Corporate governance

Genova is a Swedish public limited company with its ordinary shares and preference shares listed on Nasdaq Stockholm Main Market and bonds listed on Nasdaq Stockholm. Corporate governance in Genova is based on laws, our Articles of Association, Nasdaq Stockholm’s Rule Book for Issuers and the Swedish Corporate Governance Code as well as the rules and recommendations issued by relevant organisations. Our ambition is to maintain effective and transparent corporate governance, in order to strengthen Genova’s trust and create a solid relation with our shareholders.

Corporate governance in Genova aims to ensure that rights and obligations are distributed among the company’s bodies in accordance with applicable laws, regulations and procedures. Effective and transparent corporate governance enables the shareholders to assert their interest vis-a-vis company management, while creating a clear division of roles and responsibilities between management and the Board, as well as otherwise within the company. Such clear and transparent corporate governance results in efficient decision-making, enabling Genova to act fast when new business opportunities arise. The Corporate Governance Report provides an overview of Genova’s corporate governance system and includes the Board’s description of internal control and risk management
in regard to financial reporting.

Corporate governance reports

General meetings

Annual General Meeting 2020 in Genova Property Group AB was held on Friday 24 April 2020.

Board of Directors

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Senior executives

Board committees

Remuneration Committee

Genova has a Remuneration Committee comprising three Board members, including the Chairman of the Board who is also Chairman of the Remuneration Committee. The Remuneration Committee consists of Mikael Borg, Erika Olsén and Andreas Eneskjöld. The members must be independent of both the company and the Executive Management Team.

The Remuneration Committee is a preparatory body that mainly considers, analyses, initiates and monitors matters related to remuneration principles, remuneration and other terms of employment for the Executive Management Team. During the year, the Remuneration Committee should also monitor and evaluate ongoing and completed programmes for the variable remuneration paid to senior executives, as well as current remuneration structures and levels within the company. Every financial year, the Remuneration Committee shall also prepare a report of the remuneration paid to the company’s senior executives.

Audit Committee

Genova has an Audit Committee comprising three Board members: Mikael Borg, Maria Rankka and Jan Björk. The members of this Committee must not be employed by the company. At least one member must have competence in accounting or auditing.

The role of the Audit Committee is to monitor the integrity of the company’s financial statements and make recommendations and proposals to ensure the reliability of the financial statements. The Audit Committee shall also monitor the effectiveness of Genova’s internal control systems, internal audit process and risk management systems in relation to financial reporting.
The Committee shall also remain informed about the audit of the annual report and consolidated financial statements, and about the conclusions of the Swedish Inspectorate of Auditors’ quality control, and report the results of these to the Board. An additional task is to review and monitor the external auditor’s objectivity, and to assist in the preparation of proposals for the Annual General Meeting’s decision on the election of auditors.

Nomination Committee

The Annual General Meeting (AGM) on 24 April 2020 adopted instructions for appointing a Nomination Committee in Genova. Genova’s Nomination Committee shall consist of at least four members, one of whom may be the Chairman of the Board. The members shall be appointed by the Chairman of the Board, no later than six months prior to the AGM, offering the four largest shareholders, or three if the Chairman of the Board is included, based on Euroclear Sweden AB’s list of registered shareholders on the last banking day of August in the current year, an opportunity to each appoint a representative to be a member of the Nomination Committee. Should any of these shareholders choose to waive their right to appoint a member, the right passes to the shareholder who, after that shareholder, has the largest shareholding in the company. The composition of the Nomination Committee shall be announced no later than six months prior to the AGM.

The Nomination Committee shall prepare and submit proposals to the AGM for the election of a Chairman of the AGM, Board members, the Chairman of the Board, Board fees and other remuneration for Board assignments, auditor fees and, where applicable, an auditor. The Nomination Committee shall also prepare and submit proposals to the AGM regarding principles for the composition of the Nomination Committee.

Auditor

The auditor shall review Genova’s annual financial statements and accounts, and the management of the Board and the CEO. At the 2019 AGM, Genova’s registered auditing firm (Ernst & Young) was re-elected.

