Our Company / Corporate Governance

Gasgrid’s Corporate Governance Policy

Introduction

Gasgrid is the Finnish gas transmission system operator with system responsibility and the builder of the national hydrogen infrastructure. We offer our customers safe, reliable and cost-efficient transmission of gases. We actively develop our transmission platform, services and the gas market in a customer-oriented manner to promote the carbon-neutral energy and raw material system of the future. Gasgrid Group (hereafter Gasgrid) comprises the state-own parent company Gasgrid Finland Oy and the subsidiaries Gasgrid vetyverkot Oy and Floating LNG Terminal Finland Oy. This Corporate Governance Policy applies to the entire Gasgrid.

Gasgrid Finland’s decision-making and governance comply at all times with the Finnish Limited Liability Companies Act, the Natural Gas Market Act, the Act on the Unbundling of the Natural Gas Transmission Network Operator, and the Special Act on Procurements and Access Rights Contracts for Units in the Energy Supply Sector in force at any time. Additionally, Gasgrid’s operations are also guided by its Articles of Association as well as by the Code of Conduct, instructions and procedures adopted by Gasgrid Finland’s Board of Directors and Management Team. Gasgrid Finland complies with the applicable sections of the Corporate Governance Code for listed companies prepared by the Securities Market Association. The Code is available at https://www.cgfinland.fi/en/corporate-governance-code/ (the “Corporate Governance Code”). Gasgrid Finland also complies with the applicable Government ownership steering policy.

Gasgrid Finland’s Board of Directors and CEO are responsible for corporate governance. Gasgrid Finland has one statutory auditor who is elected by the shareholders at the general meeting (the “General Meeting”).

Gasgrid Finland’s Board of Directors is responsible for ensuring compliance with the ownership steering and corporate governance principles set out herein. The Board of Directors adopts and implements the rules of procedure, which include the evaluation and development of its own work, every year.

Auditor

Gasgrid Finland has one auditor, which must be an auditing entity approved by the Finnish Patent and Registration Office. The General Meeting elects an external auditor annually for a term of office that ends at the close of the first General Meeting following election. The auditor must report to the company on additional services beyond the scope of the audit annually. The company also reviews at regular intervals the need to use different auditors.

Governing bodies

Gasgrid Finland’s General Meeting, Board of Directors, CEO and Management Team are the decision-making bodies that manage the Company and oversee its operations.

General Meeting of Shareholders

The General Meeting is Gasgrid Finland’s supreme decision-making body. The shareholders exercise their decision-making authority via the General Meeting. At the General Meeting, decisions are primarily made according to a simple majority of votes.

The General Meeting must be held in Helsinki Metropolitan Area by the end of June each year. The General Meeting must consider with the following matters:

Presentation and adoption of the financial statements
Presentation of the Board of Directors’ report and the auditor’s statement
Presentation of the remuneration report
- Presentation of the sustainability report
- Review of Gasgrid’s risks and risk management
Use of the profit for the financial period and the distribution of assets to shareholders
Decision on the discharge of the CEO and members of the Board of Directors from liability
Decision on the number and remuneration of members of the Board of Directors and the auditor
Election of the members and chair of the Board of Directors and the auditor

The Board of Directors may, if necessary, convene an extraordinary general meeting. Extraordinary general meetings may also be convened at the request of the company’s auditor or a group of shareholders representing one-tenth of the votes conferred by the company’s shares. In addition, the law may require such meetings to be convened.

In addition, the Board of Directors proposes the remuneration policy to the General Meeting, providing information about the remuneration for the members of the Board of Directors and Management Team. Any major changes to the remuneration policy must be submitted to the General Meeting. Changes to the remuneration policy must also be submitted by the following General Meeting if the majority of the shareholders opposed the policy at the previous General Meeting.

The shareholders may unanimously decide to hold a General Meeting without making preparations for the meeting by signing the appropriate minutes to the meeting.

Board of Directors

The shareholders elect the members of the Board of Directors at the General Meeting. The members of the Board of Directors are elected for an indefinite term of office. The number of members of the Board of Directors is specified in the Company’s Articles of Association.

The Board of Directors is responsible for the company’s strategic development and for the business and management supervision of Gasgrid Finland, as well as for significant decisions related to the strategy, investments, organisation and financing. In addition, the Board of Directors represents the company and takes responsibility for the appropriate arrangement of the company’s financial statements and financial oversight in accordance with the Articles of Association and the Limited Liability Companies Act. Furthermore, the Board of Directors ensures that the company complies with the rules and regulations applying to it, as well as the Articles of Association and the decisions of the General Meeting.

