Proposals to the Annual General Meeting of Municipality Finance Plc

Municipality Finance Plc
Stock Exchange Release
7 March 2023 at 11:00 am (EET)

Proposals to the Annual General Meeting of Municipality Finance Plc

Municipality Finance Plc’s (hereinafter MuniFin) Board of Directors (the Board) and the Shareholders’ Nomination Committee (the Nomination Committee) have made the following proposals to the Annual General Meeting (the AGM) convening on 28 March 2023 at 10:00 am (EET).

Use of profit shown on the balance sheet and the distribution of dividend

MuniFin has distributable funds of EUR 365,774,616.34 of which the profit for the financial year totaled EUR 138,060,709.21. The Board proposes to the AGM that a dividend of EUR 1.73 per share, totaling EUR 67,580,370.54 shall be distributed based on the balance sheet to be adopted for 2022.

MuniFin’s profit for the financial year is very good. The Board considers the proposed payment of dividend justified. MuniFin clearly fulfils all the prudential requirements set to it. No substantial changes in the company’s financial position have occurred after the end of the financial year and the Board estimates that the distribution of dividends will not place the fulfilment of the capital requirements or the company's liquidity in jeopardy nor is it incompatible with the legislation applicable to MuniFin.

The dividends will be paid to shareholders who are recorded in the company's list of shareholders on 4 April 2023. The Board proposes that the dividends be paid on 13 April 2023.

Remuneration and composition of the Board

The Nomination Committee proposes to the AGM the following remuneration of the Board for the term from the closing of the 2023 AGM to the closing of the next AGM (the Term 2023–2024):

• annual fixed remuneration of a Board member EUR 24,000;
• annual fixed remuneration of the Vice Chair of the Board EUR 27,500;
• annual fixed remuneration of the Chair of the Risk or Audit Committee EUR 29,500;
• annual fixed remuneration of the Chair of the Board EUR 42,000; and
• for each Board and committee meeting as well as for each meeting required by the authorities, to the members, a fee of EUR 600 per meeting attended and to the chairs, EUR 950 per meeting attended.
  
  

The proposed remuneration means an increase of EUR 2,000 to the annual fixed remuneration of the Chair of the Board, an increase of EUR 1,500 to the annual fixed remuneration of the Vice Chair of the Board and the Chairs of the Risk and Audit Committees and an increase of EUR 1,000 to the annual fixed remuneration of a Board member. The proposal will also increase the meeting fees by EUR 150 for the chairs of the Board and its committees and by EUR 100 for other positions.

The Nomination Committee proposes to the AGM that eight members will be elected to the Board for the Term 2023–2024. The Nomination Committee proposes that the following current members will be re-elected: Mr. Kari Laukkanen, Ms. Maaria Eriksson, Mr. Markku Koponen, Mr. Tuomo Mäkinen, Ms. Minna Smedsten, Mr. Denis Strandell and Ms. Leena Vainiomäki. In addition, the Nomination Committee proposes that Mr. Arto Vuojolainen will be elected to the Board as a new member. Ms. Vivi Marttila, a current member of the Board, is no longer available to the Board for the next term.

Arto Vuojolainen is the Operational and Financial Director of the City of Tampere. Before his current employer, Vuojolainen worked for a long time in various banks in expert and management positions related to credit granting and customer relations.

The Nomination Committee proposes to the Board to be elected by the AGM to reappoint Kari Laukkanen as the Chair and Maaria Eriksson as the Vice Chair.

Election and remuneration of the auditor

The Board proposes to the AGM to re-elect KPMG Oy Ab as the company’s auditor for the Term 2023–2024. KPMG Oy Ab has announced that in the event they are elected as the company’s auditor, Ms. Tiia Kataja, APA, will act as the principal auditor. Tiia Kataja has acted as the principal auditor during the previous term as well. The Board proposes to the AGM that the auditor’s fees will be paid against reasonable invoices.

Election of the auditor for the term commencing in 2024

The Board proposes that the AGM takes note of the Audit Committee’s recommendation concerning the election of the auditor for the term commencing in 2024 and the Board’s proposal, which was made based on the recommendation, on the election of the auditor to the AGM of to be held next year, i.e. in 2024.

For the term commencing in 2024, the company is required to arrange the election of the Auditor in accordance with the selection process for an audit firm as referred in the EU Audit Regulation (Regulation) due to mandatory rotation required by the Regulation. The Board’s Audit Committee launched the tendering process required by the Regulation in April 2022 and completed it at the end of 2022 and gave its recommendation to the Board on the auditor for the term commencing in 2024. As the Audit Committee has already issued its recommendations for the term commencing at the end of the AGM 2024, and the Board has decided to make a proposal to the AGM 2024 in accordance with the Committee's proposal, the Board has considered it best to bring the Committee's recommendation and the proposal of the Board to the attention of shareholders without delay already at the AGM 2023.

