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1 Introduction

Goals of the Recommendation

The high quality of corporate governance as well as transparent disclosure practices of listed companies are increasingly im- portant selection criteria for investors. From the perspective of investors, clearly defined procedures consistent with internation- al practices are facilitating factors for their reasoned investment decisions. This is of major importance in Finland where shares of listed companies are by international standards exceptionally widely held by foreign investors.

The corporate, accounting and securities markets laws as well as the rules of the Helsinki Exchanges contain regulations concerning the governance and disclosure practices of Finnish listed companies. The regulations on protection of minority shareholders and exercise of the rights of ownership and possession are embedded in the Companies Act. In other words, the law includes detailed compelling regulations on the right to vote, obtain information and submit proposals as well as general meetings of shareholders. The Companies Act also provides for non-discriminating treatment of shareholders.

Since the corporate governance of listed companies in Finland is primarily based on compelling legislation and self- regulation, this Recommendation is designed to complement the

statutory procedures.

The goal of the Recommendation is to harmonise the practices of listed companies, improve transparency of their operations, harmonise the information given to shareholders and improve the quality of disclosure. This will help increase local and international investors’ interest in Finnish listed companies and promote trust in the functioning of the securities markets.

Structure of the Recommendation

The goals, structure and scope of implementation of the Recom- mendation as a whole are presented in Section 1. The individual recommendations are presented in Sections 2–12 and the specif- ics concerning entry into force in Section 13.

The general principles of the main subject of each section are presented in the respective introduction. The individual recommendations are presented in bold text and marked with running numbers. An explanatory section including the justi- fications of the recommendation and some specifying aspects follows each recommendation. The explanations also present examples of situations where it may be reasonable to deviate from the relevant recommendation.

4

Implementation of the Recommendation

The Recommendation is intended to be complied with by companies listed on the Helsinki Exchanges, provided that it is not in conflict with the compelling regulations applicable in the domicile of the company. The term “company” is used in the recommendations and explanatory sections, and the terms “listed company” or “limited company” are used only where the context so requires.

Listed companies vary from each other in their ownership structure, area of business and extent of their operations. There are also significant differences in their administrative structures. A major part of the listed Finnish companies are medium or small-sized companies in international terms. It is, however, important that the Recommendation reflects the international developments of corporate governance.

The Recommendation uses the terms “describe” or “report” to describe the dissemination of information to shareholders. Unless otherwise provided, the information shall in all such cases be disclosed at least in the annual report and on the Inter- net website of the company. If the company does not issue an annual report, the information must be given in connection with the notes to the financial statements.

The Recommendation has been prepared in accordance with the “Comply or Explain” principle, i.e. the company should comply with the entire Recommendation, and if it wishes to de- viate from the Recommendation, it should account for such de- viation and provide the explanation for doing so. The company must give information on compliance of this Recommendation both in its annual report and on its website.

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