Corporate Governance

Fellow Finance Plc ("Company") is a Finnish public limited company following Finnish Company Law, Accounting Act, Payment Services Act and Articles of Association of Fellow Finance Plc.

In its accounting practices and interim reports Company follows the Finnish Accounting Standards, FAS which is based on the Accounting Act of Finland and the Accounting Decrees as well as the statements and instructions of Accounting Board of Finland.

According to the Finnish Companies Act and Articles of Association the primary responsibility of the Company governance and and operations are with the Company bodies which are General Meeting of Shareholders, Board of Directors and CEO. The ultimate authority in Company is exercised by the Shareholders in the General Meeting. Company has also a Management Team lead by CEO.

To organise the Company administration the Board of Directors has defined the corporate governance principles together with roles, responsibilities and authorisations.

Group structure

The parent company of Fellow Finance Group is Fellow Finance Ltd. The company domicile is Helsinki. The parent company is the primary business unit in Fellow Finance Group. The Company has a Finnish subsidiary, Lainaamo Oy, a Polish subsidiary, Fellow Finance Polska Sp. z o.o. and a Swedish subsidiary, P2P Sverige Ab.

General Meeting of Shareholders

The General Meeting is Fellow Finance’s highest decision-making body, at which the shareholders exercise their right to vote and voice their views and set questions. Fellow Finance convenes General Meeting annually by the end of June and the Meeting agenda will consist of matters defined in Articles of Association and other matters proposed to the Meeting agenda. The Company Shareholders are invited to the General Meeting with a notice of General Meeting published on the Company website and based on the Board of Directors judgement in the domestic newspapers in Finland.

The Board will decide on calling the annual general meeting. The invite to the annual general meeting must be delivered to the shareholders three months at the earliest and three weeks at the latest before the annual general meeting, but no later than nine days before the annual general meeting’s record date.

In order to use their right to speak and vote, the shareholders must register as stated in the meeting invite, at the latest by the date defined in the invite, which can be ten days before the annual general meeting, at the earliest. Only the shareholders that have been recorded into the company’s shareholder registry, maintained by Euroclear Finland Ltd., by the annual general meeting’s record date, have the right to participate in the meeting and use their vote. Shareholders may use their rights during the annual general meeting either in person or through an authorised representative.

The Board can convene an Extraordinary General Meeting to resolve matters proposed. Shareholders, whose ownership is at least 10% of the Company shares outstanding and the Company auditor can propose matters to be resolved in an Extraordinary General Meeting, after which Company is required to convene Extraordinary General Meeting.

In principle, the General Meeting will handle matters on meeting agenda. According to the Limited Liability Companies Act the Shareholders can also propose Company Board to add matters to the next General Meeting agenda. The company will publish well in advance a day until which the Shareholders need to present their proposals for General Meeting agenda. A proposal is submitted in time if the Board has received an information four (4) weeks before publication of the invitation to the Annual General Meeting. The Board will prepare the proposals of the Board Members and remuneration of the Board Members.

Below is a list of the most important matters to resolve by Annual General Meeting:

Annual General Meeting 2019

Board of Directors

Board of Directors is responsible for the Group management and organizing the administration in proper manner. According to Articles of Association the Board has at least four (4) but not more than eight (8) members.

In order to act efficiently the Board needs to have enough members with adequate and versatile experience. The process to find, present and appoint Board Members is a lengthy and long-term process. The most significant owners of Company are committed to promote a versatile and highly professional composition of Board of Directors.

The General Meeting of Shareholders appoints Board Members and the chairman of Board of Directors. Board of Directors is appointed in Annual General Meeting of Shareholders and its term will last until the end of the Annual General Meeting of the next year. The General Meeting will also decide on the Board Member remuneration.

Board of Directors approves the principles Company strategy, investments, organisation, internal audit, risk management and financing and appoints Group CEO.

Board of Directors assembles as frequently as possible to take care of its duties. The Board is quorate when more than half of the Board Members are present. Board of Directors has not established subcommittees. The Board will handle the duties of Audit Committee and Nomination and Compensation Committee as a part of its agenda.

