Improved opportunities for shareholder influence
Shareholders of listed companies would have a better opportunity to influence the remuneration of management. Communicating information about shareholder rights would also be improved.
On Thursday 13 December, the Government submitted a proposal to Parliament on legislative amendments for implementing EU law on shareholder rights. The aims include furthering the opportunities for shareholder influence and enhancing transparency between listed companies and investors.
Remuneration policy vote by general meeting of shareholders
Shareholders would in future be better able to influence the remuneration of management in listed companies. Listed company management includes the board of directors, managing director, deputy managing director and any supervisory board.
Decisions on remuneration would continue to be made by the appointing body: the general meeting of shareholders in the case of remuneration for the board of directors, and the board of directors in the case of remuneration for the managing director.
A listed company's remuneration matters would be set out in its remuneration policy and remuneration report:
- In its remuneration policy the company would be required to present the principles applying to remuneration of management and the main terms of the service contracts.
- The remuneration policy would be put to a vote of the general meeting of shareholders. The voting decision of the general meeting of shareholders would be advisory (non-binding).
- A company could remunerate its management only in accordance with the remuneration policy presented at the general meeting of shareholders.
- A company could derogate temporarily from its remuneration policy if this is essential for safeguarding the company’s long-term interests.
- The remuneration report would summarise the remuneration given in the previous financial year, setting out the actual remuneration figures in euros for the persons concerned.
Information communicated more effectively to shareholders
Under the government proposal, listed companies would in future be better able to obtain information on foreign shareholders, where these shareholders have nominee-registered shares. Those providing services of safekeeping of shares (investment firms and providers of nominee-registration) would have a duty to supply information to a listed company on its foreign shareholders. The company’s request for information would also have to be forwarded along the chain of intermediaries.
The government proposal would ensure a company is able to forward information to its shareholders about how they can exercise their shareholder rights in the company. The obligations would apply to those providing services of safekeeping of shares within the European Union.
Institutional investors to publish principles of shareholder control
The Government is proposing that shareholder control exercised by asset managers and institutional investors in a listed company be made more effective. They would in future be required to draw up and publish principles of shareholder control.
The government proposal would also bring changes to the regulation of related parties in the Limited Liability Companies Act.
The aim is that the proposal's legislative amendments would enter into force at the start of April 2019, but the proposal also includes numerous transitional provisions. The government proposal is published under Government proposals and decisions.
Questions and answers on shareholder rights (in Finnish)
Thirty-three statements received on the Memorandum of the Working Group on Shareholder Rights (in Finnish) (News item 1 June 2018)
EU legislation will bring changes affecting operation of listed companies and investment firms (Press release 16 April 2018)
Armi Taipale, Senior Ministerial Adviser, tel. +358 2955 30399, armi.taipale(at)vm.fi
Jyrki Jauhiainen, Senior Ministerial Adviser, (regulation of related parties) Ministry of Justice (tel. +358 2951 50074, jyrki.jauhiainen(at)om.fi