
Patria Oyj’s president and CEO is responsible for managing the company’s and the Patria Group’s business activities and administration, in accordance with the provisions of the Companies Act and any instructions and guidelines issued by the Board of Directors. The President and CEO is assisted in Group management by the Board of Management, which convenes monthly and which consists of Presidents of each Business Unit, Chief Financial Officer, General Counsel & Chief Compliance Officer, Chief Strategy Officer, Chief Communications Officer and Chief Human resources Officer . In addition, the Group management meets in other combinations as and when necessary for management purposes.
Patria also has an Administrative Management Group chaired by the Chief Financial Officer. The purpose of the Administrative Management Group is to develop and rationalize Patria’s administration and to ensure the quality and efficiency of administrative services required by Patria’s business operations. The Administrative Management Group members are heads of Patria’s HR, Finance, ICT, Procurement, and Risk Management function.
In Patria corporate responsibility related activities and reporting are steered by Patria’s Corporate Responsibility Steering Group. The Steering Group is coordinated by Patria’s Chief Communications Officer. Patria’s Ethics Officer participates in the steering groups meetings and supports the work of the Steering Group. The General Counsel and Chief Compliance Officer reports to the Audit Committee.
Compensation and benefits
Information regarding compensation and benefits of the management is available in the attachment of the Financial Statement, see chapter 7 (Personnel expenses).
Monitoring and controls
In accordance with the Companies Act, the Board of Directors is responsible for ensuring that the monitoring and controls of accounts and funds management has been organized appropriately. The president and CEO is responsible for ensuring that the company’s accounting complies with legislation and that the funds management is reliably organized. Patria’s management is responsible for ensuring that the Group’s day-to-day operations comply with all applicable legal requirements and Board decisions, and that the Group´s risk management has been organized in an appropriate manner.
The Group’s division into business units increases efficiency and focus of management thereof and facilitates organization of efficient monitoring and control thereof. An operational reporting system has been set up for the Group’s financial monitoring and control. It produces versatile information on the Group’s financial standing and development on a monthly basis. The Group also has clearly defined decision-making authorizations related to investments.
Patria has an independent, external Internal Audit function, which evaluates and contributes to ensuring the efficiency and feasibility of risk management and internal controls, the reliability of financial reporting and the compliance of the operations, and which reports to the Audit Committee. The Internal Auditors comply with the International Standards for the Professional Practice of Internal Auditing. Internal Audit reports on its activities and findings to the Audit Committee and Patria’s management. The Audit Committee confirms the audit plans annually. The company’s auditors report their observations at least once a year to the relevant business units and to the Group’s financial management, as well as to the Board of Directors and the Audit Committee. The auditors also submit a statutory auditors’ report to the company’s shareholders.