Board of Directors

Remuneration Committee

The Remuneration Committee is appointed yearly by the Board of Directors. The Remuneration Committee comprises the Chairman of the Board and one to two directors who are independent of the company and its management.

The task of the Remuneration Committee is to prepare issues regarding remunerations and other terms of employment for the Company Management and thus in particular fulfill following task; for the AGM submit proposals to the Board regarding remuneration to the CEO and other senior executives.

No decision-making authority has been delegated to the Remuneration Committee.

The Committee shall at least once a year, and at the express request of a director, report to the Board, in which the committee shall report on its work. The committee shall keep minutes of its meetings and the minutes shall be served on the Board.

Guidelines for remunerations to the senior managers for the financial year are approved at the AGM in April.

Link to Remumeration to Senior Executives

Audit Committee

The Audit Committee is appointed yearly by the Board of Directors. The Audit Committee's task is to prepare issues for the Board concerning the audit procurement and audit fees, take part of the audit plan and reporting from the same, secure the quality of the company's financial reporting and other information and meet regularly with the auditors to inform themselves about the focus and scope of the audit.

The Audit Committee's duties also include monitoring the performance of the external and the internal control systems, monitoring of current risk and the company's financial information and other matters that the Board instructs the Committee to prepare. The Audit Committee obtains current information and documentation from the Board, President, Finance and CFO and the company's external auditors. The Committee also obtains all reports from the external auditors and monitors them internally and with the auditors.

The Committee shall at least twice a year, and at the express request of a director, report to the Board, in which the committee shall report on its work. The Committee shall keep minutes of its meetings and records shall be served on the Board.

The Audit Committee has adopted guidelines for other service apart from auditing that the company can purchase from the company's auditors.

Link to Guidelines for Procurement

The role of the Chairman of the Board

Apart from leading the Board of Directors’ work, the Chairman of the Board of Ependions continuously monitors progress by maintaining ongoing contact with the Chief Executive Officer on strategic matters. The Chairman of the Board represents the group on ownership-related matters.

The Board of Directors’ working methods

The Board of Directors’ activities conform to a yearly plan. Apart from the Board meeting following election, which is held coincident with the AGM, the Board normally meets five times per year (scheduled meetings). Extra meetings are convened when necessary. The Board of Directors’ and Chief Executive Officer’s rules of procedure are adopted yearly at the Board meeting following election. Each meeting follows an agenda, with supporting documentation provided to Board members in goodtime before each Board meeting.

The Annual Accounts, proposed appropriation of profits and the financial statement are considered each financial year in the first scheduled Board meeting of the financial year. Coincident with this process, the company’s Auditors submit a report to the Audit Committee regarding the Auditors’ observations and judgments of the audit conducted. The Chief Executive Officer is assigned to submit Interim Reports approved by the Board of Directors at scheduled meetings later in the financial year. Each scheduled meeting also includes several other matters on its agenda, including a report on the current results of operations.

The Board of Directors appraises its own work and that of the Chief Executive Officer on an ongoing basis. It also conducts a structured evaluation led by the Chairman of the Board in tandem with scheduled Board meetings each October.

By the Board appointed Committees are responsible for preparing issues for Board decisions. Decisions are taken by the Board after an open discussion led by the Chairman. The Chief Financial Officer of Ependion, also Compliance Officer for the Code of Corporate Governance, serves as Secretary of the Board of Directors.

Rules of procedure for the Board of Directors of Ependion

Adopted by the Board of Directors on May 10, 2023.

Contents

1. Composition

2. Assignment, Responsibilities and Duties

3. Chairman of the Board

4. Meetings

5. Minutes

6. Decision-making

7. Disqualification

8. Confidentiality and Communication

9. Committees

10.   Annual General Meeting

 

1. Composition

Members, Deputies and the Chairman are appointed annually at the Annual General Meeting for the period until the next Annual General Meeting has been held. The composition of the Board of Directors is stated in the Articles of Association, and shall have such composition that it satisfies the requirements of members’ non-affiliation in accordance with the Swedish Code of Corporate Governance.

