News

THE PROPOSALS OF THE BOARD OF DIRECTORS TO THE ANNUAL GENERAL
MEETING IN 2006

- No dividend is proposed to be distributed. It is proposed that
the loss of the financial year shall be entered to the
shareholders’ equity.
- Proposal to amend the sections 9 and 12 of the articles of
association regarding the term of office of the auditor.
- The Board of Directors shall be re-authorised to decide on the
issue of shares.
- Proposal to decrease the share premium fund and distribute the
funds partly to the shareholders.
- Proposal for the changes to be made in the company’s option
programmes as a result of the decrease of share premium fund and
distribution of part of the funds to shareholders.

THE PROPOSAL OF THE BOARD OF DIRECTORS FOR THE MEASURES TO BE
TAKEN OWING TO THE LOSS OF THE FINANCIAL YEAR

The Board of Directors shall propose to the Annual General
Meeting of the Shareholders on March 21, 2006 that no dividend
shall be distributed. SSH Group has no funds available for
distribution. The Board of Directors proposes that the loss of
the financial year of the parent company, of EUR 5,348,457.60
shall be entered into the shareholders’ equity into the profit
and loss account of the company.

THE PROPOSAL OF THE BOARD OF DIRECTORS TO AMEND PARTIALLY THE
ARTICLES OF THE ASSOCIATION

The Board of Directors proposes that the articles of association
shall be amended partly so that the provisions in the sections 9
and 12 where it is stated that the auditors shall be elected
until further notice, shall be amended so that the election shall
be made on yearly basis in the annual general meeting. According
to the proposal the auditors’ term of office would be the
financial year.

THE PROPOSAL OF THE BOARD OF DIRECTORS TO AUTHORISE ITSELF TO
DECIDE ON AN INCREASE OF THE SHARE CAPITAL BY AN ISSUE OF NEW
SHARES, OPTION RIGHTS AND/OR A CONVERTIBLE BOND

The Board of Directors proposes that the General Meeting of the
Shareholders shall authorise, reversing the previous unused
authorisations, the Board of Directors to decide on an increase
of the share capital by an issue of new shares, and/or issue of
taking a convertible bond through one or more issues so that the
share capital can be increased by such new issue and on the base
of convertible bond by a maximum aggregate amount of EUR 165,000
by issuing a maximum number of 5,500,000 new shares with a
nominal value of three cents (EUR 0.03) each at a price defined
by the Board of Directors and in other respects on conditions
determined by the Board of Directors. The Board of Directors
proposes furthermore that the General Meeting authorises the
Board of Directors to decide on the persons entitled to subscribe
to shares and that the authorisation includes a right to deviate
from the shareholders’ pre-emptive rights to the share
subscription, if there is an important financial reason on part
of the company to do so, such as an expansion of ownership of
shares and/or strengthening of the company’s capital structure,
financing of business acquisitions, carrying out of co-
operational arrangements, or motivating the personnel. The
proposal for the authorisation is also proposed to include the
right of the Board of Directors to decide on the basis of
defining the subscription price and the final amount of the
subscription price. The Board of Directors is not entitled to
deviate from the shareholders’ pre-emptive right in favour of the
persons belonging to the inner circle of the company. New shares
can also be subscribed to with property given as capital
contribution, by set off or otherwise on specific terms and
conditions. It is proposed that the authorisation is effective
until March 21, 2007.

THE PROPOSAL OF THE BOARD OF DIRECTORS FOR THE REDUCTION OF THE
SHARE PREMIUM FUND AND THE DISTRIBUTION OF THE AMOUNT PARTLY TO
THE SHAREHOLDERS

THE BOARD OF DIRECTORS PROPOSES THAT THE GENERAL MEETING SHALL
DECIDE TO REDUCE THE SHARE PREMIUM FUND OF THE COMPANY BY
13,000,000 EUROS IN TOTAL.

