Corporate Governance and Finnish legislation

In Finland good corporate governance consists of various factors. There is both legal regulation and recommendations based on self-regulation.

In several other countries Corporate Governance is mainly based on recommendations (for example the Combined Code of the UK) or law (for example the SOX of the USA). In Finland the purpose has been to complement the legislation and facilitate the interpretation through the recommendations.

The most essential legal regulation for the listed companies is first of all included into Companies Act, Security Markets Act, Auditing Act and Accounting Act. Also some remarkable EU directives have to be noticed, such as the fourth company law directive (annual accounts of companies with limited liability) and directive on shareholders rights. The European Commission has adopted a Recommendation on directors’ remuneration and also adopted a Recommendation on the role of independent directors.

The Corporate Governance Recommendation for Listed Companies complements legislation. First of all, the Corporate Governance Code focuses on transparency and promotion of governance. The code includes recommendations concerning general meeting, supervisory board, board of directors, board committees, managing director, other management, compensation, internal control, risk management, internal audit, insider administration, external audit and communication and disclosure of the above-mentioned.

More information about Companies Act, which the Corporate Governance recommendation complements.