2. Assignment, Responsibilities and Duties

Board members shall dedicate the time and care, and acquire the knowledge, necessary to protect the company’s and its owners’ interests. Board members should independently judge the matters the Board of Directors is to consider and seek the information that the Board member considers necessary for the Board of Directors to be able to reach well-founded decisions. The Board member shall acquire the knowledge of the company’s operations, organization, markets etc. required for the assignment.

The Board of Directors is responsible for the company’s organization and administration of the company’s affairs, in the Company’s and all shareholders’ interests.

The Board of Directors shall ensure that the company’s organization is structured so that accounting, the management of funds and the company’s other financial circumstances are controlled satisfactorily. The Board of Directors is liable for judging the company’s and the Ependions group’s financial situation continuously.

The Board of Directors shall appoint a Chief Executive Officer.

The Board of Directors shall present Annual Accounts.

The Board of Directors’ responsibilities include:

1. adopting overall strategy and business orientation and the overall goals for the operation

2. adopting a budget for the Ependion

3. updating budgets

4. following up on overall goals and action-plans

5. appointing, appraising, and where necessary, dismissing, the Chief Executive Officer, with an appraisal on an ongoing basis, with the Board of Directors dealing with this matter on a dedicated footing at least once per year

6. ensuring that the company has satisfactory internal controls and formalized processes that ensure compliance with established principles for financial reporting and internal controls,

7. ensuring that there are effective systems for monitoring and controlling the company’s operations.

8. ensuring that the company’s financial reporting has been proposed consistent with laws, applicable accounting policies and other standards applying to listed companies.

9. ensuring that there are satisfactory controls of the company’s compliance with laws and other ordnances that apply to the company’s business.

10.   to ensure that the required ethical guidelines are set for the company’s conduct.

11.   ensuring that the company’s communication features openness, and is accurate, relevant and reliable.

12.   that the Ependion’s organization, processes and internal instructions are regularly reviewed by the company’s auditors.

The Board of Directors is also responsible for:

1. adopting the Rules of Procedure for the work of the Board of Directors each year

2. adopting instructions for the Chief Executive Officer each year

3. adopting instructions for obtaining and reporting information as guidance for the Board of Directors’ assessment of the company’s and the Ependion’s financial position (such instructions may be included in the Rules of Procedure for the Chief Executive Officer)

4. meeting the company’s auditors semiannually

5. appointing a Remuneration Committee consisting of the Chairman and one to two Board members each year

6. appointing an Audit Committee consisting of at least three board members each year

7. appraising the work of the Board of Directors through a systematic and structured process with the aim of developing the Board of Directors’ working methods and effectiveness, reporting on relevant sections of this appraisal to the Nomination Committee

8. deciding on the Chief Executive Officer’s terms of employment

9. ensuring that the company’s semi-annual and nine-month interim report is subject to summary review by the company’s auditor.

10.   where applicable, considering whether the Chief Executive Officer should be permitted to take on significant assignments outside the company.

11.   reviewing the company’s systems for internal controls in the Corporate Governance Report and evaluating the need for a dedicated internal audit function each year, and explaining its standpoint on the above review of internal controls

12.   the above in structure shall also be revised as required, for example due to changes to legislation or equivalent.   

3. Chairman of the Board

The Chairman of the Board should ensure that the work of the Board of Directors is well organized, conducted effectively, and that the Board of Directors performs its duties.

Particularly, the Chairman should;

1. organize and lead the work of the Board of Directors to create the best possible prospects for the work of the Board of Directors

2. ensure that scheduled Board meetings are held in accordance with these Rules of Procedure and additional meetings are held as required.

3. lead Board meetings

4. ensure that new Board members undergo the necessary introductory training and other training that the Chairman and Board members consider appropriate collectively.

5. ensure that the Board of Directors updates and deepens its knowledge of the company continuously.

6. be responsible for contacts with shareholders on ownership issues and convey the views of the owners to the Board of Directors

7. ensure that the Board of Directors receives satisfactory information and supporting data for its work including monitoring the company’s operations and ensuring that Board members also receive information on the company’s operations and significant events between Board meetings.