THE BOARD OF DIRECTORS PROPOSES THAT A MINIMUM OF 7,067,203.25
EUROS AND A MAXIMUM OF 7,453,585.25 EUROS FROM THE REDUCED AMOUNT
SHALL BE DISTRIBUTED TO THE SHAREHOLDERS BY RETURNING 0.25 EUROS
PER EACH SHARE OF THE COMPANY, AS A REFUND OF THE TIED EQUITY, TO
THE SHAREHOLDERS OF THE COMPANY IN RELATION TO THE OWNERSHIP OF
SHARES. THE ACCURATE AMOUNT OF THE REDUCTION OF THE SHARE PREMIUM
FUND WILL BE DETERMINED BY THE AMOUNT OF THE SHARES ON THE RECORD
DATE OF THE REFUND OF THE ASSETS.

The Board of Directors proposes that to the extent that the funds
shall not be returned to the shareholders, the amount of the
decreased share premium fund shall be transferred to a fund
belonging to the company’s free own equity. The purpose of the
transfer to the free equity is to secure a diversity of
operational prospects and transaction alternatives and to
safeguard that the restricted equity and other non-distributable
items, referred to in the Finnish Companies Act, of the company
and its group shall remain fully covered after the decrease and
partial distribution of the share premium fund.

The reduction of the share premium fund and the partial
distribution of the assets to the shareholders require the
permission of the registration authority according to the Finnish
Companies Act 6:5. The decision of the reduction will not come
into final effect until on the day of the authorization by the
National Board of Patents and Registration, which will be granted
approximately five months after the decision of the General
Meeting. Receipt of the permission will be informed of
separately.

After the permission has been given, the Board of Directors shall
immediately assemble for a meeting and is authorized to decide on
the record date of the distribution of the assets and the date of
the payment. The aim is to have the dates as near as possible to
the day of the permission. The assets shall be distributed to the
shareholders who are, on the record date referred to above,
registered as shareholders in the company’s list of shareholders
kept by the Finnish Central Securities Depository Ltd.

There will be no nullification or redemption of the company’s
shares in connection with the distribution of the amount of the
reduction of the share premium fund. The reduction of the share
premium fund and the distribution of the assets to the
shareholders will have no effect on the number or the nominal
value of the shares or the distribution of the voting right. The
equity of the company and the group will decrease, as a result of
the distribution of the assets with a minimum of 7,067,203.25
euros and a maximum of 7,453,585.25 euros.

THE PROPOSAL OF THE BOARD OF DIRECTORS FOR THE CHANGES TO BE MADE
IN THE COMPANY’S OPTION PROGRAMMES AS A RESULT OF THE DECREASE OF
SHARE PREMIUM FUND AND DISTRIBUTION OF PART OF THE FUNDS TO
SHAREHOLDERS

The Board of Directors proposes that the General Meeting shall
decide to reduce the subscription prices of the shares to be
subscribed for by virtue of option rights, issued at various
times, with 0.25 euros per each share on the record date of the
distribution of the assets, on condition that the decision of the
decrease of share premium fund shall enter into force. The
subscription price of the shares shall, however, always be at
least the par value of the shares.

APPENDICES:

1.  The proposal of the Board of Directors to amend  partly
 the articles of association
2.  The proposal of the Board of Directors to decide on an
 increase of the share capital by an issue of new shares, option
 rights and/or a convertible bond
3.  The proposal of the Board of Directors for the
reduction of the share premium fund and the distribution of the
 amount partly to the shareholders
4.  The proposal of the Board of Directors for the changes
 to be made in the company’s option programmes as a result of the
 decrease of share premium fund and distribution of part of the
 funds to shareholders

Copies of financial statements, the proposals of the Board of
Directors and other documents required to be displayed under the
Finnish Companies Act are available for inspection by the
shareholders for one week prior to the General Meeting at the
Company head office, Valimotie 17-19, 00380 Helsinki, room 3002.

