New Corporate Governance Code has been published
The board of Securities Market Association has approved the new Finnish Corporate Governance Code for Finnish listed companies on 1.10.2015. The recommendations of the Finnish Corporate Governance Code are complimentary to the provisions of the law. The new Finnish Corporate Governance Code will enter into force on 1.1.2016.
The new Finnish Corporate Governance Code will substitute the current corporate governance code for listed companies that was issued in 2010.
Finnish Corporate Governance Code 2010 (unofficial translation)
On 9 April 2014, the European Commission published a recommendation on the quality of corporate governance reporting to promote the ‘comply or explain’ principle and the quality of explanations. The new Finnish Corporate Governance Code has been reviewed and restructured to reflect the Commission’s recommendation. In the restructuring process the number of recommendations has decreased significantly.
One reason for the decreased amount of recommendation is the restructuring of reporting obligations. All reporting obligations are now compiled into a separate section of the code. The reporting obligations are also set mandatory for all listed companies. The objective is to promote further transparency and to improve the consistency of companies’ reporting.
Although Commission’s recommendation did not call for changes to the actual content of the current recommendations, a comprehensive re-evaluation was carried out. As a result some new recommendations were introduced to the new Finnish Corporate Governance Code, notably:
- A new recommendation regarding the diversity policy. The new recommendation calls for companies to define a diversity policy and more specifically to report on their objectives regarding the representation of both sexes on the board and the measures to achieve those objectives.
- A new recommendation on related party transactions. According to the recommendation companies shall report on the decision-making procedures in place for any significant and unusual related party transactions. The objective of the new recommendation is to increase openness and awareness of related party transactions and to help companies to ensure that conflicts of interest are appropriately taken into account.
The new Finnish Corporate Governance Code also addresses the need of market participants for a general overview on the Finnish corporate governance framework. The introduction of the new Finnish Corporate Governance Code provides a brief overview of the Finnish corporate governance model and the legal framework. A more comprehensive description of Finnish corporate governance will be provided on the website of Finnish Securities Market Association.
Legal Counsel Antti Turunen
Telephone +358 9 4242 6265