ORGANIZATION

Duties and responsibilities

The Board of Directors’ duties and responsibilities are defined primarily by the Articles of Association and the Finnish Limited Liability Companies’ Act. The Board’s duties include:

• compiling of the Board of Directors’ report, interim reports and financial statements
• ensuring the proper organization and surveillance of the accounting and asset management
• the preparation of proposals for the General Meeting and the convocation of the General Meetings
• the approval and confirmation of strategic guidelines and the principles of risk management
• the ratification of annual budgets and plans
• the appointment of a full-time Chairman of the Board and a President and CEO, and decisions on the terms and conditions of their employment
• decisions on the company’s corporate structure
• decisions on major acquisitions and investments
• decisions on other matters falling under the Board’s responsibility by law

The Board has created rules of procedure stipulating the duties of the Board, its Chairman and its Committees. The Board of Directors holds six regular meetings a year and additional meetings as required. The Board of Directors reviews its own performance and procedures once a year.

Members of the Board

The Annual General Meeting elects five to ten members and no more than three deputy members to the Board of Directors for one year at a time in accordance with KONE Corporation’s Articles of Association. The Board of Directors elects a Chairman and Vice Chairman among its members. In electing the members of the Board, attention is paid to the candidates’ broad and mutually complementary experience, expertise and views of both KONE’s business and other businesses.

Committees

The Board of Directors has appointed two committees consisting of its members: the Audit Committee and the Nomination and Compensation Committee. The Board has confirmed rules of procedure for both Committees. The Secretary to the Board acts as the Secretary of both Committees.

The Audit Committee monitors the Group’s financial situation and supervises reporting related to the financial statements and interim reports. The Audit Committee monitors and assesses the adequacy and appropriateness of KONE’s internal control and risk management, as well as the adherence to rules and regulations. It also monitors and oversees the financial statement and financial reporting process, and processes the description of the main features of the internal control and risk management systems pertaining to the financial reporting process included in the company’s corporate governance statement. In addition, it deals with the Corporation’s internal audit plans and reports. The Director of Internal Auditing reports the internal audit results to the Committee. The Audit Committee evaluates the auditing of the Group’s companies and the appropriateness of the related arrangements and auditing services, and considers the auditors’ reports. Furthermore, the Committee formulates a proposal to the Annual General Meeting regarding the auditors to be selected for the Corporation.

The Nomination and Compensation Committee prepares proposals to be made to the Annual General Meeting regarding the nomination of Board members and their compensation and makes decisions regarding senior management appointments and compensation. The Committee also decides on the compensation systems to be used.