Corporate Governance Report

The purpose of corporate governance is to create a clear division of roles and responsibility among owners, the Board of Directors and executive management. Corporate governance at Entraction is based on current legislation, the rules for companies listed in the First North Premier segment of the Nasdaq OMX Nordic Exchange and internal guidelines.

Swedish Code of Corporate Governance

In 2004, a Swedish code was drawn up for corporate governance. This follows the principle of “comply or explain”. Although Entraction Holding is not covered by the Swedish Code of Corporate Governance as the company is listed on First North Premier, the Board of Entraction has commenced a voluntary adjustment to the provisions of the code. This Corporate Governance Report is intended to provide an overview of Governance within the Entraction Group.

Annual General Meeting

According to the Swedish Companies Act, the Annual General Meeting is the ultimate decision-making body through which shareholders exercise their voting rights. The Annual General Meeting makes decisions regarding the annual report, dividends, election of the Board and auditors, remuneration to Board members and auditors, as well as other matters in accordance with the Swedish Companies Act and the Articles of Association.

Nomination Committee

At the 2009 Annual General Meeting, a decision was made to establish a Nomination Committee for the preparation and submission of proposals for shareholders in the Company in respect of the Chairman of the Meeting, Board of Directors, Board Chairman and auditors. The Nomination Committee shall also put forward proposals in respect of Board fees and their division between the Chairman and other Board members, fees to auditors and remuneration for committee work.

The Meeting decided that the Nomination Committee should consist of representatives of the four largest shareholders in terms of voting rights and the Board Chairman. The Board Chairman should be the convenor of the Nomination Committee. The Nomination Committee’s composition is communicated in the interim report for the third quarter.

Board of Directors

In conjunction with its constituent meeting each year, the Board reviews and establishes a work procedure to guide its activities. This consists of instructions governing the division of responsibility and work among the Board, the CEO and Board committees, and also in respect of the presentation of the Company's ongoing financial reports.

The Board of Directors is also responsible for the development and review of the Company's strategies by means of plans and targets, decisions on acquisitions and divestments of operations, major investments, the appointment and remuneration of the CEO, as well as ongoing review of operations over the year. The Board of Directors also sets the business plan and annual accounts, as well as monitoring the work of the CEO.

The Board Chairman supervises and distributes work within the Board and is responsible for key matters dealt with at Board meetings. The Chairman monitors operations through dialogue with the CEO and is responsible for other members receiving the information necessary for a high level of quality in discussions and decisions.

Entraction’s Board consists of five members. The CEO is continually called upon to attend Board meetings, and other members of the management group participate whenever required in Board meetings for information purposes. The company’s Communication Manager, Pia Rosin, is the Board’s secretary. The table on page 19 shows the composition of the Board of Directors and the Board's assessment regarding relationships of dependence towards the Company and its owners.

Agenda of the Board of Directors

The Board meets in accordance with an annual schedule and whenever required. All Board meetings are minuted, and meetings follow a set agenda. During the 2008 fiscal year, 14 Board meetings were held. At these meetings, the Board dealt with the set points, which, in accordance with the Board’s work procedure, were to be addressed at each Board meeting, such as business status, strategy, budget, interim reports and annual financial statements. In addition, other major points of discussion were included: a new strategic focus to enable Entraction Holding to leverage over the long term its position as a supplier of systems for digital gaming, the settlement of a dispute with HQ Bank, possible structural transactions, improvements to the gaming platform, arbitration regarding the compulsory purchase of the minority holding in Entraction Solutions AB and an incentive programme for the CEO. For detailed information on remunerations to the Board and senior executives, see Note 5.

The Board's work procedure also requires it to conduct an annual assessment of the CEO's performance in comparison with established long and short-term targets and to assess the performance, working practices and decision-making procedures of the Board.

For the 2008 year of operations, Entraction Holding has not appointed particular Remuneration or Audit Committees - instead, the assignments of these committees have been dealt with by the Board as a whole.

CEO and Group Management

The CEO heads operations within the framework established by the Board at its constituent meeting. In advance of Board meetings, the CEO prepares the information and documentation necessary as a basis for decisions, presents the points of business and explains proposed decisions.

The CEO leads the work of the Group Management team and makes decisions in consultation with other members of management. Group Management holds regular meetings at which strategic operational issues are discussed. In addition to these meetings, most members of Group Management meet on a daily basis. The rapid development of the company means that such daily contact is a prerequisite for functioning control and management. Group Management consists of managers for key areas of operations within the Group.

External auditors

On the AGM 2009 PricewaterhouseCoopers, with Michael Bengtsson as auditor in charge, and Mathias Carlsson, PricewaterhouseCoopers, were elected the Company’s auditors for the period until and including the AGM 2013.

The audit was presented to shareholders in the form of an auditors' report. This is in the form of a recommendation to shareholders ahead of the decision at the Annual General Meeting to approve the consolidated income statements and balance sheets and those of the Parent Company, the appropriation of the Parent Company's profits and the issue of discharge from liability for the Board and the CEO.

The Board of Directors monitors the quality of financial reporting through measures including instructions to the CEO. According to these instructions, the CEO is responsible for reviewing and safeguarding the quality of all financial reporting and for otherwise ensuring that the Board receives the reports it requires to be able to continuously assess the Group's financial position. The internal reporting and control system is based on annual financial plans, monthly reports and daily checks on key operational figures.

The CEO is also responsible for other financial information, such as press releases and presentation materials, being correct and of good quality. The interim reports for the first, second and third quarters of 2008 have not been subject to review by the Company's auditors. The Group's auditors annually report their observations from the audit to the entire board in connection with the annual accounts.