KESKO BOARD'S PROPOSALS TO THE ANNUAL GENERAL MEETING
Kesko Corporation's shareholders are invited to the Annual General Meeting to be held at Messukeskus Helsinki, Rautatieläisenkatu 3, Helsinki, on Monday, 30 March 2020, starting at 13.00 EET. The General Meeting will handle matters specified for the agenda of the Annual General Meeting in section 10 of the Company’s Articles of Association, the Company’s Remuneration Policy for Governing Bodies, and the following proposals by the Board of Directors:
Use of the profit shown on the balance sheet and resolution on the payment of dividend
The Board of Directors proposes that based on the adopted balance sheet, a dividend of €2.52 per share be paid for the year 2019 on shares held outside the Company at the date of dividend distribution. The remaining distributable assets will remain in equity. The Board proposes that the dividend be paid in two instalments.
The first dividend instalment, €1.28 per share, is to be paid to shareholders registered in the Company’s register of shareholders maintained by Euroclear Finland Ltd on the first dividend instalment payment record date 1 April 2020. The Board proposes that the first dividend instalment pay date be 8 April 2020.
The second dividend instalment is to be paid to shareholders registered in the Company's register of shareholders maintained by Euroclear Finland Ltd on the second dividend instalment payment record date, 1 October 2020. If the Board proposal concerning a share issue without payment is approved, the second instalment will be divided between one current and three new shares, so that €0.31 is paid on each share. If the Annual General Meeting does not approve the Board proposal concerning a share issue without payment, the second dividend instalment will be €1.24 per share. The Board proposes that the second dividend instalment pay date be 8 October 2020. The Board proposes that it be authorised to decide, if necessary, on a new dividend payment record date and pay date for the second instalment if the rules and statutes of the Finnish book-entry system change or otherwise so require.
Election of the Auditor and resolution on the auditor's fee and the basis for reimbursement of expenses
The Board of Directors proposes, on the recommendation of the Board’s Audit Committee, that based on a tendering of auditors, the firm of authorised public accountants Deloitte Oy be elected as the Company’s auditor for the financial year 2020. If Deloitte Oy is elected as Kesko's auditor, the firm has announced that APA Jukka Vattulainen will be the auditor with principal responsibility.
The Audit Committee’s recommendation for the election of auditor is available on the Company’s website at www.kesko.fi/en/investor/General-Meeting.
At the recommendation of the Board’s Audit Committee, the Board proposes that the auditor's fee and reimbursement of the auditor's expenses be paid according to an invoice approved by the Company.
The Board of Directors’ proposal on a share issue without payment (share split) and on the amendment of section 3 of the Company’s Articles of Association
The Board of Directors proposes a resolution on a share issue without payment in order to enhance the liquidity of the Company’s share. The Board also proposes a related amendment to section 3 (“Shares”) of the Company’s Articles of Association.
The Board proposes that new shares be issued to the shareholders without payment in proportion to their holdings so that three (3) new A shares are issued for each current A share, and three (3) new B shares are issued for each current B share. In addition, in the share issue without payment, new B shares will similarly be issued without payment to the Company on the basis of B shares held by the Company. Based on the number of shares on the date of the Board’s proposal, a total of 95,211,021 new A shares and a total of 204,848,235 new B shares will be issued. The shares shall be issued to shareholders who are registered in the Company’s register of shareholders maintained by Euroclear Finland Ltd on the record date of the share issue, 1 April 2020. The share issue without payment shall be executed in the book-entry system and will not require any action on the part of the shareholders. The new shares will generate shareholder rights as of 1 April 2020 when they have been registered in the trade register. The registration of the new shares in the shareholders’ book-entry accounts is planned to occur on 2 April 2020. The new shares will not entitle their holders to the first instalment of dividend in accordance with the Board’s proposal for the distribution of profit of €1.28 per share, but they will entitle the holder to the second proposed dividend instalment of €0.31 per share.
A resolution on the share issue requires that section 3 of the Company’s Articles of Association be amended so that the maximum number of B shares as well as the maximum aggregate number of A and B shares be increased. The Board proposes that the maximum numbers be increased to rounded figures so that the maximum number of B shares would be increased from 250,000,000 shares to 360,000,000 shares, and the maximum aggregate number of A and B shares would be increased from 400,000,000 shares to 610,000,000 shares. Each A share would continue to entitle the holder to ten (10) votes and each B share to one (1) vote.
The proposed new wording of section 3 of the Articles of Association is as follows:
“3 § Shares
The company has A shares and B shares. Concerning A shares the minimum number is one (1) and the maximum number two hundred and fifty million (250,000,000), while concerning B shares the minimum number is one (1) and the maximum number three hundred and sixty million (360,000,000), provided that the total number of shares is at minimum two (2) and at maximum six hundred and ten million (610,000,000).
Each A share entitles the holder to ten (10) votes and each B share to one (1) vote.
The company's shares are included in the book-entry securities system.”
Board of Directors' proposal for its authorisation to decide on the issuance of shares
The Board of Directors proposes that the Board be authorised to decide on the issuance of new B series shares as well as of own B shares held by the Company as treasury shares on the following terms and conditions:
Under the authorisation, the Board shall be authorised to take one or more decisions on the issuance of B shares, provided that the number of B shares thereby issued totals a maximum of 40,000,000 B shares. This number of shares is equivalent to approximately 10% of all shares in the Company after the new shares to be issued in a share issue without payment pursuant to the proposal of the Board of Directors have been registered.
