2017/2018


Corporate Governance Report

AS PRFoods organises its business activities on the basis of its articles of association and national legal norms, and as a public enterprise on the requirements of the Tallinn Stock Exchange, Corporate Governance Recommendations (CGR) and the principles of equal treatment of shareholders and investors. The companies listed on the NASDAQ Tallinn Stock Exchange are obligated to publish a corporate governance report in the composition of their annual report describing the principles of CGR which are not complied with, accompanied by an explanation for such a deviation. The report below outlines the principles of CGR not fully adopted by PRFoods and the reasons thereof. In addition, the report provides information on general meetings, the Group’s supervisory board and management board and management principles of AS PRFoods.

Participation in a General Meeting via Means of Communication Equipment

Issuers shall make participation in the general meeting possible via means of communication equipment (the Internet) provided the technical equipment is available and it is not too costly for the issuer. AS PRFoods lacks the adequate technical equipment and acquiring of it would be too costly. In accordance with the policy of transparency, we used the Webinar service of Nasdaq Baltic in conducting the general meeting. PRFoods made live broadcast of shareholder’s general meeting and answered to the additional questions. The meeting was held in Estonian. The webinar was chaired by Indrek Kasela, the chairman of the Management Board of AS PRFoods who informed about the issues on the agenda of the general meeting of shareholders and introduced the results of the period. For technical reasons, participants of the webinar were unable to exercise their shareholders’ rights (voting). The webinar was recorded and published both on the Group’s website www.prfoods.ee and in the youtube.com account of Nasdaq Baltic.

Responsibility Areas of Management Board Members

The responsibility areas of the management board members are approved by the management or supervisory board. The chairman of the supervisory board concludes a contract of service with a member of the board for discharge of their functions. The company’s management board has one member who performs the duties of the managing director and is responsible for the functioning of the company’s strategic areas, including integration of internal control and management processes with the company’s accounting procedures, both daily and periodical. The chairman of the supervisory board has signed a contract of service with the member of the management board.

Remuneration Principles of Management Board Members

Basic wages, performance pay, severance packages, other payable benefits and bonus schemes of a management board member as well as the essential features of these shall be published in clear and unambiguous form on website of the issuer and in the CGR report. Information published shall be deemed clear and unambiguous if it directly expresses the amount of expense to the issuer or the amount of foreseeable expense as of the day of disclosure. The chairman of the management board receives remuneration in accordance with the contract of the management board member. The amount of the remuneration of the chairman of the management board is established with the contract of the management board member and is not to be disclosed as agreed by the parties. The chairman of the management board is entitled to receive a severance fee of up to 6 months remuneration of the member of the management board.

Significant Transaction of a Management Board Member with the Issuer

The supervisory board shall approve the transactions, which are significant to the issuer and concluded between the issuer and a member of its management board or another person connected/close to them and shall determine the terms of such transactions. The transactions approved by the supervisory board concluded between the issuer and a member of the management board or another person connected/close to them are published in the CGR report. No such transactions have taken place during the past financial year.

Control Executed by the Supervisory Board over Activities of the Manager and the Issuer

The supervisory board shall regularly assess the activities of the management board and its implementation of the issuer’s strategy, financial condition, risk management system, the lawfulness of the management board activities and whether essential information concerning the issuer has been communicated to the supervisory board and the public as required. Upon the establishment of committees by the supervisory board, the issuer shall publish on its website their existence, duties, membership and position in the organization. Upon change of the committee structures, the issuer shall publish the content of such changes and the period during which the procedures are in effect.

Disclosure of Remuneration to Members of Supervisory Board

The amount of remuneration of a member of the supervisory board shall be published in the CGR report, indicating separately basic and additional payment (incl. compensation for termination of contract and other payable benefits). The general meeting of shareholders of AS PRFoods is competent to elect and approve the composition of the supervisory board and their term of office. According to the articles of association of PRFoods, the supervisory board consist of three to seven members who are elected by the general meeting for a term of three years. The general meeting has confirmed the remuneration fees of members of the supervisory board as follows: fee for the chairman 1,000 euros a month, fee for the vice chairman 750 euros a month and the fee of the member 500 euros a month. No severance fee is to be paid to the member of the supervisory board.