8. after consulting with the Chief Executive Officer, adopt a proposed agenda for Board meetings.

9. ensure that Board decisions are executed.

10.   ensure that the work of the Board is evaluated each year.

11.   In the absence of the Chairman, his duties are instead taken over by the Board members elected by the Annual General Meeting who have been a member of the Board of Directors of the company for the longest time. If two or more have been directors for the same length of time, the oldest of them takes precedence. If the Chairman leaves his position during his term of office, the Board of Directors shall elect a Chairman internally for the period until the next Annual General Meeting

12.   if, in addition to Chairmanship, the Chairman of the Board secures consulting assignments on behalf of the Ependion group, then, if necessary with consideration to the content of the assignment, the Chairman shall approve the potential division of responsibility with the Chief Executive Officer

4. Board Meetings

Location of Meetings
The Board of Directors normally meets in Malmö, Sweden. However, the Board may decide to hold meetings in another location in Sweden, or a foreign location. The board can also decide to hold the meeting via a virtual forum such as Microsoft Teams.

Scheduled Board Meetings
The Board of Directors shall hold at least four scheduled meetings each year. Of these meetings, one meeting shall consider strategy issues.

Board Meeting Following Election
The newly elected Board of Directors shall hold its Board meeting following election after the Annual General Meeting. The following matters shall be considered at this meeting:

1. appointing the chairman of the board

2. appointing authorized signatories

3. adopting the rules of procedure for the Board of Directors

4. adopting instructions for the Chief Executive Officer

    
Additional Board Meetings
When a Board member or the Chief Executive Officer requires, the Board shall be convened for additional Board meetings.

If the company’s auditor issues a reminder to the Board, this matter shall be considered at a Board meeting within four weeks of the reminder being presented.

Per Capsulam Meetings, etc.
The Chairman of the Board may permit additional Board meetings to be held per capsulam.

The Chairman of the Board may also permit a member to participate by telephone or similar in special circumstances.

All Board members shall be requested for, and approve, decisions taken per capsulam.

Material for Board Meetings
Each Board member will be provided with documentation for each Board meeting. Such documentation shall normally be sent at least one week prior to the relevant meeting. An agenda and copy of the previous minutes shall be attached to the documentation.

Business of Board Meetings
The following matters shall be considered at scheduled Board meetings (not strategy meetings).

1. financial reporting for the group and

2. business reporting for the group.

Written supporting documentation shall be sent prior to meetings for financial reporting. Reporting shall be in accordance with the instructions for the Chief Executive Officer.

5. Minutes

Minutes shall be taken at Board meetings. Minutes are taken and signed by the Board Secretary and shall be verified by at least one Board member in addition to the Chairman. However, minutes taken at meetings held per capsulam shall be verified by all Board members.

The minutes should clearly state which matters have been considered, which documentation has been used for each matter and the import of the decisions taken. If due to disqualification, a specific Board member has not participated in proceedings, this matter shall be noted in the minutes. The minutes shall be sent to Board members as soon as possible after the Board meeting.

Minutes shall be taken in numerical order, and stored in a satisfactory manner with the agenda through the agency of the Secretary.

Minutes or extracts from minutes may not be copied or disclosed to any party other than Board members and the company’s auditor without the approval of the Chairman or the Board member appointed by the Chairman. However, disclosure is committed to the extent it is required by law or other statute, or regulatory decision.

6. Decision-making

The Board of Directors is quorate if more than half of the members are present. When judging if the Board of Directors is quorate, Board members that are disqualified should not be considered present.

Decisions may not be taken on a matter unless, as far as possible, all Board mem bers have firstly been able to participate in considering the matter, and secondly, received sufficient documentation to decide the matter.

For a Board decision, that opinion represented by over half of those attending present vote for at the meeting, or if voting is equal, the opini on that the Chairman represents. However, if the board is not complete, those members voting in favor of the decision must be more than one-third of the full number of Board members.

If votes are equal in the election of the Chairman, the election will be decided by drawing lots.

