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shareholders can contribute to the management and thereby to the operation of the entire company.

If the company has a supervisory board, it elects the direc- tors pursuant to the Companies Act unless otherwise provided in the articles of association. However, to ensure effective and direct ownership control, the directors should be elected by the general meeting even if the company has a supervisory board. The working group that has prepared the reform of the Compa- nies Act suggests also that the general meeting should elect the directors.

Recommendation 11 Number of the directors The board shall comprise at least five directors.

To ensure the effective implementation of the duties of the board, it should comprise at least five directors.

In some circumstances, however, it may be justified to elect less than five directors. In a relatively small company, a board consisting of three directors may be able to adequately discharge the duties pertaining to the board.

Recommendation 12 Term of the directors The directors shall be elected for a term of one year.

The shareholders should have the possibility to regularly evalu- ate the activities of the directors. To ensure effective ownership control, the directors should be evaluated and elected annually at the general meeting. Since the shareholders decide on the elec- tion and re-election of directors, it is not necessary to restrict the number of their successive terms of office.

Recommendation 13

Notification of proposed director candidates to shareholders

The prospective director candidates notified to the board shall be disclosed in the invitation to the general meeting, provided that the proposal has been made by the nomination committee or if the candidate is supported by at least 10 % of the total votes of all the shares of the company and the candidate has given his/ her consent to the election. The candidates proposed after the delivery of the invitation shall be disclosed separately.

Since the election of directors is one of the most important deci- sions of the general meeting, the shareholders must be informed of the prospective director candidates in a timely manner before the meeting. Before disclosing the candidates the company must, however, ensure that the candidates have given their consent to be elected to the board.


Recommendation 14 Special order of appointment of the directors

If, according to the articles of association, directors are to be appointed according to a specific order, the company shall disclose such appointment order in the invitation to the general meeting.

The articles of association can provide that less than half of the directors are appointed following another procedure instead of election by the general meeting. A special appointment proce- dure can for example concern the employees’ right to appoint directors to the board. The relevant provision concerning the appointment procedure must be disclosed in the invitation to the general meeting to ensure that shareholders are informed of the procedure for appointment of directors.

Recommendation 15 Qualifications of the directors

A person elected as director shall have the qualifica- tions required to discharge directors’ duties and the possibility to devote sufficient time for the work.

Successful board work requires knowledge of the business operations. It is imperative for the board work and its effective functioning that the board is composed of directors with ver- satile and mutually complementing capabilities and skills. The age mix and the proportion of both sexes can also be taken into account in the composition of the board.

Every director should have the possibility to pay sufficient attention to the matters of the company. Directors, in particular the board chairman, are often required to render significant input for the benefit of the company even outside the board meetings. Factors that impact the sufficiency evaluation of the time avail- able to the director for this work include among other things the director’s main occupation, secondary occupations and other simultaneous board memberships.

Recommendation 16 Right of directors to receive information

The company shall provide sufficient information of the operations of the company to the directors.

In order to discharge their duties the directors need informa- tion about the structure, business operations and markets of the company. A new director must be introduced to the operations of the company, and the directors must be provided with necessary information on the operations of the company on a regular basis.

Recommendation 17

Independence of directors The majority of all directors shall be independent of the company. In addition, at least two of the directors

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