CORPORATE GOVERNANCE

Vasakronan AB is a public limited company. Given the general interest in our operations, and since our bonds are listed on the Stockholm stock exchange, we apply the Swedish Corporate Governance Code. Clear internal structures and processes also ensure that our operations are conducted efficiently and appropriately.

Vasakronan’s Corporate Governance Report sets out how the company has applied the Code over the last financial year, any deviations applied and the reasons why. The corporate governance reports for the last ten years are available in Vasakronan’s annual reports.

The overriding mandate from the owners is to generate a long-term high and stable return from Swedish property assets, with operations that contribute to sustainable societal development. Ensuring the above requires corporate governance where responsibility is clearly allocated between owners, the Board, the management and other stakeholders. Moreover, clear structures and procedures are needed to control operations.

Articles of Association

The starting point for operations

The Articles of Association state that the business “is — directly or indirectly through wholly or part-owned companies, or through contracted services — to own, develop and manage real property, and to conduct other associated operations including, inter alia, the provision of services.”

Furthermore, the Articles of Association also state that the Board of Directors must be domiciled in Stockholm and comprise not less than three and not more than ten members. The company’s financial year encompasses the calendar year. An annual general meeting is to be held each year within six months of the end of the financial year.

Current Articles of Association (Swedish)

Corporate Governance Report 2019

Notice convening

Shareholders exercise their influence through participation in the general meetings of shareholders, which are the highest decision-making body. Under the Articles of Association, the annual general meeting of shareholders (AGM) must be held within six months of the end of the financial year. At the AGM, the Board of Directors and auditors are elected and resolutions are passed regarding the principles of remuneration and other employment terms and conditions for the CEO and the Management Group. Extraordinary general meetings are held if any of the owners so request, or if the Board of Directors considers there is reason to do so.

Most recent AGM

The most recent AGM was held on 7 May 2019 at Vasakronan’s head office in Stockholm. All shares were represented and the auditors were present. The accounts for 20187 were adopted and the Board of Directors and CEO discharged from liability. Resolutions also encompassed the election of Board members, the Chairman of the Board and the auditors as well as fees to the Board and committee members, and the auditors. Moreover, the members of the Audit Committee and the Remuneration Committee were elected. In addition, principles were established for the remuneration and other employment terms and conditions for the Management Group as well as an instruction for the Nomination Committee.

Governance and control

A continuous process

Business planning starts with the Management Group’s strategy days in the spring and concludes with the Board of Directors deciding on the plan at its December meeting. In between, business plans are developed for both underlying units and for the company as a whole. The plans formulate both short- and long-term financial, environmental and societal goals. The business plan is thereafter monitored continually during the subsequent year.

A risk inventory and risk assessment are conducted every year prior to business planning. The material risks identified are managed in the business plans for the units. The work on risk management is described in more detail in the Annual Report. A framework of guidelines, policies and instructions established by the Board of Directors and the CEO govern the organisation and its employees. The framework is to be followed by all employees, and monitoring is conducted on a regular basis. Responsibility for follow-up has been assigned to a separate steering group that has been appointed by the CEO and which comprises the CEO, the General Counsel, the CFO and the Head of Group Controlling. The steering group is also responsible for ongoing evaluation of the work with governance, internal control and risk. This takes place in close collaboration with the Audit Committee, which is responsible for risk work, and internal control is continually tested and evaluated. Since existing structures for evaluation and monitoring have so far been deemed sufficient to provide a basis for evaluation by the Board, no separate unit for internal auditing has been established. The decision is, however, taken up annually for re-examination.

Internal control of financial reporting

The Board issues a report that describes how internal control of the financial reporting is organised. The report contains no statements on how well internal control functioned during the past financial year, and it has not been audited by the company’s auditors.

The full Board report on internal control pertaining to the financial reporting for 2018 is available in Vasakronan’s 2018 Annual Report.

Financial statements

Auditor

External audit

In addition to issuing the Auditors’ Report, the elected auditor examines the annual accounts, the consolidated financial statements and accounting records, the Board’s and the CEO’s administration of the company and the annual accounts of the subsidiaries. The audit is conducted in accordance with the Swedish Companies Act, international auditing standards and generally accepted auditing principles in Sweden.

At the 2018 AGM, PricewaterhouseCoopers was elected as auditor for the coming year, with Helena Ehrenborg as Auditor in Charge.

Head of Group Controlling Stina Carlson 076-784 88 43 stina.carlson@vasakronan.se

Corporate Governance