7. Disqualification

A Board member may not consider a matter if

1. there is an agreement between the Board member and Ependion

2. there is an agreement between Ependion and a third party if the Board member in question has a significant interest that may conflict with the company’s, or

3. there is an agreement between Ependion and a legal entity that the Board member alone, or together with another party, may represent. However, this prohibition does not apply if the company’s counterparty is a company in the Ependion group.

Agreement also means legal proceedings or other lawsuit.

Stipulations on disqualification mean that a disqualified Board member may not participate all be present either at the Board of Directors’ consideration or its decision.

The onus is on Board members to inform the Board of Directors of circumstances that may imply the member being considered as disqualified.

8. Confidentiality and Communication

Board members are reminded of their obligation to treat those matters for the Board of Directors’ consideration confidentially, which particularly, shall apply to such information that may be provided regarding the company’s commercial relations.

All information on the company for the press shall the submitted by the company’s Chief Executive Officer and/or Chairman. In addition, all such information shall be provided to Board members before public disclosure. The Board of Directors may assign another party to submit such information.

9. Committees

Remuneration Committee

The Board of Directors shall establish a Remuneration Committee consisting of the Chairman and one to two Members of the Board of Directors who are independent in relation to the Company and the Company Management. The members of the Committee shall include the requisite knowledge and experience in matters relating to remuneration to senior executives. If the Remuneration Committee (or the Board of Directors) engages an external contractor for its work, the Committee shall ensure that there is no conflict of interest in relation to other assignments that he or she may have for the company or the company management.

The Remuneration Committee shall mainly be responsible for the preparation of the Board's decisions on issues relating to remuneration principles, remuneration and other terms of employment for the company management, follow and evaluate ongoing and completed programs for variable remuneration for the company management during the year and follow and evaluate the application of the guidelines for remuneration to senior executives that the Annual General Meeting is required by law to decide on, as well as applicable remuneration structures and remuneration levels in the company.

The Remuneration Committee shall ensure that the results of this evaluation are reported on the Company's website in accordance with the Rules of the Code. When drafting proposals to the Board of Directors, the Remuneration Committee shall ensure that the Rules of the Corporate Code on the design of variable remuneration, remuneration and other terms of employment, etc., are met.

No right to make decisions has been delegated to the Committee.

At least once yearly, and on written demand from a Board member, the Committee shall present a report to the Board of Directors, in which the Committee reports on its work. The Committee shall take minutes of its meetings and these minutes shall be presented to the Board of Directors.

Audit Committee
The Board of Directors shall establish an Audit Committee, which shall consist of at least two Board members. The majority of the Committee’s members shall be non-affiliated to the company and management. At least one of the members who is non-affiliated to the company and the company management shall also be independent in relation to the company's major owners and have accounting or auditing expertise. Board members that are members of management may not be members of the Committee.

The Audit Committee shall:

1. be responsible for consultation on the work of the Board of Directors on quality-assuring the company’s financial reporting; whereby the Committee shall obtain a view of the company’s risk situation and the structure of the company’s internal controls.

2. regularly meet the company’s auditor to be informed on the orientation and scope of the audit and discuss coordination between external and internal audits, complex auditing issues and the view of the company’s risks,

3. review and monitor the auditor's impartiality and independence, noting in particular whether the auditor provides the company with services other than audit services and establishing guidelines for which services other than auditing the company may procure from the company's auditor,

4. evaluate audit efforts and inform the company’s Nomination Committee, or where applicable, dedicated Nomination Committee, on the results of the evaluation, and,

5. support the Nomination Committee when preparing proposals for auditors and remuneration for audit work.

No right to take decisions has been delegated to the Committee.

At least semiannually, and on express demand from a Board member, the Committee shall present a report to the Board of Directors, in which the Committee reports on its work. The Committee shall take minutes of its meetings and these minutes shall be presented to the Board of Directors.

10. Annual General Meeting

The Board of Directors convenes the Annual General Meeting in accordance with an invitation approved by the Chairman of the Board.

The Chairman of the Board shall open the Annual General Meeting.