Neomarkka Plc complies with Finnish legislation and its own Articles of Association in its corporate governance and management. The company also complies with Corporate Governance regulations and recommendations for listed companies issued by the NASDAQ OMX Helsinki and the Financial Supervisory Authority's (FIN-FSA).

Company applies the Finnish Corporate Governance Code published by the Securities Market Association on 22 October 2008 with the exception that there are no female members in the com-pany's Board of Directors. The intention is to find an applicable per-son for the role in 2010.

Corporate Governance principles are updated continuously, when changes are made. The current Corporate Governance summary is published on the group´s website at www.neomarkka.fi.

General meeting of shareholders

The general meeting is the company´s highest decision-making body. The Annual General Meeting (AGM) will be held once a year. At the general meeting shareholders exercise their right to vote on company affairs. The general meeting deals with the matters laid down in the Companies Act and the Neomarkka Articles of Association, e.g. approves the financial statements and decides on dividend distribution and any changes in the Articles of Association. It also elects the chairman, vice chairman and other members of the Board of Directors and the auditors, and decides on their remuneration. Extraordinary General Meetings are arranged if necessary during the year.

The Notice of General Meeting shall be given to shareholders by means of an advertisement in at least one national newspaper which is determined by the Board of Directors, not earlier than three (3) months and not later than three (3) weeks prior the meeting but however, nine (9) days prior to the record date for the shareholders' meeting as referred to in chapter 4, section 2 of the Limited Liability Companies Act.

The Articles of Association

The Articles of Association does not include any redemption clauses or shareholder agreements.

Shares

Neomarkka Plc's B share is quoted on the NASDAQ OMX Helsinki. The company has two share series: A shares and B shares. The A share carries 20 votes and the B share one vote.

Board of Directors

According to Neomarkka´s Articles of Association, the Board of Directors (the Board) consists of three to seven regular members and a maximum of three deputy members. The term of a member begins after the general meeting and normally expires at the close of the following Annual General Meeting. The duties of the company´s Board are laid down in the Companies Act and other applicable legislation. The Board is responsible for proper organization of the administration and operations of the company, and considers and decides on all major matters concerning said operations. The Board appoints the company's Managing Director, who is not a member of the Board.

The chairman of the Board convenes a Board meeting whenever the affairs of the company so require. The Board constitutes a quorum when more than half of all its members are present. The opinion supported by more than half of the members present or, if the votes fall even, the opinion supported by the chairman, will be the Board´s decision.

The charter of the Board is normally formulated at the constituting meeting of the Board. The following principal duties and working principles are included in the current written charter:

- The Board complies with the Recommendation for Finnish Corporate Governance Codes of listed companies and regulations and recommendations for listed companies issued by the NASDAQ OMX Helsinki and the Financial Supervisory Authority's (FIN-FSA).
- The Board is responsible for submitting quarterly interim reports and the annual report. The auditors are given an opportunity to comment on the reports before the Board takes its decision and the reports are published.
- The Board decides on questions that concern the level of risk-taking in the company.
- The Board appoints the audit committee and decides on its charter. The committee has no autonomous authority. Responsibility for the functions allotted to the committee remains with the Board.
- The Board can establish other committees made up of Board members or give members of the Board special commissions. Such decisions must be entered in the minutes. Neither a Board committee, nor a member of the Board with a special commission has autonomous authority. Responsibility for the functions allotted remains with the Board.
- The Board annually conducts an evaluation of its performance and working methods.

The Board consists of six regular members and no deputy members since 9 June 2010.

In 2009 the Board met 10 times. The participation activity of the members was 96%.

Evaluation of the independence of the Board members

The Board will evaluate its member´s independence of the company according to the Corporate Governance recommendation. Board´s evaluation from 9 June 2010 as follows:

According to the Board´s evaluation, the majority of the Board members Matti Lainema, Ilpo Helander, Taisto Riski, Pekka Soini, Risto Kyhälä and Matti Lappalainen were independent of the company, whereas Board members Matti Lainema, Ilpo Helander, Taisto Riski, Pekka Soini, Risto Kyhälä and Matti Lappalainen were independent of the company´s significant shareholders.

Audit committee

The Board annually appoints the chairman and members of the audit committee. The functions of the audit committee include monitoring the company´s financial position, supervising the financial reporting, evaluating the adequacy and appropriateness of internal supervision and risk management, evaluating compliance with laws and regulations and maintaining contact with the auditor, examining the auditor´s reports and evaluating any advisory services supplied by the auditor. The audit committee prepares the Board´s proposal to the Annual General Meeting concerning appointment of the external auditor(s). The audit committee reports to the Board.

The audit committee consists of the two members Taisto Riski (chairman), Ilpo Helander and Pekka Soini since 9 June 2010.

In 2009, the audit committee convened 5 times. The participation activity of the members was 92%.

Evaluation of the independence of the members of the audit committee

According to the Board´s evaluation, the members of the audit committee are independent of the company.

Managing Director

The Managing Director elected by the Board is responsible for the day-to-day management of the company according to instructions and orders issued by the Board. The Managing Director must ensure that the company's bookkeeping complies with the law and that financial matters are handled in a reliable manner. The Managing Director is in charge of the company's investment activities.

Organization of the Management

The Managing Director of the company is Markku E. Rentto. The company management group consists of Managing Director and CFO Sari Tulander. Both have started in their positions on 10 May 2007.

