Saga Furs Oyj : Corporate Governance Statement 2019/2020

Corporate Governance Statement 2019/2020

1. Introduction

This statement on the Corporate Governance of Saga Furs Oyj has been issued as a separate report and published on the Company website on 28 January 2021 simultaneouslywith the Report by the Board of Directors for the 2019/2020 financial year.

During the financial year, Saga Furs Oyj complied with the Finnish Securities MarketAssociation's Corporate Governance Code, which came into force in January 2020. The Corporate Governance Code is available on the Finnish Securities Market Asso-ciation's website at www.cgfinland.fi. Saga Furs Oyj is a supporting member of the Finnish Securities Market Association.

Departures from the recommendations

The Company departs from the Code in respect of the following recommendations:

Recommendation 10: Departing from the recommendation, only one of the membersof the Board of Directors is independent of the Company or its significant sharehold- ers. The Company considers that the nature of its business requires that the majorityof the Board members be profoundly familiar with, and committed to, the fur trade.

The composition of the Board of Directors is decided annually by the General Meet- ing.

Recommendation 15: Departing from the recommendation, the Remuneration and Nomination Committees include, in addition to members of the Board, representatives of the key shareholders of the Company. The Company's Board of Directors has considered it to be in the interests of the Company and all its shareholders to have representatives from both the Board and shareholders take part in the commit- tees' work.

Recommendation 17: Departing from the recommendation, the majority of the members of the Remuneration Committee are not independent of the company, since theBoard members constitute the majority of the Committee.

II Governance

Composition of the Board of Directors

The General Meeting elects a minimum of five and a maximum of eight members to the Board of Directors. The directors are elected for a term of one year that commences at the end of the General Meeting at which they are elected and ends upon the adjournment of the next General Meeting.

In the notice of the General Meeting, the Company communicates any proposals regarding the composition of the Board of Directors that the Board of Directors or shareholders with a minimum of 10% of votes yielded by the Company's shares have made prior to the notice. The Company reports the biographical details of the director candidates on its website and in the notice of the 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.

During the financial year 2019/2020, the following individuals acted as members of the Board of Directors of Saga Furs Oyj as of the General Meeting on 29 April 2020:

• Kenneth Ingman (b. 1970). Board member since 2014. Engineer, industrial engineering and management. Fur breeder since 2003. No shareholdings in the Company.
• Jari Isosaari (b. 1972). Board member and Chairman since 2019. Bachelor of Business Administration. Fur breeder since 1998. Owns 400 C shares di- rectly, and 580 C shares indirectly through Isosaaren Turkis Oy.
• Lasse Joensuu (b. 1971). Board member since 2014. Degree in fur farming. Fur breeder since 1989. Owns 110 Series C shares.
• Anders Kulp (b. 1973). Board member since 2016. M.Sc. (Econ), master fur breeder. Fur breeder since 2013. No shareholdings in the Company.
• Virve Kuusela (b. 1965). Board member since 2016. M.Sc. (Econ). DSV, Di- rector, Global Sales. No shareholdings in the Company.
• Isto Kärkäinen (b. 1960). Board member since 2017. Vocational school, rural entrepreneur. Fur breeder since 1985. No shareholdings in the Company.
• Magnus Ljung (b. 1970). Board member since 2020. M.Sc., Managing Direc- tor, Saga Furs Oyj. No shareholdings in the Company.
• Kennet Myllykoski (b. 1970). Board member since 2020. M.Sc. (Econ), fur farmer. No shareholdings in the Company.

Before the General Meeting on 29 April 2020, the following individuals also served as members of the Board of Directors in addition to the above:

• Hannu Sillanpää (b. 1961). Board member since 2011. Middle school, master fur breeder. Fur breeder since 1979. Owns 192 Series C shares.
• Rainer Sjöholm 1970). Board member since 2008. M.Sc. (Econ). Fur breeder since 1995. Owns 72 Series C shares.

Secretary to the Board of Directors is Juha Huttunen, Deputy Managing Director of the Company.

Board members independent of the Company or its significant shareholders

Virve Kuusela is independent of the Company and its significant shareholders in the sense referred to in the Corporate Governance Code (Recommendation 10). Six members of the Board of Directors have a customer relationship with the Company as fur producers. Moreover, Magnus Ljung is the Managing Director of the Company.

Charter 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 neces-sary, his or her deputy. The other duties of the Board of Directors include:

• deciding on the Company's strategy
• deciding on 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 General Meeting
• reviewing the Company's sales policy applied to its auctions
• monitoring the Company's financial risks
• monitoring the Company's risks
• deciding on the basic pricing of the pelt brokerage services the Company of- fers to its customers
• approving the composition of the Company's Management Group based 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 Boardof Directors gains information on the international market situation for raw pelts, becomes familiar with the issues regarding interest safeguarding in different market ar- eas, and monitors the flows of pelts into and out of the Company.

The Board of Directors evaluates its operations and working methods annually (Rec- ommendation 13).

According to its charter, the Board of Directors convenes a minimum of 14 times perfinancial year. During the 2019/2020 financial year, the Board met 35 times. The Board members' attendance rate at the meetings was nearly 100 per cent.

Individual attendance rates at Board meetings:

• Kenneth Ingman 34 meetings
• Jari Isosaari 35 meetings
• Lasse Joensuu 35 meetings
• Anders Kulp 35 meetings

• Virve Kuusela 35 meetings
• Isto Kärkäinen 35 meetings
• Magnus Ljung 18 meetings
• Kennet Myllykoski 18 meetings
• Hannu Sillanpää 17 meetings
• Rainer Sjöholm 17 meetings.

Diversity of the Board of Directors

At Saga Furs, diversity (Recommendation 9) is seen as an integral part of corporate responsibility as well as a success factor that enables the achievement of strategic objectives and continuous improvement.

Saga Furs' Board of Directors or Nomination Committee will take into account, in its proposal for the composition of the Board of Directors, the results of the annual evaluation of the Board, the needs and stages of development of the Company's opera- tions, as well as the areas of expertise required for any Committees of the Board. When considering the composition of the Board of Directors, the Board or Nomination Committee will consider, among other things, whether the Board is sufficiently diverse in terms of professional and educational background as well as gender and age, and whether it presents a suitable proportion of decision-making skills, complementary expertise and experience in order to be able to meet the requirements of theCompany's business operations and strategic objectives, and to support and challenge the Company's executive management proactively and constructively. Both the national languages of Finland shall be represented on the Board. In addition, Saga Furs considers that the nature of its business requires that the majority of the Board members be profoundly familiar with, and committed to, the fur trade.

A member of the Board of Directors of Saga Furs must have the possibility to devote sufficient time to his or her duties. When considering the composition of the Board ofDirectors, the long-term needs and succession planning shall also be taken into ac- count.

The Company's aim is that both genders are represented on the Board of Directors. To achieve this, the Board aims to actively communicate this goal to the sharehold- ers, as well as ensure that the search and evaluation process for new members of the Board includes representatives of both genders.

During the financial year, one member of the Board of Directors and their personal deputy were women and the other members as well as the personal deputies were men. The Company's aim to have both genders represented on the Board has thus been met.

Composition and activities of the committees established by the Board of Directors