For investors

Corporate Governance

Corporate governance deals with how a company should be run so that the interests of its owners are safeguarded. The overall goal is to increase shareholder value and thus meet the owners’ requirements for their invested capital.

Transtema Group AB (publ.) (“Transtema”) is a public company based in Gothenburg, Sweden. The Swedish Companies Act, the Swedish Code of Corporate Governance, and the Nasdaq OMX Stockholm Rules for Issuers form the basis for the company’s governance. The company’s internal governance framework consists of the Articles of Association, the Rules of Procedure of the Board, the CEO Instructions, as well as policies and associated guidelines.

Transtema’s CEO is responsible for the company’s day-to-day management in accordance with the Board’s guidelines and instructions. In dialogue with the Chairman of the Board, the CEO also compiles the agenda for the board meetings and is responsible for preparing information and decision support for these meetings. Furthermore, the CEO is responsible for ensuring that the members of the Board receive information on Transtema’s development so they can make well-informed decisions.

The overall aim of corporate governance is to ensure the Group’s commitments to all its stakeholders, such as shareholders, customers, suppliers, creditors, employees, and society at large. The term “Corporate Governance” usually refers to the rules and structures that are established to manage and control a public limited company in an efficient and systematic way. Transtema applies the Swedish Code of Corporate Governance.

Remuneration Committee

The Board of Transtema Group AB (publ) has on 5 May 2022 at its inaugural meeting adopted the Rules of Procedure below for the Remuneration Committee.

The objective of the Remuneration Committee is to ensure a comprehensive, thorough, and well-founded remuneration model for the Company’s employees that contributes to the Company’s business strategy, long-term interests, and sustainability, with a focus on the remuneration for the CEO and other senior executives.

The Remuneration Committee shall, acting on instructions from the Board:

• prepare the Board’s decisions on matters relating to remuneration principles, remuneration, and other terms of employment for senior executives;
• monitor and evaluate ongoing and, during the year, completed variable remuneration programmes for senior executives;
• monitor and evaluate the application of the guidelines for remuneration to senior executives to be resolved by the Annual General Meeting and the current remuneration structures and levels in the Company; and
• prepare the Board’s report on paid and outstanding remuneration covered by the guidelines for remuneration.

The Remuneration Committee consists of the following board members:
Liselotte Hägertz Engstam (Chairwoman),
Magnus Johansson and
Anna Honnér.

Internal control

The Board’s responsibility for internal control is regulated by the Swedish Companies Act and the Annual Accounts Act, which require that information on the key elements of Transtema’s system of internal control and risk management in connection with financial reporting be included in the Corporate Governance Report each year, as well as the Code.

Internal control aims to create a clear accountability structure and an effective decision-making process. The Board has adopted a number of basic documents of importance for financial reporting to ensure an effective control environment. The Board’s Rules of Procedure and instructions for the Chief Executive Officer further ensure a clear allocation of roles and responsibilities, aiming to effectively manage the business’s risks. The Board has also established some basic guidelines and policies relevant to internal control.

The basic policy documents are subject to review on an ongoing basis. In addition, an effective control environment requires an adequate organisational structure and ongoing reviews of the same. Transtema’s Group Management regularly reports to the Board following defined routines. Furthermore, Group Management is responsible for the system of internal controls required to manage material risks in the ordinary course of business. Managers at various levels within the Group finally have defined authority and responsibility regarding internal control.

Control environment

The Board ensures that established principles for the financial reporting and internal control are adhered to and that appropriate relations with Transtema’s auditor are maintained. The Board monitors the financial reporting on an ongoing basis to ensure good internal control and continuous improvements. At least one board meeting annually focuses on internal control, risks, and management reporting. The responsibility for maintaining an effective control environment and the ongoing work with internal control over financial reporting is delegated to the CEO, who in turn delegates this to the CFO following Transtema’s Financial Policy.

The internal control structure is based on Transtema’s organisation with clear roles, responsibilities, and delegation of power. Operational decisions are made at the company level, while decisions on strategy, overall financial matters, acquisitions, and larger investments are made by Transtema’s Board with the support of Group Management. The policy documents relating to accounting, Transtema’s accounting manual, and financial reporting, the Company’s financial policy, constitute the essential elements of the control environment concerning financial reporting. These documents are updated on an ongoing basis when changes are made to, for example, accounting standards and legislation.

Risk assessment

Within Transtema, a risk assessment is carried out regularly to identify material risks relating to financial reporting. As regards financial reporting, the risk is primarily considered to lie in material misstatements in the accounts, for example, regarding the accounting and valuation of assets, liabilities, income, and expenses or other deviations. Fraud and loss through misappropriation are another risk. Risk management is built into each process, and different methods are used to assess and mitigate risks and to ensure that the risks to which Transtema is exposed are managed following established policies, instructions, and follow-up procedures, which aim to reduce potential risks and promote correct accounting, reporting, and information disclosure.

Control activities

The risks identified regarding financial reporting are managed through Transtema’s control activities, such as access controls in IT systems, attestation controls, and the like. The control structure consists of clear roles in the organisation that enable an effective distribution of responsibilities for specific control activities and aim to detect or, in time, prevent the risk of reporting errors. The continuous analysis of the financial reporting and the analysis performed at Group level are crucial to ensure that the financial reporting does not contain any material misstatements. The Group’s financial organisation plays an important role in the internal control process, which is responsible for the accuracy, completeness and timeliness of the financial reporting from each unit.

Information and communication

The Group has information and communication channels intended to promote the completeness and accuracy of its financial reporting, as set out in its information policy. Policies, guidelines, and internal instructions relating to financial reporting are available in electronic and printed form. Regular updates and announcements of changes in accounting policies, reporting requirements, or other information disclosures are made available and known to relevant employees.

Follow-up and improvement

The CEO has delegated responsibility to the CFO, who is responsible for ensuring that internal control is organised and monitored according to the guidelines established by the Board. The CFO is also responsible for conducting independent objective reviews to systematically evaluate and propose improvements to the Group’s governance, internal control, and risk management processes. Financial management and control are carried out by the group finance function. Transtema’s management performs a monthly performance review with an analysis of deviations from the budget, forecast, and previous year, and all monthly accounts are discussed with the management of the respective subsidiary or operating segment. The Board receives monthly financial reports, and the financial reporting is followed up at each board meeting. Before the publication of the Annual Report and quarterly reports, the Board and Group Management review the financial reporting. An external audit of the financial statements is carried out in connection with the annual accounts.