Attendance at Supervisory Board Meetings by the Members of Supervisory Board

If a member of the supervisory board has attended less than half of the meetings of the supervisory board, this shall be indicated separately in the CGR report. In 18 months 2017/2018, all members of the supervisory board attended all supervisory board meetings.

Conflict of Interests Situations

Members of the supervisory board shall promptly inform the chairman of the supervisory board and management board regarding any business offer related to the business activity of the issuer made to him, a person close to him or a person connected with him. All conflicts of interests that have arisen in preceding year shall be indicated in the CGR report along with their resolutions. Members of the supervisory board refrain from conflicts of interests and adhere to the prohibition of competition. The supervisory board and the management board cooperate closely in accordance with the articles of association and in the interests of the business undertakings and its shareholders. There were no such conflicts of interest during 18 months 2017/2018.

Information on the Issuer’s Website

On the issuer’s website, among others the general strategy directions of the issuer as approved by the supervisory board shall also be accessible. The Group’s management board believes that the strategy is part of the Group’s commercial secrets and therefore cannot be disclosed. General directions and significant issues are provided in the Management Report.

The Issuer’s Meetings with Journalists and Analysts

The issuer shall disclose the dates and places of meetings with analysts and presentations and press conferences organized for analysts, investors or institutional investors on its website. The issuer enables shareholders to participate at such events and makes presentations available on its website. The issuer shall not arrange meetings with analysts and presentations organized for investors directly before dates of publishing a financial report. The issuer shall treat all shareholders equally. Compulsory, significant and price-sensitive information is first disclosed via the information system of the Tallinn Stock Exchange and then on the websites of the Estonian Financial Supervision Authority and the Group. In addition, every shareholder is entitled to request additional information from the Group and set up meetings. The Group’s management board does not consider it important to keep a logbook on timetable and agenda of meetings with various shareholders as these meetings are limited to information that is already disclosed. This rule applies on all meetings, including the ones held shortly before disclosing financial reports.

Auditor of the Issuer

The general meeting of shareholders of AS PRFoods held on 30 May 2017 appointed AS PricewaterhouseCoopers as the Group’s auditor for the financial year of 18 months 2017/2018. Information about the auditor is available on the Group’s website. The remuneration of the auditor will be determined pursuant to the agreement to be concluded with the auditor and the parties have agreed not to disclose the amount of the remuneration. Pursuant to the Auditing Act, the sworn auditor representing the external audit company is to be changed at least once in every seven years. In the financial year 18 months of 2017/2018 the Group has paid auditing fees in the amount of 72 thousand euros and 9 thousand euros for other limited assurance engagements as well as other advisory services.

GOVERNANCE PRINCIPLES AND ADDITIONAL INFORMATION

AS PRFoods is a public limited company and its governing bodies are the shareholders’ general meeting, the supervisory and the management board.

General Meeting

The general meeting of shareholders is the Group’s highest governing body competent to amend and approve new articles of association, change the amount of share capital, recall members of the supervisory board and resolve on dissolution of the company, decide on division, merger or restructuring of the company, provided least 2/3 of the votes represented by shareholders at the general meeting are in favour.

General meetings are ordinary (OGM) and extraordinary (EGM) meetings. An OGM shall be convened by the management board once a year not later than within six months after the end of the financial year. The management board shall convene an EGM if the Group’s net assets fall below the limit allowed by law or if the meeting is requested by the supervisory board, auditor or shareholders whose shares represent at least 1/10 of the share capital. A general meeting has quorum when more than half of the votes determined by shares are present. The list of persons entitled to participate at the general meeting is determined 7 days before the meeting.

The OGM of shareholders of AS PRFoods was held on 30 May 2017 in the Nordic Hotel Forum. 22 shareholders or their authorised representatives collectively representing 26,755,600 votes or 71.0% of the total votes attended the OGM. Thus, the meeting was authorized to adopt resolutions on issues on the agenda. The agenda of the meeting comprised of approval of the annual report of financial year 12 months 2016, deciding on distribution of the financial year’s profit, and appointing the auditor including determining the auditor’s fee. The chairman of the management board of AS PRFoods held a presentation. The meeting adopted the resolutions on all issues on the agenda of the OGM according to the proposals made by the supervisory board. Information on the adoption of resolutions and contents were published after the end of the meeting via the information system of NASDAQ Tallinn and on the website of the Group at www.prfoods.ee.