Ernst & Young has been the company’s auditor since 2011. The Auditor-in-Charge is Henrik Nilsson, an authorised public accountant and member of FAR.

Remuneration

Remuneration of Board members

Fees and other remuneration paid to Board members, including the Chairman, are determined by the Annual General Meeting (AGM). The AGM on 24 April 2020 resolved to adopt a proposal by the company’s two major shareholders that fees paid to the Board of Directors for the period until the end of the next AGM should be SEK 350,000 (2019: SEK 150,000) for the Chairman, and SEK 200,000 (2019: SEK 100,000) for each member. It was also resolved that a fee of SEK 85,000 would be paid to the Chairman of the Board’s Audit Committee and SEK 60,000 to each of the other members, and that a fee of SEK 50,000 would be paid to the Chairman of the Board’s Remuneration Committee and SEK 40,000 to each of the other members.

The company’s work in 2019 and 2020 to prepare for the listing of the ordinary share on Nasdaq Stockholm led to extraordinary efforts for the company’s Board of Directors, which is why it was also resolved that an additional fee of SEK 150,000 be paid to the Chairman of the Board, and SEK 100,000 to each of the other Board members, retroactively. Audit fees are paid in accordance with approved invoices.

Remuneration guidelines for senior executives

Genova shall offer remuneration and other terms of employment that enable the company to attract and retain senior executives with the competence required by the company. The general principle is that remuneration paid to senior executives in the company should be market-based and competitive. The remuneration of senior executives may consist of basic salary, variable cash remuneration, pension and other benefits. No variable remuneration is paid to the Chief Executive Officer.

The remuneration guidelines for senior executiveswere adopted by the AGM on 24 April 2019 and shall apply until the general meeting of shareholders decides otherwise.

Articles of Association

Article 1 Name of the company

The name of the company is Genova Property Group AB (publ). The company is a public limited liability company.

Article 2 Registered office

The registered office of the Board shall be in the City of Stockholm.

Article 3 Business activities

The object of the company is to conduct property investments and property management, and other related activities.

Article 4 Share capital

The share capital shall amount to not less than SEK 40,800,000 and not more than SEK 163,200,000.

Article 5 Shares

5.1

The number of shares in the company shall amount to not less than 34,000,000 and not more than 136,000,000. Two classes of shares may be issued: ordinary shares and preference shares. Each ordinary share entitles the holder to one (1) vote, and each preference share to one-tenth (1/10) of a vote. Shares of each class may be issued in a number equal to the entire share capital. However, the number of preference shares that may be issued is limited by the provisions of Section 5.7 below.

5.2

Should the company decide to issue new ordinary shares or preference shares by way of a cash issue or offset issue, the holders of ordinary shares and preference shares shall have preemptive rights to subscribe for new shares of the same class in proportion to the number of shares they previously held (primary preemptive rights). Any shares not subscribed for with primary preemptive rights shall be offered to all shareholders (secondary preemptive rights). Should the entire number of shares subscribed for with secondary preemptive rights be unavailable, the shares shall be allotted between the subscribers in proportion to the number of shares they previously held, irrespective of whether the shares are ordinary shares or preference shares, and, to the extent this is not possible, by drawing lots.

5.3

Should only new ordinary shares or new preference shares be issued by way of a cash issue or offset issue, the holders of the class of shares to be issued shall have preemptive rights to subscribe for new shares in proportion to the number of shares of the same class that they previously held (primary preemptive rights). Any shares not subscribed for with primary preemptive rights shall be offered to all shareholders (secondary preemptive rights). Should the entire number of shares subscribed for with secondary preemptive rights be unavailable, the shares shall be allotted between the subscribers in proportion to the number of shares they previously held, irrespective of whether the shares are ordinary shares or preference shares, and, to the extent this is not possible, by drawing lots.

5.4

Should warrants or convertibles be issued by way of a cash issue or offset issue, the holders of ordinary shares and preference shares shall have preemptive rights to subscribe for warrants as if the issue applied to those shares that may be newly subscribed for under the option right or, respectively, preemptive rights to subscribe for the convertibles as if the issue applied to those shares that the convertibles may be exchanged for.

