Corporate Governance in Swedish Match
Observant readers of Swedish Matchs annual reports in the past few years will have noticed a section on Corporate Governance. We were virtually unique in Sweden in this respect until last year, 2003, when a number of large Swedish companies followed suit.
This coincided with a number of major financial scandals in the US, when Enron and WorldCom suddenly became global household names. In rapid response to the scandals, the US introduced a new law, the Sarbanes-Oxley Act, the most important financial legislation since the 1930s.
The stringent and very detailed new regulations imposed tighter requirements on US companies - and in important respects also foreign companies listed on US exchanges - regarding the entire chain of control from the companys shareholders to the Board and President and down to those responsible for accounts and reporting in subsidiary companies.
With our shares listed on the US Nasdaq exchange and with almost 5,000 US shareholders, we have had to adapt to the new US regulations, explains Bo Aulin, Senior Vice President, Corporate Affairs, and Chief Legal Counsel, who is responsible for much of the practical work. Suppressing a good-natured sigh, he continues:
It has been a huge task: Swedish culture, traditions, attitudes and corporate life are very different from business in the US. But basically, we now have several new functions that improve oversight and control and we have formalized existing procedures that were already working well.
The most striking changes relate to the Board. Since Swedish Match is a company that focuses on its shareholders, the Board set up a Nomination Committee and a Remuneration Committee back in 1996. These committees have gradually been assigned clearer mandates and duties.
Perhaps the most significant consequence of the Sarbanes Oxley Act for our part is the Boards Audit Committee, which was set up last year to provide extended support for the entire Board. We also set up a Disclosure Committee, consisting of senior executives in the company who examine all financial information, continues Bo Aulin.