B shares can be issued for subscription by shareholders in a directed issue in proportion to their existing holdings of shares in the Company, regardless of whether they own A or B shares. B shares can also be issued in a directed issue, departing from the shareholder's pre-emptive right, for a weighty financial reason for the Company, such as using the shares to develop the Company's capital structure, to finance possible acquisitions, capital expenditure or other arrangements within the scope of the Company's business operations, or to implement the Company's commitment and incentive scheme. For the latter purpose, however, the maximum number of B shares that can be issued is 800,000 shares. This number of shares is equivalent to approximately 0.2% of all shares in the Company.
The new B shares may be issued only against payment. Own B shares held by the Company as treasury shares can be conveyed either against or without payment. According to the Finnish Limited Liability Companies Act, a directed share issue can only be without payment if an especially weighty financial reason exists thereto, both from the viewpoint of the Company interests and taking into account the best interests of all its shareholders.
The Board of Directors shall decide on the subscription price of the shares upon the issuance of new shares, and the possible amount that is payable upon the conveyance of B shares held by the Company. The Board of Directors is also entitled to issue shares against non-monetary consideration. The subscription price and possible amount payable for the shares shall be recorded in the reserve for invested non-restricted equity.
The Board of Directors shall make decisions concerning any other matters related to the share issues.
The authorisation is valid until 30 June 2021. The authorisation revokes the authorisation granted by the Annual General Meeting of 4 April 2016 to the Board of Directors to convey a total maximum of 1,000,000 B shares held by the Company, which would have expired on 30 June 2020. The authorisation also revokes the authorisation granted by the Annual General Meeting of 11 April 2018 to issue a total maximum of 10,000,000 new B shares, which the Board of Directors has not used. That authorisation would have expired on 30 June 2021.
If the Annual General Meeting does not approve the Board’s proposal on a share issue without payment, the Board of Directors of Kesko Corporation proposes to the Annual General Meeting to be held on 30 March 2020 that the Board be authorised to decide on the conveyance of own B shares held by the Company on the following terms and conditions:
Under the authorisation, the Board shall be authorised to take one or more decisions on the conveyance of the B shares, provided that the number of B shares thereby conveyed totals a maximum of 200,000 B shares. This number of shares is equivalent to approximately 0.2% of all shares in the Company.
B shares can be conveyed to shareholders in a directed issue in proportion to their existing holdings of shares in the Company, regardless of whether they own A or B shares. B shares can also be conveyed in a directed issue, departing from the shareholder's pre-emptive right, for a weighty financial reason for the Company, such as using the shares to develop the Company's capital structure, to finance possible acquisitions, capital expenditure or other arrangements within the scope of the Company's business operations, or to implement the Company's commitment and incentive scheme.
Own B shares held by the Company as treasury shares can be conveyed either against or without payment. According to the Finnish Limited Liability Companies Act, a directed share issue can only be without payment if an especially weighty financial reason exists thereto, both from the viewpoint of the Company interests and taking into account the best interests of all its shareholders.
The Board of Directors shall decide on the possible amount that is payable upon the conveyance of the B shares held by the Company. The Board of Directors is also entitled to convey shares against non-monetary consideration. The possible amount payable for the shares shall be recorded in the reserve for invested non-restricted equity.
The Board of Directors shall make decisions concerning any other matters related to the share issues.
The authorisation is valid until 30 June 2021. The authorisation revokes the authorisation granted by the Annual General Meeting of 4 April 2016 to the Board of Directors to convey a total maximum of 1,000,000 B shares held by the Company, which would have expired on 30 June 2020. The authorisation does not revoke the authorisation granted by the Annual General Meeting of 11 April 2018 to issue a total maximum of 10,000,000 new B shares, which the Board of Directors has not used. That authorisation is valid until 30 June 2021.
The Board of Directors’ proposal for establishing a Shareholders’ Nomination Committee
The Board of Directors proposes to the Annual General Meeting that it resolves to establish a Shareholders’ Nomination Committee, the duty of which would be to prepare proposals related to the number, election and remuneration of board members to the Annual General Meeting and, when necessary, to an Extraordinary General Meeting. According to the Board’s proposal, the Shareholders’ Nomination Committee would be established for the time being, until decided otherwise by the General Meeting. The Board proposes the confirmation of the rules of procedure of the Shareholders’ Nomination Committee appended.
Donations for charitable purposes
The Board of Directors proposes that it be authorised to decide on donations in a total maximum of €1,000,000 for charitable or corresponding purposes until the Annual General Meeting to be held in 2021, and to decide on the donation recipients, purposes of use, and other terms and conditions of the donations.
Available documents
The proposals of the Board of Directors and shareholders are available on the Company's website at www.kesko.fi/en/investor/General-Meeting. The financial statements documents will be made available to shareholders on the Company's website in week 10. Copies of the documents will be sent to shareholders on request. They will also be available at the Annual General Meeting.
Notice of Annual General Meeting and Remuneration Policy
The notice of the Annual General Meeting and the Remuneration Policy will be published separately at a later date on the Company's website and as a stock exchange release.
Further information is available from Lasse Luukkainen, Group General Counsel, tel. +358 105 322 818, and Hanna Jaakkola, Vice President, Investor Relations,
tel. +358 105 323 540.
Appendix Rules of procedure of the Shareholders’ Nomination Committee
Kesko Corporation
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