5.5

The foregoing shall not entail any limitation on the possibility to resolve on an issue with disapplication of preemptive rights.

5.6

When increasing the share capital by way of a bonus issue, only new ordinary shares may be issued. In this event, only the ordinary shareholders shall have preemptive rights to the new shares. The bonus shares shall be allotted between the ordinary shareholders in proportion to the number of shares they previously held. The foregoing shall not entail any limitations on the possibility to issue new shares of the same class by way of a bonus issue, following any appropriate amendments to the Articles of Association.

5.7

Should, and provided that, the preference share ratio (calculated using the method describe below) (Preference Share Ratio) exceeds 9/20 (or 0.45), or will exceed 0.45/1 after the issue of additional preference shares, a decision to issue additional preference shares may not be made.

The preference share ratio is: A / B where: A. is the total issue proceeds of all preference shares outstanding, and B. is the Group’s (where the company is Parent Company) recognised equity according to the company’s most recently published interim report less any proposed but not adopted or implemented value transfer, including any dividends on preference shares proposed but not yet implemented by the Board in accordance with Section 6.1 below.

‘All preference shares outstanding’ means the total number of registered preference shares plus adopted, but not registered, new issues of preference shares, preference shares that may be added when convertibles and warrants are exercised, and preference shares that may be issued under other financial instruments, less such preference shares held by the company itself, and those preference shares that are subject to redemption at the discretion of a General Meeting or the Board.

Article 6 Dividends

6.1

Should the General Meeting resolve to issue a dividend, the preference shares shall confer preemptive rights over the ordinary shares to the annual dividend as set out below. The preference shares shall not otherwise confer any right to a dividend.

The right to a dividend per preference share (Preference Dividend) shall, from 1 January 2016 until the preference shares are redeemed, amounts to a maximum of SEK 10.50 per year, whereby SEK 2.62 shall be paid out in the first and third quarters of the calendar year, and SEK 2.63 in the second and fourth quarters of the calendar year, on the record dates set out below.

6.2

Dividends on preference shares shall be paid quarterly in SEK. Record dates shall be 20 February, 20 May, 20 August and 20 November. Should such dates not fall on a business day, meaning a day that is not a Saturday, Sunday or public holiday, the record date shall be the immediately preceding business day. The dividend shall be paid out on the third business day after the record date.

6.3

If no dividend has been distributed on preference shares in connection with a record date as set out in Section 6.2 above, or if only a dividend less than the Preference Dividend has been distributed, the preference shares, provided the General Meeting has resolved to pay a dividend, shall confer a right to receive, in addition to future Preference Dividends, an amount that is evenly distributed between each preference share, corresponding to the difference between what would have been paid and the amount paid (Amount Outstanding) before a dividend on the ordinary shares is distributed. The Amount Outstanding shall be adjusted upward by a factor corresponding to an annual interest rate of ten (10) percent, whereby adjustment shall be made from the quarterly date when part of the dividend was paid (or should have been paid, in the event that no dividend was paid at all).

6.4

Should the number of preference shares be changed due to a merger, demerger or similar company event, the amount that the preference share confers a right to under Articles 6-8, shall be recalculated to reflect the change.

Article 7 Redemption

7.1

The share capital may be reduced, although not below the minimum share capital requirement, by redeeming a certain number of, or all, preference shares at the discretion of the General Meeting. Following a resolution to reduce the share capital, an amount corresponding to the reduction shall be allocated to the statutory fund if the requisite funds are available.

7.2

The allotment of redeemable preference shares shall be pro rata to the number of preference shares held by each preference shareholder on the date of the General Meeting’s redemption decision. If it is not possible to allot the shares evenly as described above, the Board shall decide on the allotment of excess redeemable preference shares. However, provided the decision is supported by all preference shareholders, the General Meeting may decide which preference shares shall be redeemable.

7.3

The redemption price of each redeemed preference share shall be calculated as follows:

A.