APPENDIX 1

THE PROPOSAL OF THE BOARD OF DIRECTORS TO AMEND PARTLY THE
ARTICLES OF ASSOCIATION

The Board of Directors proposes to the general meeting that the
articles of association would be amended in relation to the
election of the auditor so that the auditor shall be elected
yearly in the annual general meeting. The Board of Directors
proposes that the Sections 9 and 12 shall be amended as follows:

The present 9 §:
“9 § Auditors
The company shall have one regular auditor and one alternate
auditor approved by the Central Chamber of Commerce. If the
auditor selected for the company is an accounting firm approved
by the Central Chamber of Commerce, no alternate auditor will
have to be elected.

The auditors shall be appointed for an indefinite term."

The proposed new 9 §:
“9 § Auditors
The company shall have one regular auditor and one alternate
auditor approved by the Central Chamber of Commerce. If the
auditor selected for the company is an accounting firm approved
by the Central Chamber of Commerce, no alternate auditor will
have to be elected.

The auditor shall be appointed for one accounting period."

The Present 12 §:
“Annual General Meeting of Shareholders
The General Meeting of Shareholders shall be held annually on a
date set by the Board of Directors within six months of the end
of the accounting period:

The meeting shall 

be presented with
- the financial statements consisting of the income
     statement, balance sheet and the annual report on operations
-  the auditor’s report
  
decide on
-   the adoption of the income statement and balance sheet
-   any action called for by profit or loss shown on the
adopted balance sheet
-   discharge from liability for the members of the Board
of Directors and the Managing Director
-   the fees payable to the members of the Board of
Directors and the auditor
-   the number of the members of the Board of Directors

elect
-   the members of the Board of Directors, and if required
-   the auditor and the alternate auditor"
  

The proposed new 12 §:
“Annual General Meeting of Shareholders
The General Meeting of Shareholders shall be held annually on a
date set by the Board of Directors within six months of the end
of the accounting period:

The meeting shall

be presented with
-  the financial statements consisting of the income
     statement, balance sheet and the annual report on operations
-   the auditor’s report
  
decide on
-    the adoption of the income statement and balance sheet
-    any action called for by profit or loss shown on the
adopted balance sheet
-    discharge from liability for the members of the Board 
 of Directors and the Managing Director
-    the fees payable to the members of the Board of
Directors and the auditor
-    the number of the members of the Board of Directors

elect
-    the members of the Board of Directors, and
-    the auditor, and if required, the alternate auditor"

Helsinki, February 7, 2006

The Board of Directors



APPENDIX 2

THE PROPOSAL OF THE BOARD OF DIRECTORS TO DECIDE ON AN INCREASE
OF THE SHARE CAPITAL BY AN ISSUE OF NEW SHARES, OPTION RIGHTS
AND/OR A CONVERTIBLE BOND

The Board of Directors proposes that the General Meeting of the
Shareholders shall reverse the earlier unused authorisations and
shall authorise the Board of Directors to resolve on an increase
of the share capital by an issue of new shares, and/or an issue
of a convertible bond, through one or more issues so that the
share capital can be increased by such a new issue and on the
basis of convertible bonds by a maximum aggregate amount of EUR
165,000 by issuing a maximum number of 5,500,000 new shares with
a nominal value of three cents (EUR 0.03) each at a price defined
by the Board of Directors and in other respects on conditions
determined by the Board of Directors. This number of shares
equals to approx. 19.5 per cent of the currently registered share
capital and the total aggregate amount of votes.

The Board of Directors proposes furthermore to the General
Meeting of the Shareholders that the General Meeting shall
authorise the Board of Directors to decide on the persons
entitled to subscribe shares and/or convertible bonds and that
the authorisation includes a right to deviate from the
shareholders’ pre-emptive right to the share subscription if
there exists an important financial reason on part of the company
for doing so, such as expansion of ownership of shares and/or
strengthening of the company’s capital structure, financing
acquisitions and/or other business transactions, carrying out of
co-operation arrangements, or  motivation of personnel. The
proposal for authorisation is proposed to include the right of
the Board of Directors to decide also on the grounds for defining
the subscription price, the final amount of the subscription
price as well as other terms and details. The Board of Directors
may not deviate from the shareholders’ pre-emptive right in
favour of a person belonging to the inner circle of the company.
The issue of new shares can be conducted with property given as
capital contribution, by set off or otherwise on certain
conditions. It is proposed that the authorisation shall be
effective until March 21, 2007.

