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KONE’s general governance principles

The duties and responsibilities of KONE Corporation’s various governing bodies are determined by Finnish law and KONE’s corporate governance principles. KONE complies with the Finnish Corporate Governance Code 2015 published by the Securities Market Association, with the exception of recommendations 16 (Independence of the company of the members of the audit committee), 17 (Independence of the company of the members of the remuneration committee) and 18a (Independence of the company of the members of the nomination committee). The entire Code is available on the Internet at www.cgfinland.fi. These exceptions are due to the company’s ownership structure. The company’s largest shareholder, Antti Herlin, controls 62 percent of the company’s voting rights and 22 percent of its shares. The significant entrepreneurial risk associated with ownership justifies the main shareholder serving as either Chairman or Member of the Board of Directors and of its Committees and, in this capacity, overseeing the shareholders’ interests.

KONE’s administrative bodies and officers with the greatest decision-making power are the General Meeting of Shareholders, the Board of Directors of KONE Corporation, the Chairman of the Board and the President and CEO. At the Annual General Meeting of Shareholders, the shareholders approve the consolidated financial statements, decide on the distribution of profits, select the members of the Board of Directors and the auditors and determine their compensation.

KONE Corporation’s Annual General Meeting is convened by the Board of Directors. According to the Articles of Association, the Annual General Meeting of Shareholders shall be held within three months of the closing of the financial year on a date decided by the Board of Directors.

  • KONE Corporation’s Board of Directors has ratified the principles of internal control, risk management and internal auditing to be followed within the Group.

    Internal control

    The goal of KONE’s internal control system is to ensure that the Group’s operations are efficient and profitable, that its business risk management is adequate and appropriate, and that the information created is reliable. The control system also makes it possible to oversee that the determined operating principles and given instructions are followed.

    The Board’s Audit Committee monitors the functioning of the internal control process. The Corporation has an Internal Audit Department, which is separate from the operational management. The head of Internal Audit reports to the Chairman of the Board. The Internal Audit Department is responsible for auditing both the internal control system and the management of business risks. It reports its findings to the Audit Committee.

    Read more on KONE's Corporate Governance Statement 2016

  • This document is an unofficial translation from the Finnish original. In the event of any discrepancies between the Finnish and English versions, the Finnish version shall prevail.

    § 1 Business Name and Domicile
    The business name of the company is KONE Oyj and in English, KONE Corporation. Its domicile is Helsinki.

    § 2 Field of Operation
    The company’s field of operation is the metal industry, primarily the mechanical engineering and electrical engineering industries, trade in the products of the metal industry, and industrial and business activities related to these. In addition, the company may engage in the buying, selling, owning, and administration of property and securities.

    3 § Shares
    The shares of the company are divided into class A and class B shares.

    Share issue
    In a share issue against payment, either shares of both classes or only of class B may be issued in accordance with a decision of a General Meeting of Shareholders.

    In a share issue in which shares of both classes are issued, the shares shall be issued in proportion to both classes of shares and by offering to shareholders shares in both share classes in proportion to their previous holdings of shares in such class.

    Dividend on class B shares
    When distributing dividends, the dividend paid on class B shares is higher than that paid on class A shares. The difference between the dividends paid on the different classes of shares can be a minimum of one (1) percent and a maximum two and one-half (2.5) percent, calculated based on the amount obtained by dividing the share capital entered into the Trade Register by the number of shares entered into the Trade Register.

    Right to vote pertaining to shares
    In a General Meeting of Shareholders, each class A share entitles its holder to one vote and each full ten class B shares entitle their holder to one vote, but each shareholder has a minimum of one vote.

