Legal Alerts/21 May 2019

The Securities Market Association Publishes Draft Amendments to the Finnish Corporate Governance Code

The Corporate Governance Code (CG Code), which is administered by the Finnish Securities Market Association (SMA), applies to all companies that are listed on Nasdaq Helsinki Ltd (the Helsinki Stock Exchange). Pursuant to the Rules of the Helsinki Stock Exchange, all issuers of shares traded on the main list must comply with the CG Code.

Working group

In October 2018, the SMA announced that its board had appointed a working group to prepare an update to the current CG Code, which has been in effect since 1 January 2016.

This update was prompted by the amendments made to the Shareholder Rights Directive (2017/828/EU) that were adopted in May 2017 (SRD II). The amendments will be implemented in Finland by amending national legislation as from 10 June 2019.

Proposed amendments to the CG code published for comment

On 15 May 2019, the SMA working group published a summary of the main amendments it has proposed to the CG Code. The working group published the updates to the recommendations of the CG Code and a proposal for a new reporting section on the same date. These proposals are available at (in Finnish only as of the date of this alert).

The main proposed amendments are:

  • New guidelines concerning the remuneration policies of listed companies as well as the remuneration reports of listed companies will replace the current reporting guidelines for remuneration statements. In addition, a new checklist has been introduced to assist with these reporting obligations. Information concerning the remuneration of the management team members will only be reported on the relevant company’s website in the future. These changes are intended to reflect the updated director remuneration rules and reporting imposed by the SRD II and national implementing legislation;
  • The recommendation concerning related party transactions (recommendation 28 in the current CG Code) will receive an extensive overhaul to reflect the changes required by the SRD II and implementing legislation with regard to decision-making and reporting concerning related party transactions. The amended recommendation will require for listed companies to define principles and processes to identify related parties and transactions and to assess the nature of any related party transactions and their terms. Companies must disclose their principles and processes in their annual corporate governance statements;
  • Amendments made to Finnish laws, especially with regard to audits, are reflected in the amendments proposed to the recommendation concerning audit committees. The amended CG code includes updates to the mandatory and non-mandatory tasks of the audit committees and changes to the rationale text explaining the reasoning behind the recommendation;
  • The recommendation concerning the assessment of the independence of directors and related reporting will be updated. The proposed amendments require for companies to explain their reasoning if the company determines that one of its directors is not independent from the company and/or its major shareholders. Furthermore, the amended recommendation states that the board can decide to conduct its own assessment of the independence of proposed directors also when the nomination proposal originates from the shareholders.

The working group has proposed a number of other minor changes to the recommendations and the rationale texts for the recommendations set out in the current CG code. The proposal does not add any completely new recommendations to the CG code. However, the working group has proposed that any recommendations relating to the organisation of the other executives (recommendation 21 in the current CG code) and to the remuneration structure (recommendation 24 in the current CG code) be removed because the reporting section of the CG code addresses these subjects.

Entry into force

The SMA has proposed that the amended CG code take effect on 1 January 2020. The SMA will hear comments on the proposal until 5 August 2019. The working group intends to publish the final version of the amended CG code, which takes into account comments received, by November 2019.

Borenius’ lawyers are available to assist in addressing any questions you may have regarding this legal alert. Please feel free to contact any of the Borenius’ attorneys listed in this alert or those with whom you usually work.

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Additional information

Andreas Doepel

Senior Counsel, General Counsel


Juha Koponen


Helsinki, London, New York