The EGM of AS PRFoods from 19.07.2017 was called to approve the acquisition of majority holding of John Ross Jr. (Aberdeen) Ltd and Coln Valley Smokery Ltd. 14 shareholders representing 26,073,268 shares and 69.19% of votes participated in the EGM. The chairman of the management board of AS PRFoods held a presentation. The EGM approved the proposed acquisition. Information on the approval of resolutions and contents were published after the end of the meeting via the information system of NASDAQ Tallinn and on the website of the Group at www.prfoods.ee.

The EGM of AS PRFoods from 28.08.2017 was held to approve the acquisition of Trio Trading Ab Oy. 20 shareholders representing 26,717,106 shares and 70.90% of votes participated in the meeting. The chairman of the management board of AS PRFoods held a presentation at the meeting. The EGM approved the proposed acquisition. Information on the approval of resolutions and contents were published after the end of the meeting via the information system of NASDAQ Tallinn and on the website of the Group at www.prfoods.ee.

The third EGM of AS PRFoods was held on 11.12.2017. 10 shareholders representing 25,935,263 shares and 68.83% of votes participated in the meeting. The agenda of the EGM included: to change the beginning and the end of a financial year of AS PRFoods and thus, to change the duration of the financial year of 2017 and to amend the clause 2.1 of articles of association accordingly, amend the clause 6 of the articles of association, and to prolong the term of the members of the supervisory board by five years. The EGM approved all the proposals on the agenda as proposed by the supervisory board. Information on the approval of resolutions and contents were published after the end of the meeting via the information system of NASDAQ Tallinn and on the website of the Group at www.prfoods.ee.

Supervisory Board

Pursuant to law, a supervisory board of a public limited company is a supervisory body responsible for planning the activities of a company, organizing its management and supervising the activities of the management board.

According to the articles of association of PRFoods, the supervisory board has three to seven members elected by the general meeting of shareholders for the term of three years. Members of the supervisory board elect a chairman from among themselves. Chairman of the supervisory board is responsible for organizing the work of supervisory board and has a casting vote in case of tied vote.

As of the date of the report, the supervisory board of PRFoods is comprised of the following members: Lauri Kustaa Äimä (since incorporation), Kuldar Leis (elected on 29 May 2013), Aavo Kokk (elected on 5 May 2009), Harvey Sawikin (elected on 5 May 2009), Vesa Jaakko Karo (elected on 17 August 2009) and Arko Kadajane (elected on 29 May 2012). The terms of office of all the current members of the supervisory board will end on 10 December 2022. The supervisory board of PRFoods includes four independent members — Aavo Kokk, Vesa Jaakko Karo; Kuldar Leis and Arko Kadajane. The chairman of the supervisory board is Lauri Kustaa Äimä and the vice-chairman of the supervisory board is Kuldar Leis.

The meetings of the supervisory board are held when necessary but no less frequently than once per quarter. The meeting of the supervisory board has a quorum when more than half of the members participate.

In addition to the meetings, the supervisory board adopted resolutions without convening a meeting if it was necessary. The management board informed the supervisory board on a regular basis of the operations and financial status of PRFoods and the supervisory board provided the management board with necessary directions and support in conducting the everyday business activities of the company. In case a contract of service with a member of the supervisory board expires or is terminated prematurely, the Group will not incur a higher liability to pay a benefit than prescribed by the law. As at the end of the financial year, the Group’s supervisory board members owned directly and indirectly 3.95% of the Group’s shares (31.12.2016: 3.95%).

Management Board

The management board is the management body of the company that represents and manages the company according to the law and provisions of the articles of association. The management board is required to act in the most financially appropriate manner. According to the articles of association, the management board of AS PRFoods consists of one to four members. The members of the management board shall be elected by the supervisory board for three years.