    Conversion of class A shares to class B shares
    Upon an offer by the Board of Directors, the holder of class A shares shall have the right to present a claim that the class A shares owned by him or her be converted to class B shares at a ratio of 1:1. The offer by the Board of Directors shall be communicated to the holders of class A shares by a letter sent to their addresses entered in the company’s shareholders’ register. Any claim regarding a conversion shall be presented in writing to the company’s Board of Directors. The claim shall specify the shares for which the conversion is desired. After the period of the offer has expired, the Board of Directors shall forthwith carry out the conversions based on the claims presented. Thereafter, a notification of the conversion shall forthwith be made to the Trade Register for registration. The conversion has been put into effect when the registration has been made.

    The shares of the company are in the book-entry securities system.

    § 4 Board of Directors
    The Board of Directors of the company shall include a minimum of five (5) and a maximum of ten (10) regular members, as well as a maximum of three (3) deputy members.

    The Board of Directors shall elect the Chair of the Board and the Deputy Chair from amongst its members.

    The term of office of the Board of Directors shall expire at the end of the first Annual General Meeting of Shareholders following the election.

    The Board of Directors is deemed to constitute a quorum when more than a half of its members are present.

    § 5 Managing Director
    The Board of Directors of the company shall appoint the company’s Managing Director.

    § 6 Right of Representation
    The company is represented by the Chair of the Board of Directors and by the Managing Director, either one of them alone, and by the members and deputy members of the Board of Directors, any two of them jointly.

    The Board of Directors shall decide on the granting of powers of procuration.

    § 7 Audit
    The company shall have a minimum of one (1) and a maximum of three (3) auditors. The auditors must be authorized public accountants.

    The auditors are elected annually at the annual general meeting for a term that shall expire at the end of the first Annual General Meeting of Shareholders following the election.

    § 8 Summons to a General Meeting
    The summons to a General Meeting of Shareholders must be published on the website of the company no earlier than three (3) months and no later than three (3) weeks prior to the General Meeting of Shareholders, but in any case at the latest nine (9) days prior to the record date of the General Meeting of Shareholders. The Board of Directors may decide to publish the summon or the notice of the General Meeting during the same time limit in one or several newspapers.

    § 9 Declaration of Intention to Attend a General Meeting
    In order to be permitted to participate in a General Meeting of Shareholders, a shareholder shall, no later than the date designated by the Board of Directors and mentioned in the summons to the Meeting, which date may be no earlier than ten (10) days before the Meeting, declare to the company her/his intention to attend.

    § 10 General Meeting of Shareholders
    The Annual General Meeting of Shareholders shall be held annually within three months after the closing of the financial period, on a day designated by the Board of Directors.

    At the Meeting, the following shall be:

    presented

    1) the financial statements, which shall comprise the consolidated financial statements, the Board of Directors’ Report;
    2) the Auditors’ Report;

    decided

    3) the adoption of the financial statements;
    4) the use of the profit shown on the balance sheet;
    5) granting discharge from liability to the members and deputy members of the Board of Directors and to the Managing Director;
    6) the number of members and deputy members of the Board of Directors and their remunerations;
    7) the number of auditors, and their remunerations;

    and elected

    8) the Board of Directors’ regular members and, if needed, deputy members;
    9) one or several Auditors.

    § 11 Financial Period
    The financial period of the company is the calendar year.

    § 12 Arbitration
    Any disputes between the company on the one hand, and the Board of Directors, any member of the Board of Directors, the Managing Director, any auditor, or any shareholder on the other hand, regarding the application of the Limited Liability Companies Act or the present Articles of Association, shall be settled by arbitration as prescribed in the Limited Liability Companies Act and the Arbitration Act.

    (Updated on March 28, 2012)

  • KONE Corporation’s Auditors are Niina Vilske, Authorized Public Accountant, and PricewaterhouseCoopers Oy, Authorized Public Accountants. The fees paid to companies in the PricewaterhouseCoopers chain for 2016 were EUR 3.1 million for auditing and EUR 1.6 million for other consulting services.

    Contact Information
    PricewaterhouseCoopers Oy
    tel. +358 (0)20 787 7000 (exchange)
    Email: firstname.lastname@fi.pwc.com