Corporate Governance

Applicable rules and regulations

Vapo Oy is a Finnish non-listed joint-stock company whose decision-making and management comply with the Limited Liability Companies Act and the company’s Articles of Association and Shareholders’ Agreement. In addition, Vapo Oy complies with the recommendation on the handling of Corporate Governance matters in publicly owned and affiliated companies issued by the Ownership Steering Department in the Prime Minister’s Office and, where applicable, the Securities Market Association’s Finnish Corporate Governance Code, which took effect on 1 January 2016.

The Articles of Association are attached (Appendix 1).

The company publishes an annual Corporate Governance Statement together with the annual report.

Group structure

The operations of the Group’s parent company Vapo Oy are composed of the business areas of the local energy value chain - Fuels, Heat and Power - as well as the regional operations in Finland, which are in the same responsibility matrix for regional operations as the aforementioned. Vapo Ventures, which operates within Vapo Oy, develops new business operations for Vapo. In addition to the above, the Group includes, as an independent business, Vapo Oy’s subsidiary Kekkilä Oy, which operates in the sectors of garden substrates, fertilisers and environmental solutions. Vapo Oy’s most important subsidiaries are Neova Ab in Sweden and AS Tootsi Turvas in Estonia. In line with Vapo Oy’s operations, the business of both of these subsidiaries covers the entire value chain of local energy. Kekkilä Group includes Kekkilä Oy in Finland and Hasselfors Garden AB in Sweden. In addition, the Vapo Group includes the subsidiaries and associates of the aforementioned companies.

The Vapo Group’s senior administrative bodies are the Annual General Meeting of Vapo Oy, the Supervisory Board, the Board of Directors, the Chief Executive Officer and the boards and managing directors of its subsidiaries. Vapo Oy’s Board of Directors appoints the members of the boards of directors of its subsidiaries and other Group companies, ensuring that the work of the statutory executive bodies supports the management of operative business. The Board of Directors of Kekkilä Oy includes external members. The steering group of the Vapo Ventures unit also includes external members.

The operations of Vapo Oy’s business areas (Peat Products, Wood Energy, Heat and Power) are managed by the directors of each division and the Chief Operating Officer in charge of the Finnish regional organisation, who report to Vapo Oy’s Chief Executive Officer. The operational management of Kekkilä Oy and Neova AB is the responsibility of the managing directors of these subsidiaries, who report to their respective companies’ Boards of Directors. The operational management of AS Tootsi Turvas is the responsibility of the company’s Board of Directors, which reports to the Supervisory Board of AS Tootsi Turvas. The Chief Executive Officer of Vapo Oy acts as the Chairman in Kekkilä Oy, Neova AB and the steering group of the Vapo Ventures unit. The Chairman of the Supervisory Board of AS Tootsi Turvas is the Chief Operating Officer in charge of the Finnish regional organisation.

Apart from the Group companies where Vapo Oy’s Chief Executive Officer acts as a Board member, the chairman of the Board of Directors is Vapo Oy’s Business Area Director or the managing director of the subsidiary to whose business the company’s operations are most closely associated.

The Boards of Directors of Group companies monitor and assess their work with annually conducted internal evaluations.

Vapo Oy’s Board of Directors appoints the Audit Committee and the Remuneration Committee from among its number.