Helsinki, February 7, 2006

The Board of Directors


APPENDIX 3

THE PROPOSAL OF THE BOARD OF DIRECTORS FOR THE REDUCTION OF THE
SHARE PREMIUM FUND AND THE DISTRIBUTION OF THE AMOUNT PARTLY TO
THE SHAREHOLDERS

THE BOARD OF DIRECTORS PROPOSES THAT THE GENERAL MEETING SHALL
DECIDE TO REDUCE THE SHARE PREMIUM FUND OF THE COMPANY BY
13,000,000 EUROS IN TOTAL.

THE BOARD OF DIRECTORS PROPOSES THAT A MINIMUM OF 7,067,203.25
EUROS AND A MAXIMUM OF 7,453,585.25 EUROS FROM THE REDUCED AMOUNT
SHALL BE DISTRIBUTED TO THE SHAREHOLDERS BY RETURNING 0.25 EUROS
PER EACH SHARE OF THE COMPANY, AS A REFUND OF THE TIED EQUITY, TO
THE SHAREHOLDERS OF THE COMPANY IN RELATION TO THE OWNERSHIP OF
SHARES. THE ACCURATE AMOUNT OF THE REDUCTION OF THE SHARE PREMIUM
FUND WILL BE DETERMINED BY THE AMOUNT OF THE SHARES ON THE RECORD
DATE OF THE REFUND OF THE ASSETS.

The Board of Directors proposes that to the extent that the funds
shall not be returned to the shareholders (i.e. at least an
amount of 5,546,414.75 euros), the amount of the decreased share
premium fund shall be transferred to a fund belonging to the
company’s free own equity. The purpose of the transfer to the
free equity is to secure a diversity of operational prospects and
transaction alternatives and to safeguard that the restricted
equity and other non-distributable items, referred to in the
Finnish Companies Act, of the company and its group shall remain
fully covered after the decrease and partial distribution of the
share premium fund.

The reduction of the share premium fund and the partial
distribution of the assets to the shareholders require the
permission of the registration authority according to the Finnish
Companies Act 6:5. The decision of the reduction will not come
into final effect until on the day of the authorization by the
National Board of Patents and Registration, which will be granted
approximately five months after the decision of the General
Meeting. Receipt of the permission will be informed of
separately.

After the permission has been given, the Board of Directors shall
immediately assemble for a meeting and is authorized to decide on
the record date of the distribution of the assets and the date of
the payment. The aim is to have the dates as near as possible to
the day of the permission. The assets shall be distributed to the
shareholders who are, on the record date referred to above,
registered as shareholders in the company’s list of shareholders
kept by the Finnish Central Securities Depository Ltd.

There will be no nullification or redemption of the company’s
shares in connection with the distribution of the amount of the
reduction of the share premium fund. The reduction of the share
premium fund and the distribution of the assets to the
shareholders will have no effect on the number or the nominal
value of the shares or the distribution of the voting right. The
equity of the company and the group will decrease, as a result of
the distribution of the assets with a minimum of 7,067,203.25
euros and a maximum of 7,453,585.25 euros.

The Board of Directors shall decide on all the practicalities in
relation to the reduction of the share premium fund and the
distribution of the assets.

The Board of Directors explains/justifies the reduction of the
share premium fund and the distribution of the assets as follows:

The company has applied and received from the Tax Office on
24.3.2005 a positive Tax Authority’s advance ruling, accepted by
the Tax Agent, which declares that from the perspective of the
company the arrangement is considered to be a return of equity,
and the return of assets is not regarded as evading dividend
taxes.