Until November 24, 2025, an amount corresponding to (i) SEK 130 plus (ii) any accrued portion of Preference Dividends plus (iii) any Amount Outstanding adjusted upwards by an amount corresponding to the annual interest rate as set out above in Section 6.3. However, the redemption price for each redeemed preference share must never be lower than the share’s quota value.

B.

At any time after November 25, 2025, an amount corresponding to (i) SEK 110 plus (ii) any accrued portion of Preference Dividends plus (iii) any Amount Outstanding adjusted upwards by an amount corresponding to the annual interest rate as set out above in Section 6.3. However, the redemption price for each redeemed preference share must never be lower than the share’s quota value.

‘Accrued portion of Preference Dividends’ is the accrued dividend for the period commencing on (but excluding) the most recent record date for calculating the Amount Outstanding up to and including the date of payment of the Redemption Price. The number of days shall be calculated as the actual number of days in relation to 90 days.

7.4

Holders of preference shares who have requested redemption shall be required to accept the redemption price for the preference share within three months of receiving written notification of the General Meeting’s redemption decision, or, where approval of the reduction is required by the Swedish Companies Registration Office or a Court, after receiving notification that a decision regarding such approval has become final.

Article 8 Dissolution of the company

In the event of dissolution of the company, preference shares shall have preemptive rights over ordinary shares to receive, from the company’s assets, an amount per preference share corresponding to the redemption price calculated as set out above in Section 7.3 on the dissolution date before distribution to ordinary shareholders. The preference shares shall not otherwise confer any distribution rights.

Article 9 Board of Directors

The Board shall consist of at least three, but no more than ten members, with no deputies.

Article 10 Auditors

One or two auditors, with or without deputy auditors, shall be appointed to review the limited liability company’s Annual Report and financial statements, and the administration of the Board of Directors and the Chief Executive Office.

Article 11 Notice

11.1

Notice of a General Meeting shall be given by advertising in Post- och Inrikes Tidningar (the Swedish Official Gazette) and by publishing the notice on the company’s website. Information that notice has been issued shall be published in Svenska Dagbladet.

11.2

Notice of a General Meeting or Extraordinary General Meeting where amendments to the Articles of Association will be addressed shall be issued not earlier than six weeks and not later than four weeks prior to the Meeting. Notice of an Extraordinary General Meeting to address other matters shall be issued not earlier than six weeks and not later than two weeks prior to the Meeting.

11.3

Shareholders who wish to participate in the General Meeting must notify the company by the date specified in the notice to attend the Meeting. This date must not fall on a Saturday, Sunday, public holiday, Midsummer Eve, Christmas Eve or New Year’s Eve, nor earlier than five business days prior to the General Meeting.

11.4

Shareholders may be accompanied by a maximum of two advisors at the General Meeting, but only if the shareholder notifies the company of the number of advisors in the manner set out in the paragraph above.

Article 12 Matters to be addressed at the Annual General Meeting

The following matters shall be addressed at the Annual General Meeting:

1. Election of the Chairman of the General Meeting.

2. Preparation and approval of the voting list.

3. Election of one or two people to verify the minutes.

4. Determination of whether the General Meeting has been duly convened.

5. Approval of the agenda.

6. Presentation of the Annual Report and auditors´report.

7. Resolutions on:

a. adoption of the income statement and balance sheet and, where applicable, the consolidated income statement and consolidated balance sheet

b. appropriations of the limited liability company´s profit or loss in accordance with the adopted balance sheet, and

c. discharge from the liability for the Board of Director and CEO

8. Determination of Board and auditor fees.

9. Election of Board members, Chairman of the Board and, where applicable, auditors.

10. Any other matters to be considered by the General Meeting pursuant to the Swedish Companies Act (2005:551) or the Articles of Association.

Article 13 Financial year

The financial year shall be 1 January-31 December.

Article 14 Record day provision

The company’s shares shall be registered in a CSD register in accordance with the Swedish Central Securities Depositories and Financial Instruments Accounts Act (1998:1479).

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