The Board of Directors is responsible for upholding the reliability of the company’s financial reporting and for the Board of Directors’ oversight activities. In addition to the list of tasks set out in the Corporate Governance Code, the Board of Directors assesses the audit plans of the internal audit function and the statutory auditor. The Board of Directors issues recommendations to company on the appointment of an auditor. The Board of Directors also regularly evaluates and develops its own operating procedures.

The Board of Directors is also tasked with specifying the principles for monitoring and evaluating insider transactions and for keeping a list of identified insiders.

Independence of members of the Board of Directors

The company’s policy is that all members of the Board of Directors should be independent of Gasgrid Finland based on an overall assessment of the Board of Directors. Otherwise, the independence of members of the Board of Directors is assessed with particular reference to the independence criteria laid down in the Act on the Unbundling of the Natural Gas Transmission Network Operator (588/2017). This means that members of the Board of Directors may not have any direct or indirect control or considerable controlling influence in companies engaged in the production or supply of natural gas or electricity. The members of the Board of Directors must provide the Board of Directors with sufficient information to enable the Board of Directors to assess their independence, and they must notify the Board of Directors of any changes in such information.

Competence, compliance and diversity of the Board of Directors

Successful discharge of the Board’s functions requires it to possess a diverse composition, competence and experience, as well as attention to the personal characteristics of individual members.

Board committees

Gasgrid Finland’s Board of Directors has an Audit Committee, established in 2023, which meets regularly. Gasgrid Finland’s Board will assess the need to establish committees in the light of the scope of its business and its development, and will establish committees as necessary. The Board of Gasgrid Finland will integrate the tasks of these committees into the Board’s annual management process to ensure the appropriate management of the tasks assigned to these committees under the Finnish Limited Liability Companies Act and the Corporate Governance Code.

CEO

The CEO manages operations in accordance with the Finnish Limited Liability Companies Act. The CEO oversees the company’s day-to-day management in accordance with the instructions and regulations issued by the Board of Directors. The CEO prepares the information necessary for the Board of Directors to discharge its duties.

The CEO must also ensure that the company’s financial statements comply with legal requirements and that the company’s financial affairs have been carefully organised.

Management Team

The Management Team is chaired by the CEO, who appoints the members of the Management Team with the Board of Directors’ approval. The Management Team assists the CEO in managing the company’s operations, implementing its strategy and coordinating its business guidelines. The Management Team’s responsibilities include ensuring that the company is managed efficiently and operates according to its purpose.

Forums for stakeholder cooperation

The Board of Directors ensures that the company has a regular stakeholder cooperation forum or forums. The forum has an advisory role, gathering the views and expectations of customers and stakeholders on the gas transmission system, gas markets and gas fuels as part of the energy system and society, as well as the services provided to customers. The participants in the forum may represent various stakeholders in the gas sector, such as citizens, local and regional authorities, shareholders, importers and traders, suppliers, local residents, the media, environmental organisations, gas producers and end-users. Forums may target different stakeholders, and the meetings may cover different themes. Gasgrid Finland must have at least one such forum in operation.

Operating policies and compliance

Gasgrid is responsible for Finland’s gas transmission system and infrastructure and has been mandated to implement the national hydrogen infrastructure. Gasgrid complies with national and EU legislation, international treaties, the OECD’s principles and recommendations, and the operating policies adopted by Gasgrid. In addition, Gasgrid complies with the Government’s instructions and decision-making principles.

The Code of Conduct forms the ethical foundation for all Gasgrid’s work. The Board of Directors adopts the policies and Gasgrid’s Management Team has the authority to make technical updates such as name changes to the appendices to the Corporate Governance Policy. All employees are responsible for reporting any suspected irregularities to their supervisors, other members of the management or, where necessary, directly to internal audit. Suspected irregularities can also be reported through the Gasgrid whistleblowing channel, which is accessible to all stakeholders on Gasgrids website.

Compliance with laws and commitments is regularly evaluated in accordance with Gasgrid’s separate operating procedural guidelines. Compliance evaluation ensures that Gasgrid has identified the legislation guiding its activities and evaluated its compliance, together with the people in charge.

Remuneration

Gasgrid Finland complies with the applicable ownership steering policy on the remuneration paid to the CEO, Board of Directors, Management Team and other governing bodies. The Company complies with the relevant collective agreements, including the provisions on the salary development of employee and other agreed items. Gasgrid Finland’s Board of Directors makes annual decisions on the application, targets and performance level of the remuneration model.