The turnover of the SSH group in the year 2005 was approximately
9.3 million euros and the liquid assets of the company were
approximately 22.5 million euros. The equity ratio was 92.8 per
cent. The Board of Directors considers that the strong marketing
position and the estimated profitability of the company make it
possible to refund, from the cash reserve of the company, by
reducing the share premium fund, the amount of the assets
mentioned above to the shareholders of the company.

The distribution of the amount of the reduction of the share
premium fund does not affect the developmental prospect of the
company. Even after the refund of the shareholders’ equity the
cash reserve of the company plus the predictable positive cash
flow enables a rapid growth so that the self-sufficiency and the
financial situation of the company will stay excellent. After the
reduction of the share premium fund and the distribution of the
assets, the equity ratio of the SSH group would be over 90 per
cent, according to the situation on 31.12.2005.

Helsinki, February 7, 2006

The Board of Directors

APPENDIX 4

THE PROPOSAL OF THE BOARD OF DIRECTORS FOR THE CHANGES TO BE MADE
IN THE COMPANY’S OPTION PROGRAMMES AS A RESULT OF THE DECREASE OF
SHARE PREMIUM FUND AND DISTRIBUTION OF PART OF THE FUNDS TO
SHAREHOLDERS

THE BOARD OF DIRECTORS PROPOSES THAT THE GENERAL MEETING SHALL
DECIDE TO CHANGE AND REDUCE THE SUBSCRIPTION PRICES OF THE SHARES
TO BE SUBSCRIBED FOR BY VIRTUE OF OPTION RIGHTS THAT SSH
COMMUNICATIONS SECURITY CORP (“SSH") HAS ISSUED AT VARIOUS TIMES,
WITH 0.25 EUROS PER EACH SHARE ON THE DATE OF THE PARTIAL PAYMENT
OF THE DISTRIBUTION OF THE SHARE PREMIUM FUND, PROVIDED THAT THE
GENERAL MEETING DECIDES TO DECREASE THE SHARE PREMIUM FUND AND TO
DISTRIBUTE THE AMOUNT PARTLY TO THE SHAREHOLDERS ACCORDING TO THE
PROPOSAL OF THE BOARD OF DIRECTORS.

The subscription price of a share subscribed for by virtue of
option rights shall, however, always be at least the par value of
a share.

On the day of the Board of Directors’ proposal the issued option
rights of the company are as follows:

Option programme           Number of options Subscription price
                           of a share (EUR)
I/1999                     36,250            0.03
I/2000                     169,025           6.21
Programme 10.7.2000        32,000            6.21
II/2000                    9,250             14.71
I/2002                     679,052           3.21
II/2002                    15,125            1.71
III/2002                   41,999            1.61
I/2003                     554,497           0.58
II/2003                    29,500            0.58

Consequently, there are 1,566,698 issued, unused option rights in
total.

The subscription periods for the various option programmes start
on different dates, and besides, within the option programmes
certain option rights (marked with different letter symbols) have
progressive subscription starting dates.

As for unexercised option rights by the date of the payment for
the distribution of dividend (approximately about five months
from the decision of the general meeting), the Board of Directors
proposes that the conditions of the option rights shall be
amended so that the subscription price of a share shall be
decreased with 0.25 euros per share to be subscribed for.

The reduction of the subscription price for shares to be
subscribed for by option rights is due to a corresponding amount
of distribution of the premium fund to the shareholders per
share.

The amendments will be implemented by amending the conditions of
each option programme to correspond with the new subscription
price.
          
In order that the company should not have on the record date of
the distribution of the assets, any increase of share capital
pending and not yet registered in the Trade register and new
shares not yet appended to the book entry system, the Board of
Directors will interrupt the subscription period for shares upon
exercise of option rights at 31.5.2006. The Board of Directors
will accept subscriptions upon exercise of option rights
(according to the proposed new subscription price) again after
distribution of assets has been executed.
          
