The Recommendation is intended to be complied with by companies listed on the Helsinki Exchanges and will complement statutory practices. On the basis of its rules, the Helsinki Exchanges has integrated the Recommendation as an element of regulation of listed companies. The Central Chamber of Commerce and the Confederation of Finnish Industry and Employers support the implementation of the Recommendation in listed companies.
The integral parts of the Recommendation pertain to the inpendence of the directors, openness about compensation of the directors and enhancement of the effectiveness of board work through establishment of committees. Transparency is also recommended in matters relating to the compensation and other service terms of the managing director. Furthermore the Recommendation addresses, among other things, the following questions: organisation of the general meeting of shareholders, work of the board of directors, the election, number and term of directors, presentation of information on corporate governance systems, internal control, risk management and internal audit.
The Recommendation has been prepared in accordance with the "Comply or Explain" approach, i.e. the company should comply with the entire Recommendation. If the company has a weighty reason to depart from the Recommendation, it should account for such exception and give the explanation for doing so. The company must also give information on its corporate governance systems and compliance with this Recommendation (Corporate Government Statement) in its annual report and on its website.
This Recommendation enters into force on 1 July 2004. If the company so wishes, it can, however, implement the Recommendation immediately after publication.
If compliance requires decisions of the general meeting they can be made in the annual general meeting first following the effective date of the Recommendation, before which date the company need not justify its practice that may depart from the Recommendation.
The entire Recommendation for Corporate Governance of Listed Companies is available on Internet sites www.hex.com, www.keskuskauppakamari.fi and www.tt.fi.
