Explanatory note re status 

Government proposal has been submitted to the Parliament on 13 December 2018 (Bill HE 305/2018) and the Parliament has approved the new legislation in April. As a general rule, new legislation shall enter into force on 10 June 2019 (transition periods apply i.a. with respect to the remuneration reporting)

Implementation Act 

Amendments to the existing legislation (10 different acts, including Limited Liability Companies Act, Securities Market Act and Act on Investment Services)

(Envisaged) Implementation Date 

10 June 2019

Approach to implementation

The implementation is done by amending existing laws.

Next steps

The goverment proposal regarding amendments to existing legislation was accepted by the Parliament on 12 April 2019 and the amendments shall enter into force on 10 June 2019. The requirement for listed companies to present a remuneration policy to the general meeting shall enter into force on the first annual general meeting following 1 January 2020 and the requirement to draft a remuneration report shall enter into force concerning the financial year starting on or after 1 January 2020. Some provisions regarding sanctions and liability for damages will enter into force on 22 July 2019.

Contact person 

Elina Saloranta

Identification of shareholders, transmission of information and facilitation of exercise of shareholder rights

The implementation of provisions regarding identification of shareholders and facilitation of exercise of shareholder rights is not intended to deviate from the directive or the commission regulation. However, the implementation of the directive does not cause major changes regarding these issues. For example, the information which can be acquired from the national central securities depository regarding directly owned shares is already more detailed than what the directive requires.

Transparency of institutional investors, asset managers and proxy advisors 

The new legislation implements provisions regarding the following transparency obligations in accordance with the directive:

  • Transparency obligation for institutional investors and asset managers: institutional investors and asset managers will become obliged to publish engagement and voting policies. The implementation will be done in accordance with article 3 i section 1 and article 3 i section 2 subsection 2 of the directive, as well as article 3 i section 2 subsection 1. Institutional investors and asset managers can deviate from the obligation to draft and publish policies if they can provide grounds for it.
  • Transparency obligations for proxy advisors: on the basis of this bill, proxy advisors will be required to disclose certain essential information about the preparation of their research, advice and voting recommendations. The obligation would be in accordance with article 3 j section 2 of the directive. Proxy advisors can deviate from the obligation if they can provide grounds for it. The information must be held available in accordance with article 3 j section 1 subsection 3 and article 3 j section 2 subsection 2 of the directive.
Remuneration Policy 

The directive will be implemented in a way that allows the management to act in the best interest of the company at all times. It will be possible to temporarily deviate from the renumeration policy. The decision made by the general meeting is only advisory.

  • The remuneration of the board of directors and the managing director must be based on the remuneration policy which has been presented to the general meeting.
  • The general meetings of publicly listed companies shall discuss the company’s remuneration policy, starting from 2020, and also the company’s remuneration report, starting from 2021.
  • The remuneration policy must be put on the agenda of the general meeting at least every four years and it shall provide long-term guidelines for remunerating the board of directors and the managing director of the company. The process regarding temporary deviations from the renumeration policy must be described in the renumeration policy.
  • The remuneration report must be discussed annually in the general meeting, and the report will summarise actual remuneration measures in accordance with the remuneration policy.
Transparency and approval of related party transactions

The Finnish Limited Liability Companies Act will include a separate definition for related parties to privately owned companies and listed companies:

  • The definition of a related party with respect to listed companies is amended to mirror international accounting standards (IAS)
  • The new definition of a related party with respect to privately owned limited liability companies is narrower than the definition in accordance with IAS; additionally, it would apply to listed companies when tort liability is considered