Corporate governance in Finnish listed companies
The Finnish corporate governance model is efficient and flexible. It is based on the principle of majority rule, which promotes a strong ownership role and is balanced out by the principle of equal treatment, qualified majority requirements, and the rights given to minority shareholders, as well as a clear division between the responsibilities of the company’s governing bodies.
Good corporate governance of listed companies is based on a combination of laws and decrees issued on the basis of them, as well as self-regulation and other best practices. The most essential domestic legal provisions are included in the Limited Liability Companies Act, the Securities Markets Act, the Auditing Act, and the Accounting Act. Finnish listed companies are also bound by the EU-level regulations, as well as the Rules of the Helsinki Stock Exchange (including the Corporate Governance Code and the associated reporting requirements), as well as the regulations and guidelines issued by the Financial Supervisory Authority (FIN-FSA).
The most essential regulation, as far as the listed companies’ corporate governance is concerned, is the Limited Liability Companies Act, which lays down the framework for the companies’ organisation and operative arrangements. The Limited Liability Companies Act defines, for example, the company’s governing bodies, their roles and responsibilities, as well as their relation to each other.
The Limited Liability Companies Act is also essential from the point of view of the shareholders’ rights. The Limited Liability Companies Act contains provisions on the rights associated with the shares and on the exercise of the rights, and it also contains the key principles of corporate law applied to corporate governance.
In addition to its strong principles, another central feature of the Limited Liability Companies Act is its extensively non-mandatory nature. Many of the provisions of the Limited Liability Companies Act are default provisions that companies may – subject to certain restrictions laid down by law – depart from by providing otherwise in their articles of association. The linking of the non-mandatory nature of the act to the express provisions in the articles of association well reflects the more general objective of the Limited Liability Companies Act to make corporate governance more transparent. This objective is particularly emphasised in the case of listed companies, which are further subject to the extensive reporting obligation under the Securities Markets Act.