The Finnish corporate governance model is based upon the strong principles set out in the Limited Liability Companies Act. Of these, one of the most central is the principle of majority rule, which promotes strong ownership role. According to the rule, decisions are based on the majority vote, unless otherwise provided for by law or the company’s articles of association.
The principle of equal treatment balances out the principle of majority rule together with the more detailed minority protection provisions of the Limited Liability Companies Act. Pursuant to the principle of equal treatment, all shares carry equal rights in a company, unless otherwise stipulated in the company’s articles of association. The general meeting, the board of directors, or the managing director may not make a decision or take measures that are conducive to conferring an undue benefit to a shareholder or another person at the expense of the company or another shareholder.
One of the main aims of the principle of equal treatment is to protect minority shareholders. Compliance with the principle does not prevent the use of the majority rule, but it prevents some shareholders from being favoured at the expense of others.
The duty of loyalty imposed on the executives under the Limited Liability Companies Act supports the principle of equal treatment in practice. The company directors and executives have an obligation to promote the interests of the company. Safeguarding the company’s interests ultimately benefits all shareholders and helps the company achieve its purpose, which is to generate profit for its shareholders. This purpose can only be departed from if a provision to this end is included in the articles of association.