The competence of the supervisory board includes the election of the chairman of the management board, on the latter’s proposal, appointment and recalling of members of the management board. A member of the management board may represent the company in all legal transactions. The Management Board of AS PRFoods consists of one member. According to the supervisory board, from 2 February 2015 the only member of the management board is Indrek Kasela. In its day-to-day management, the company’s management board is independent and acts in the best interests of all shareholders, ensuring thereby the company’s sustainable development in line with the set objectives and strategy. Moreover, the company’s management board is responsible for ensuring functioning internal control and risk management procedures in the company.

The competence and powers of the management board are regulated by the Commercial Code and by the company’s articles of association with no deviating exceptions or agreements made or entered into. The chairman of the management board receives remuneration according to the contract of service and is additionally entitled to receive severance benefit for up to 6 months’ remuneration. Nor a member neither the chairman of the management board has any pension-related rights. The chairman is responsible for organising business operations on the Group level and also fulfils the tasks of a managing director. In subsidiaries, the local management ensures adherence to business practices. As at the end of the financial year, the Group’s management board member owned via direct and indirect holdings a total of 4.04% of the Group’s shares (31.12.2016: 2.69%). More detailed information about the education, career, membership in management bodies of business undertakings and shareholdings in AS PRFoods of members of the supervisory board and management board are provided on the Group’s website.

Supervisory and Management Boards of Subsidiaries

The chairman or a management board member of a subsidiary is appointed by the supervisory board of the subsidiary. Below is a list of supervisory boards and management boards of subsidiaries that are 100% owned by AS PRFoods as at 30 June 2018.

Company Management Board Supervisory Board
Saaremere Kala AS Indrek Kasela (Chairman), Margus Rebane, Mats Storbjörk; Ville Sammallahti, Christopher Charles Leigh, Victoria Louise Leigh-Pearson Mairi Paiste (Chairman), Kuldar Leis, Lauri Kustaa Äimä
Vettel OÜ Indrek Kasela (Chairman), Ivari Vokk
GourmetHouse OÜ Endel Varik (Chairman), Ivari Vokk  
Heimon Kala Oy Indrek Kasela (Chairman), Margus Rebane, Mats Storbjärk, Ville Sammallahti, Pekka Pentti Olavi Lahtinen (Managing Director) 
Trio Trading Ab Oy Indrek Kasela (esimees), Mats Storbjärk, Ville Sammallahti  
Överumans Fisk AbMargus Rebane (Chairman), Pekka Pentti Olavi Lahtinen (Substitute Member) 
JRJ & PRF Ltd Indrek Kasela, Kit Harrison, Vesa Jaakko Karo, Christopher Charles Leigh, Louise Victoria Leigh-Pearson  
Överumans Fisk Ab Indrek Kasela, Christopher Charles Leigh, Victoria Louise Leigh-Pearson, Jennifer Anne Leigh  
Överumans Fisk Ab Indrek Kasela, Christopher Charles Leigh, Victoria Louise Leigh-Pearson  


Additional Management Bodies and Special Committees

The Group has regulated necessary procedures with guidelines and there has been no practical need to set up additional management/governing bodies. In 2010, the Group’s supervisory board set up an auditing committee to monitor and analyse processing the financial information, efficiency of risk management and internal controls, the process of auditing of consolidated annual financial statements, the independence of the auditor representing the auditing company under the law, and to submit to the supervisory board proposals and recommendations in issues prescribed by the law. Since November 2017, the committee is chaired by Aleksander Zaporožtsev, the members of committee are since 2010 Aavo Kokk and Mairi Paiste.

Additional Management Bodies and Special Committees

The management of AS PRFoods considers a well-functioning working environment on all levels of the Group important. To achieve and maintain it the Group employs people of different gender, national background and experiences. 

Information Management

As a listed company, AS PRFoods adheres to the principles of openness and equal treatment of investors. The information required within the stock exchange rules and regulations is published regularly in accordance to the set terms, whereas the Group employs the principle of not publishing forward-looking statements. It publishes and comments factual information only. For timely notification of investors and the public, the Group operates a website that contains all stock exchange announcements and financial reports.

  • © 2018 PRFoods LLC
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