CEO

The CEO is in charge of execution of the strategy of Fellow Finance group and of day-to-day administration of the company in accordance with the instructions and orders of the Board of Directors. The CEO also ensures that the accounting practices of the company comply with the law and that finances are organized in a reliable manner.

The CEO proposes the agenda of a Board meeting and prepares the resolution proposals. The Board of Directors appoints the CEO and decides on his remuneration and other terms of the CEO-contract.

The Company CEO since 2013 has been Jouni Hintikka.

Management team

The Management team of Fellow Finance Plc supports the CEO in executing the group strategy, monitoring the business activities and business environment, coordination the operations. The Management team prepares resolutions for Board of Directors decision and gives its opinions in changes in business. The Management team informs the Board of Directors on unusual alterations in business.

Shareholding of the Board of Directors

In the table below there has been informed the number of Fellow Finance Plc's shares and percentage of the capital stock that the members of the Board of Directors or their authority organizations hold on 30th of August 2019.

Name Shares (%)
TN VENTURES OY (Teemu Nyholm) 830 843 11,58
OY T&T NORDCAP AB (Harri Tilev) 646 436 9,01
CONVESTIA OY (Kai Myllyneva) 72 000 1,00
ALANNE CAPITAL OY (Jorma Alanne) 5750 0,08
LAURILA ESA 4310 0,06

Shareholdings of the Management Team

In the table below there has been informed the number of Fellow Finance Plc's shares and percentage of the capital stock that the members of the Management team or their authority organizations hold on 30th of August 2019.

Name Shares (%)
MARGIN INVESTMENTS OY (Jouni Hintikka) 830 843 11,58
TN VENTURES OY (Teemy Nyholm) 830 843 11,58
AIRIKKALA ANTONI 56 000 0,78

Audit

The General Meeting of Shareholders of Fellow Finance Plc appoints the accountant for the group companies. The Company auditor is an authorized public accountant Mr. Timo Hell from Advico Grant Thornton. The purpose of the legal audit is to ensure that the financial report will show correct, accurate and sufficient information on Company operations and economic situation from the financial year. The financial year of Company is the calendar year.

It is on auditor’s responsibility to audit the correctness of the accounting of Company and publish the audit report to the General Meeting. In addition Finnish law states, that the auditor also controls the lawfulness of the corporate governance. The auditor reports to the Board of Directors at least once a year. The auditor remuneration is published to the Company Shareholders.

Compliance

Compliance is responsible for monitoring that Company follows the external regulation and internal policies in its operations. The compliance function is outsourced to Lexia Attorneys Ltd.

Internal audit

Internal audit is responsible for auditing the internal risk management system. The internal audit is independent and objective evaluation ensuring the adequacy and efficiency of internal monitoring processes. Internal auditing supports the group management (Board of Directors, CEO, managers) in monitoring operations.

Board of Directors has approved the working principles of internal audit where the roles, responsibilities and policies are described. The audits are execited according to the annual audit plan approved by the Board of Directors. The internal audit is ousourced to Soinio & Co. Ltd.

Risk management and control

The purpose of the Gorup’s risk management is to make sure that the risks associated with the the company’s operations are identied and assessed and to ensure that Group does not take such risks that would endanger Group companies liquidity or solvency. The Board of Directors ensure the adequacy and efficiency of the risk management with regular reporting and function related policies. In addition Board of Directors secures that the Company functions have adequate and up-to-date continuance measures.

Board of Directors has appointed the CEO to have the main responsibility of the Company risk management. CEO ensures that the principles of risk management and risk strategy is followed in Group functions. Compliance and internal audit will perform regular checks and reports to Management team and Board of Directors.

An annual risk mapping is conducted on the Group level identifying the major operational risks of Company.

Certified advisor

Fellow Finance Plc´s certified advisor based on the Nasdaq First North Growth Market Finland Rulebook is Evli Bank Plc. The certified advisor follows and makes sure that Fellow Finance fulfills Nasdaq Helsinki First North Growth Market Finland marketplace's requirements.

The certified advisor: Evli Bank Plc, p. +358 40 579 6210.

Memberships in associations

Fellow Finance Plc is a founding member of Crowdfunding Association of Finland (Joukkorahoitusyhdistys ry:n) and Peer to Peer Lending Finland (Vertaislainayhdistys ry.).