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Corporate Governance in Finland

Securities Market Association

In December 2006, the Finland Chamber of Commerce, the Confederation of Finnish Industries EK, and OMX Nordic Exchange Helsinki Oy established a cooperation body, the Securities Market Association (www.cgfinland.fi). The goal of the association is to ensure, through more efficient self regulation, that companies operating in the securities market observe uniform and transparent operating principles and rules. The mission of the association is to promote good corporate governance.

The Finnish Corporate Governance Code 2010

The current Finnish Corporate Governance Code was issued by the Securities Market Association on 15 June 2010 and became effective on 1 October 2010.

The purpose of the Code is to encourage Finnish listed companies to apply corporate governance practices that are of a high international standard. The Code harmonises the practices of listed companies as well as the information given to shareholders and other investors. It also improves the transparency Corporate Governance in Finland of administrative bodies, management remuneration and remuneration systems.

The Code also provides an overall picture of the main principles of the corporate governance system of Finnish listed companies. The Code defines the general goals of remuneration schemes and emphasizes transparency on remuneration practices. Thus listed companies can take into consideration the company situation and development stage in their remuneration schemes in the best possible manner. Transparency and the presentation of information in a unified manner further improves the opportunities of investors to assess the appropriateness of the remuneration schemes of listed companies and the relationship between remuneration and the reaching of goals. Open access to information on remuneration also facilitates the comparison of remuneration practices between different listed companies.

History

The first Corporate Governance Recommendation in Finland was issued in 1997 by the Finland Chamber of Commerce and the Confederation of Finnish Industry and Employers (nowadays the Confederation of Finnish Industries EK). The Corporate Governance Recommendation for Listed Companies was issued by the Finland Chamber of Commerce, Hex Plc (nowadays OMX Nordic Exchange Group Oy) and the Confederation of Finnish Industry and
Employers in 2003. The recommendations were updated by Securities Market Association in 2008, when they issued the Finnish Corporate Governance Code. The latest edition of Finnish Corporate Governance Code is from 2010. Corporate Governance in the Nordic Countries In April 2009 self-regulatory bodies of the Nordic Countries published a presentation called Corporate
Governance in the Nordic Countries. Its aim is to inform international investors and other market participants of the key elements of the Nordic Corporate Governance, and thereby to increase
knowledge of and confidence on the Nordic corporate governance models. More information can be found at http://www.cgfinland.fi.

Corporate Governance of Unlisted Companies

The Board of Directors of the Finland Chamber of Commerce issued in January 2006 an Agenda for Improving Corporate Governance of Unlisted Companies. The Agenda is aimed at the companies which are not considered able to implement orporate Governance recommendations for listed companies, but which nevertheless desire to improve their operations in conformity with good corporate governance principles. Implementation of the agenda is fully voluntary. The agenda is available in Finnish, Swedish, English and Russian. More information can be found at http://www.chamber.fi.

Helsinki Takeover Code

The Securities Market Association has also issued Helsinki Takeover Code that entered into force on 1.1.2014. Helsinki Takeover Code contains recommendations on the procedures to be complied with in public takeover bids. The recommendations are based on the Securities Market Act and need to be complied with on a comply or explain -basis. The purpose of the Helsinki Takeover Code is to promote the development of good securities markets practice and to provide direction for the procedures to be complied with in takeover bids. The objective of the Takeover Code is to standardise the procedures to be complied with in public takeover bids in Finland and in this way promote the legal protection of the parties in a takeover bid. More information can be found at http://www.cgfinland.fi.