8. REBATE AND COMMISSION

Published : June 14, 2016  /  Updated : August 12, 2019

8. Rebate and commision

We must ensure that payment of Rebates (and other retrospective refunds or credits) and Commission  (and other sales service fees) are based on legally valid agreements or other valid grounds, against genuine sales or services, paid to the correct party and are of proportionate value.

8.1 Rebate and Discount

8.1.1 Principles

The primary difference between a Rebate and a Discount is that a Rebate is given after payment and a Discount is deducted before the payment.

8.1.2 Setup and Exception

Rebates or other similar credits must be awarded to the legal entity which will be invoiced for the relevant supply of goods (the “Customer”). A reference to the contract and the sales invoices must be included in the credit note for the Rebates or other similar credits.

It is prohibited to award Rebates to another party than the Customer (“None Customer Party”), unless all requirements in the below paragraph have been fulfilled. For the avoidance of doubt, a related company, e.g. the Customer’s headquarter company is a None Customer Party, and Rebates to such company shall follow the rules herein.

A Rebate can be paid to a None Customer Party if:

  1. It is agreed in writing that the beneficiary of the payment is the Customer, and not the None Customer Party.
  2. The credit note indicates that the beneficiary of the payment is the Customer, and not the None Customer Party.
  3. The Customers have in writing authorised the payment to be made to the None Customer Party, with the effect of full discharge of liability for Stora Enso.

Active action

  • Ensure that you have fulfilled all the requirements in this Section 8.1.2 before making any payment of Rebates to a None Customer Party.

Case studies and best practices

  • Read the “Common Rebate Guideline” or its equivalent for more detailed information and case studies.

8.2 Commission  and Other Sales Services Fees

8.2.1 Principles

Commission and service fees paid for other sales or marketing services must not be used to circumvent the rules regarding Rebates to Customers. Payments of inappropriate Commission and other sales services fees can be interpreted as Bribes or illegal Kickback.

8.2.2 Commission 

A Commission , also known as agency fee, broker fee etc., is a reimbursement for the services provided by an Agent, usually on a percentage basis of the sales value but can also be flat fees or calculated in other methods (“Commission ”). An agent is a person or entity who negotiates and/or concludes contracts with Customers on Stora Enso behalf (“Agent”). Agents do not acquire ownership of the products sold (the contract for sale of the products is made between Stora Enso and the Customer) and the Agents generally have no contractual liability to the Customer, as opposed to a Distributor who takes title of the goods and then further sells to their own customers (“Distributor”). Services provided by an Agent include without limitation to:

  • Create, facilitate and/or promote sales of goods;
  • Maintain at its own cost or risk stocks of the contract goods;
  • Undertake responsibility towards third parties for damage caused by the product sold;
  • Take responsibility for Customers’ non-performance of the contract;
  • Pay for the costs of transporting the goods; and
  • Directly or indirectly, be under an obligation to invest in sales promotions.

8.2.2.1 Payment of Commission

A Commission  can only be paid if:

  1. It is made to an Agent;
  2. It is for the actual services the Agent has provided and;
  3. It is on market terms.

The market terms of a Commission depends on various facts as e.g. the product, the volume and the market where the Agent operates. As a consequence a fair and appropriate Commission level varies from case to case. The responsible sales person shall ensure that Commission fulfills the requirements listed in this Section 8.2.2.1.

An Agent is always a Critical Third Party . Before appointing an Agent you must follow the Critical Third Party  procedures set out in Section 6 of This Policy.

8.2.3 Sales Services Fees

Business partners other than Agents can also provide sales services to Stora Enso, either in addition to other businesses they have with Stora Enso (e.g. a Distributor can purchase goods from us and provide other sales services) or as a standalone service (e.g. market consultants). The fee is usually a fixed amount but can also be based on sales volume or other terms.

8.2.3.1 Payment of Sales Services Fees

Sales services fees can only be paid if:

  1. It is for the actual services provided; and
  2. It is on market terms.

Case studies and best practices

  • Read the “Common Rebate Guideline” or its equivalent for more detailed information and case studies; and
  • Ensure that you use agency agreement template when engaging Agents, and use distributor agreement template when engaging Distributors. Consult Legal if you have questions or need these templates.