The Board of Directors proposes that as the General Meeting
decides on the decrease of share premium fund and the partial
distribution of the assets as proposed by the board of directors,
the conditions of the issued option programmes shall be amended,
following the date of the payment of the payment of the said
distribution of the assets, as follows:
               
- OPTION PROGRAMME I/2000 (TRADE REGISTER REF P004), CONDITION
PARAGRAPH II/3:

“The subscription price of all new shares with the nominal value
of three (3) cents (0.03 euros) that are subscribed for by virtue
of any warrant, shall be five euros and ninety-six cents (EUR
5.96) per share.
               
The minimum subscription price of shares is the nominal value of
a share. The subscribed shares shall be paid in cash."
             
- Option programme 10.7.2000 (Trade Register ref P003), condition
paragraph II/3:

“The subscription price of all new shares with the nominal value
of three (3) cents (0.03 euros) that are subscribed for by virtue
of any warrant, shall be five euros and ninety-one cents (EUR
5.96) per share.
               
The minimum subscription price of shares is the nominal value of
a share. The subscribed shares shall be paid in cash."

- OPTION PROGRAMME II/2000 (TRADE REGISTER REF P006), CONDITION
PARAGRAPH II/3:

“The subscription price of all new shares with the nominal value
of three (3) cents (0.03 euros) that are subscribed for by virtue
of any warrant, shall be fourteen euros and forty-six cents (EUR
14.46) per share.
                       
The minimum subscription price of shares is the nominal value of
a share. The subscribed shares shall be paid in cash."

- Option programme I/2002 (Trade Register ref P010), condition
paragraph II/3:

“The subscription price of all new shares with the nominal value
of three (3) cents (0.03 euros) that are subscribed by virtue of
any warrant, shall be two euros and ninety-six cents (EUR 2.96)
per share.
               
The minimum subscription price of shares is the nominal value of
a share. The subscribed shares shall be paid in cash."

- OPTION PROGRAMME II/2002 (TRADE REGISTER REF P009), CONDITION
PARAGRAPH II/3:

“The subscription price of all new shares with the nominal value
of three (3) cents (0.03 euros) that are subscribed for by virtue
of any warrant, shall be one euro and forty-six cents (EUR 1.46)
per share.
               
The minimum subscription price of shares is the nominal value of
a share. The subscribed shares shall be paid in cash."
          
- OPTION PROGRAMME III/2002 (TRADE REGISTER REF P011), CONDITION
PARAGRAPH II/3:

“The subscription price of all new shares with the nominal value
of three (3) cents (0.03 euros) that are subscribed for by virtue
of any warrant, shall be one euro and thirty-six cents (EUR 1.36)
per share.
               
The minimum subscription price of shares is the nominal value of
a share. The subscribed shares shall be paid in cash."

- OPTION PROGRAMME I/2003 (TRADE REGISTER REF P012), CONDITION
PARAGRAPH II/3:

“The subscription price of all new shares with the nominal value
of three (3) cents (0.03 euros) that are subscribed for by virtue
of any warrant, shall be thirty-three cents (EUR 0.33) per share.
               
The minimum subscription price of shares is the nominal value of
a share. The subscribed shares shall be paid in cash."
               
- OPTION PROGRAMME II/2003 (TRADE REGISTER REF P013), CONDITION
PARAGRAPH II/3:

“The subscription price of all new shares with the nominal value
of three (3) cents (0.03 euros) that are subscribed for by virtue
of any warrant, shall be thirty-three cents (EUR 0.33) per share.
               
The minimum subscription price of shares is the nominal value of
a share. The subscribed shares shall be paid in cash."

Helsinki, February 7, 2006

The Board of Directors

© 2005 SSH Communications Security Corp. All rights reserved. ssh® is a registered trademark of SSH Communications Security Corp in the United States and in certain other jurisdictions. All other names and marks are property of their respective owners.