Reporting

Gasgrid Finland aims for and implements comprehensive, transparent communications with its stakeholders. Gasgrid Finland prepares financial and sustainability reports at least once per year. The Company publishes an integrated annual report, which includes the sustainability report and financial statements. Gasgrid Finland also reports to the Ministry of Finance on the targets that its business has reached in accordance with the principles of the ownership steering policy valid at any time. Reporting pays particular attention to sustainability and remuneration. Gasgrid Finland Oy’s management and Board of Directors also engage in regular discussions with the Ministry of Finance on material issues affecting Gasgrid’s operations, property income and shareholder value, in accordance with the ownership steering policy.

Internal control

Gasgrid Finland’s Management Team is responsible for guidelines to support the company’s internal control, arranging reporting, and presenting these policies to the Board of Directors and to the Board of Directors’ Audit Committee. The policies are adopted by decision of the Board of Directors. Internal control is conducted across the organisation and covers financial reporting and other monitoring. Internal control refers to governance activities that seek to ensure the following:

Achievement of the targets set for Gasgrid Finland
Appropriate, efficient and economical use of resources
Operational risk management
Reliable and correct financial and other information
Compliance with external regulations and internal policies
Compliance with appropriate procedures related to customer relationships
Adequate security of operations, data and assets
Appropriate information management systems to support operations

Internal control is divided into the following activities:

Proactive control, such as defining Gasgrid’s values, operating policies, business targets and strategy
Day-to-day control related to operational steering, such as general control and monitoring of operational systems and work instructions; and
Control, such as a variety of management assessments, audits, comparisons and verifications, to ensure that targets are reached and agreed operational and oversight principles are complied with

Gasgrid’s corporate culture and corporate governance lay the foundation for the entire internal control process.

Financial figures are reported monthly. The finance department evaluates the monthly earnings and reports them to the Management Team. The monthly meetings of the Management Team cover the trends in business profitability as well as business risks and opportunities. The results are reported to Gasgrid Finland’s Board of Directors monthly.

The finance department works with the management to monitor customer receivables appropriately. Authorisations applying to expenses, significant agreements and investments are allocated to various organisational levels (Appendix 1). Decisions concerning gas market activities must be made with expert personnel in accordance with the applicable laws, regulations and rules.

The finance department is responsible for approving and monitoring investments in accordance with the budget adopted by the Board of Directors and within the limits of its authority (Appendix 1). Larger investments are submitted to the Management Team and Board of Directors for separate approval.

Internal audit

The company’s internal audit is an independent, impartial verification function tasked with auditing and assessing the appropriateness and effectiveness of the company’s management and governance processes, internal control organisation, risk management, and management and governance processes. Professional standards governing internal audits form the basis for the internal audit.

The Board of Directors decides upon the operating model for internal audit. Internal audit activities are based on plans approved by the Board of Directors. The results of audits are reported to the audited body, CEO and Board of Directors. The Board of Directors may also decide to outsource the internal audit function.

From a governance perspective, internal audit is subordinate to the CEO. Internal audit offers a systematic approach to the evaluation and development of the effectiveness of the Company’s risk management, monitoring, management and governance processes, as well as an assurance of their adequacy and functionality from an impartial standpoint. Internal audit is authorised to conduct audits and access all information relevant to the audit.

Risk management

Risk management is an integral part of Gasgrid’s business management and planning. Risk management is a part of everyday decision-making, operational monitoring and internal control, and it promotes Gasgrid’s progress towards its objectives and ensures they are achieved.

The effective combination of business management and risk management is based on the risk management policy adopted by Gasgrid Finland’s Board of Directors. The risk management policy aims to ensure that the risk management process remains well defined, easy to understand and sufficiently practical. The risks and trends in risks are regularly reported to the Board of Directors. The finance department coordinates and tenders Gasgrid Finland’s insurance cover.

The main goal of risk management is to identify, assess and monitor the risks, threats and opportunities that could affect the implementation of the strategy and the achievement of short- and long-term targets. Large investment projects also include a separate risk analysis.

Gasgrid is responsible for the transmission of gas in Finnish society and for the development of the gas market and the infrastructure required for gas transmission. This means that the operating environment and its changes are monitored through regular risk assessments in accordance with the risk management policy. The risk environment and related changes are assessed and monitored regularly as a part of annual and strategic planning. The identified risks and the means of managing the risks are reported to the company’s management and Board of Directors at least twice a year. Business risks also involve opportunities, which can be utilised within the agreed risk limits. Conscious risk-taking measures must always be based on factors including the risk-carrying capacity and a comparison of the potential benefits and losses.