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Governance Oversight

Klarna Group plc (CRN 14467769) (“Klarna”) is a public limited company incorporated under the laws of England and Wales with its registered office at 10 York Road, London, SE1 7ND.

Klarna’s subsidiary, Klarna Bank AB, is a limited liability company incorporated under the laws of Sweden with registration number 556737-0431. Klarna Bank AB is authorized as a bank and supervised by the Swedish Financial Supervisory Authority as a category 2 institution. Klarna Bank AB provides its financial services in other EEA countries through passporting its license under EU Directive 2013/36/EU and by establishing local branches.

Outside the EEA, including in the US, the Klarna group operates through local subsidiaries. In the UK, Klarna Financial Services UK Limited (company number 14290857) is authorized and regulated by the Financial Conduct Authority for consumer credit (FRN 987889) and payment services (FRN 987816).

 

Corporate governance structure

 

Klarna’s corporate governance structure distributes rights and responsibilities between the Klarna Group plc shareholders, the Board and the CEO according to relevant laws, rules and internal processes. We believe well-defined reporting lines and distribution of distinct responsibilities are essential to good corporate governance. Our high ethical and professional standards and a sound risk culture are also vital in ensuring good governance.

The image provides a summary of how governance and control are organized at Klarna.

Framework for corporate governance

Klarna's organization

Klarna's organization is divided into domains that are led by a domain lead who reports to a CXO. Each CXO reports to the CEO and the CEO reports to the Board. There are also three independent control functions outside of the domains: Risk Control, Compliance and Internal Audit. Risk Control and Compliance are both directly subordinated to the CEO and the Klarna Bank AB Board. Internal Audit reports directly to the Klarna Bank AB Board.

 

General meeting

A General Meeting is a meeting where members of a company convene to consider and vote on significant decisions related to the company's business and operations. Decisions at a General Meeting often include matters such as approval of the annual report, income statement and balance sheet, dividend distribution, and the election of the Board of Directors and auditors, and remuneration for Board members and auditors.

Risk management, risk reporting and control functions

Risk management is central to Klarna’s operating model and underpins all activities conducted throughout the organization. The purpose of risk management is to safeguard Klarna’s long-term viability, mitigate volatility in financial performance, enhance operational resilience and performance, and facilitate informed decision-making.

Klarna’s risk management governance model encourages a risk-aware culture combined with control structures which are monitored and enforced by independent control functions. Key controls are documented and assessed on a regular basis, with assessments considering both effectiveness of design and operation. The risk strategy is a natural extension of the business model that focuses on identification, assessment, management and monitoring of the material risks that Klarna is exposed to.

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Whistleblowing

Reporting unethical or illegal misconduct

Employees, consultants, and other partners may report observations relating to unethical or illegal misconduct through Klarna's external whistleblowing tool.

The identity of the person filing a report will be kept secret in any potential follow-up, inquiries, and discussions unless Klarna is obliged by law to disclose the identity. Should this be the case, the person reporting will be informed. The whistleblower will not be subject to any negative consequences when filing the report, or any time thereafter.

External whistleblowing tool

Reporting of observations can be done completely anonymously via the digital service WhistleB. The service is completely outside Klarna and meets the highest security requirements regarding encryption, data security, and protection of whistleblower anonymity.