Thus, the Board will propose to the AGM 2024 based on the Audit Committee’s recommendation that PricewaterhouseCoopers Oy will be elected as the Auditor for the term beginning from the election and ending to the closing of the next AGM, i.e., the AGM 2025.

Dividend policy

The Board proposes to the AGM that the AGM adopts a dividend policy to the company. In accordance with the proposed dividend policy in the coming years MuniFin aims to pay 30-60% of the Group’s financial year’s profit for in dividends. However, dividend distribution must not jeopardize MuniFin’s solvency, liquidity or its ability to meet the commitments.

The proposal for the dividend policy is based on the core mission of MuniFin, which is to ensure, in all market conditions, the accessibility and affordability of financing for its limited customer base with a public service mission. MuniFin’s target is to maintain a sufficient profit level, which ensures both carrying its core mission in the long term and fulfilling the owners’ proportionate expectations for revenue.

Incorporation ofMuniFin’s shares in a book-entry system and amendments to the articles of association

A)   Incorporation of MuniFin’s shares in a book-entry system and the required amendments to the articles of association

The Board proposes that the AGM decides on incorporating the shares of MuniFin in the book-entry system maintained by Euroclear Finland Oy as well as the amendments to MuniFin’s articles of association required by the incorporation. In addition, the Board proposes that the AGM authorizes the Board to decide on the registration period, after which the shares of the company will be in the book-entry system.

The following amendments to the articles of association are proposed in order to incorporate the shares to the book-entry system:

• A reference of the shares of the company being incorporated into a book-entry system after the end of a registration period defined by the Board is proposed to be added to the article three.
• The sentence “The consent clause must be noted on the share certificates and in the register of shareholders, as well as on any temporary certificates and subscription right certificates” is proposed to be deleted from the consent clause in article four.
• The sentence “The redemption clause must be noted on the share certificates and in the register of shareholders, as well as on any temporary certificates and subscription right certificates” is proposed to be deleted from the redemption clause in article five.
• The article 13 concerning the summons to general meeting is proposed to be reworded as follows “The summons to a General Meeting shall be delivered in writing by publishing it on the company’s website, by sending it to the e-mail addresses as notified by each shareholder to the company, by sending it by post to the address entered to the shareholder register or by publishing it in a publication specified by the Board of Directors. The summons to a General Meeting must be delivered at the earliest three months before the General Meeting and at the latest one week before the record date of the General meeting. The last date for advance notices of participation shall be mentioned in the summons of a General Meeting.”

B)   Other amendments to the articles of association


The Board proposes that the AGM also decides on the following amendments to the articles of association:

• The article two of the articles of association concerning the company’s line of business states that “the company serves the whole Finnish municipal sector, and particularly the corporations as referred to in Section 1 of the Act on the Municipal Guarantee Board.” The section is proposed to be amended to “the company serves the corporations as referred to in Section 1 of the Act on the Municipal Guarantee Board”.
• The article eight of the articles of association states that “the Managing Director, the Deputy Managing Director and company officers may only belong to another company’s management with permission from the Board of Directors of Kuntarahoitus Oyj”. The reference to “company officers” is proposed to be replaced by the words “persons reporting directly to the Managing Director”.

In addition, the Board proposes that small technical amendments will be made to the articles of association.

The invitation to the AGM, including relevant appendices, is available on MuniFin’s website in Finnish.

MUNICIPALITY FINANCE PLC

Further information:

Esa Kallio
President and CEO
tel. +358 50 337 7953

MuniFin (Municipality Finance Plc) is one of Finland’s largest credit institutions. The company is owned by Finnish municipalities, the public sector pension fund Keva and the Republic of Finland. MuniFin Group also includes the subsidiary company, Financial Advisory Services Inspira Ltd. The Group’s balance sheet totals close to EUR 48 billion.

MuniFin builds a better and more sustainable future with its customers. MuniFin’s customers include municipalities, joint municipal authorities, wellbeing services counties, corporate entities under their control, and non-profit organisations nominated by the Housing Finance and Development Centre of Finland (ARA). Lending is used for environmentally and socially responsible investment targets such as public transportation, sustainable buildings, hospitals and healthcare centres, schools and day care centres, and homes for people with special needs.

MuniFin’s customers are domestic but the company operates in a completely global business environment. The company is an active Finnish bond issuer in international capital markets and the first Finnish green and social bond issuer. The funding is exclusively guaranteed by the Municipal Guarantee Board.

Read more: www.munifin.fi

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