Remuneration

The AGM annually approves the compensation paid to the Board members, and the Board decides on the salary and other benefits of the Managing Director. The Board decides on any bonuses paid to the Managing Director. The Board members are remunerated by virtue of their Board membership, and for work on Board committees.

In accordance with the decision of the Annual General Meeting on 9 June 2010 the Board members are remunerated as follows:

The chairman of the Board is paid an annual fee of EUR 15,000, the vice chairman EUR 12,500 and other members EUR 10,000. In addition, a meeting fee of EUR 600 is paid for each Board meeting and for work on Board committees. Board members are compensated for their travel and accommodation expenses.

In addition, the AGM 9 June 2010 resolved that the Members of the Board to be paid a bonus based on the annual profit of the Company´s class B shares, the amount of which is EUR 2,000 for the Chairman of the Board and EUR 1,000 for the ordinary members of the Board, multiplied by share price development of Neomarkka Plc`s class B share during the period May 2010 - May 2011. Should the annual financial profit exceed 50 percent, the profit shall be paid in accordance with 50 percent.

The pension benefits of the Managing Director are based on the Finnish Employees' Pensions Act (TyEL). The term of notice of Managing Director is twelve (12) months, no separate compensation of dismissal has been agreed. The term of notice of CFO is six (6) months. The Managing Director and CFO are paid a monthly salary and bonus. The bonus is based on the company's financial profit for the year and other realised key targets. The bonuses are accepted using one over the other acceptance principle. The salary does not include any supplementary pension benefits. The company has no share or equity-derivative bonus systems at the moment. The bonus systems are being developed and a proposal of the change in the bonus systems will be brought to the AMG for decision.

The Managing Director was paid year 2009 regular salary and fringe benefits a total of EUR 127,500. In year 2009 the Managing Director was paid bonus amounting to EUR 22,100.

Supervision

Internal supervision and risk management
The aim of the internal supervision and risk management are used to ensure that the company operates in the most efficient and successful manner, that information is reliable, and that regulations and operating principles are followed. The Board carries the ultimate responsibility for supervision of the bookkeeping and financial management, and the Managing Director is in charge of practical organization of the supervision system and risk management. The company's financial situation and progress are monitored on a monthly basis, and the information is published in the annual report and interim reports.

A more detailed describtion of the company's internal supervision and risk management is given in section 4 in Corporate Governance Statement that has been published separately.

Internal audit
The Board has established an audit committee subordinate to the Board to carry out the company's internal audit. The operative internal audit is mainly done by own resources. Outside experts are used as case by case in projects.

Risks and hedging measures

Neomarkka's main financial risks are currency, interest rate, commodity, liquidity, credit and investment market-risks. The financial risks and their hedging measures are described in more details in the notes to the Consolidated Financial Statements 2009.

The company's future risk factors are tied to the development of business operations of the invested companies. The most significant risks in the Cable Business relate to changes in market conditions, fluctuating raw material prices and exchange rate movements. Reka Cables has 2007 carried out extensive risk analysis to chart these risks and hedge them.

The most significant risks in the Single Family House Industry relate to competition and demand of the markets, the level of production capacity utilization and changes in the raw material prices.

In 2009, Audit Committee was focusing on risks on business operations in Russia by initiating a risk assessment. The results of the assessment will be utilized in 2010 internal audit.

The company believes that the Russian cable market will grow and develop, and has made substantial investments to exploit business opportunities there. The investments contain the risk that growth in Russia will not live up to expectations.

Insider administration

Neomarkka Plc complies with the Guidelines for Insiders issued by the NASDAQ OMX Helsinki.

According to the law, the members of the Board, the Managing Director and the auditors are considered as permanent insiders of the company, and are registered in the company's public insider register. All employees of Neomarkka Plc are listed as permanent insiders in the company´s public insider register. Other employees in the Group handling key information are registered in the non-public company-specific insider register. The project-specific register includes project-specific insiders, i.e. persons receiving inside information on a temporary basis due to a contract of employment or other contract.

The company maintains its insider register in the Netsire system at the Euroclear Finland Ltd. The company´s public insider register can be found on the company´s website.

External audit

According to the Articles of Association, the company has one or two regular auditors who must be auditors or auditing bodies authorized by the Central Chamber of Commerce. The general meeting of shareholders elects the auditors, and their term ends at the close of the following AGM. In connection with the annual financial statements, the auditors make their auditors´ report to the company´s shareholders.

The purpose of the statutory external audit is to verify that the financial statements give a true and fair view of the result and financial situation of the company. The audit constitutes an independent statement to the shareholders concerning management of the bookkeeping, financial statements and administration of the company.

The Neomarkka Group is audited continuously. The auditors normally go through the administration, bookkeeping, payroll administration, current asset bookkeeping and other areas of Group companies 3-4 times per year. In addition, the consolidated financial statements, the financial statements of the parent company and the statutory inspections are audited at year-end on the scale required by good auditing practice.

Ernst & Young Ltd, Authorized Public Accountants was nominated as the company's auditor in AGM on 9 June 2010, with Heikki Ilkka, Authorized Public Accountant, as responsible auditor.

Year 2009 the auditors of Neomarkka Group was paid EUR 137,000 to for audit work. In addition to this was paid for expert services EUR 31,000.

Financial statements on the internet pages

Financial Statements can be found on the company`s website. The Annual Reports are published in Finnish and English. The Interim Reports are published in Finnish and English.