The Finnish Securities Market Association has published a new Finnish Corporate Governance Code for companies listed on the OMX Nasdaq Helsinki Exchange. The new Code will enter into force on 1 January 2016, replacing the current Corporate Governance Code from 2010.
One of the most notable revisions concerns the process preceding the nomination of the board of directors. Firstly, the process in which the proposed composition of the board of directors has been prepared, must be disclosed on the website of the company. The proposition may be prepared, for example, by a nomination committee of the board of directors, by a nomination committee of the shareholders, by significant shareholders or in another manner which the company chooses. If the board is elected in a manner that deviates from the main rule of the new Code where the general meeting elects the board of directors, this must be reported as a deviation and also mentioned in the notice to the general meeting. Also, the proposed composition and remuneration of the board of directors must be mentioned in the notice.
While each shareholder is under the Finnish Companies Act entitled to request items to be included in the agenda for a general meeting of shareholders, the new Code requires that listed companies must on their website disclose the date by which shareholders must present such requests. Also, the new Code requires that all members of the board of directors and the managing director as well as any persons proposed to be elected to the board of directors should participate in the general meetings.
In addition, each listed company must approve principles regarding diversity of the board of directors. These principles should include, at least, the goals for gender representation, the measures to reach these goals and how reaching of the goals has progressed. Depending on the business and goals of the company, the diversity principles may also address other matters, such as age and educational background.
Another notable new recommendation concerns transactions with related parties, which, according to the new Code, must be specifically assessed and monitored by the Company. The Company must also maintain a register of related parties, including group companies and parties having a significant influence over the company in question, and explain the decision-making process applied with respect to material related party transactions that deviate from the ordinary course of business of the company or from market terms.
Companies are expected to apply the new Code as of 1 January 2016. However, the companies may voluntarily apply the reporting obligations of the new Code partly or as a whole already regarding the financial year to be ended on 31 December 2015.
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