Stockholm Stock Exchange’s Formal Opinion On Proposed Code For Corporate Governance

StockholmStock Exchange takes a favorable view of the introduction of a Swedish code for corporate governance. However, it believes that, in certain respects, the proposed code will have excessively far-reaching effects on small and midsize companies. The Exchange intends to include the code in its rules and regulations, although a prerequisite for this is that the code receives wide-ranging support from Swedish listed companies. Accordingly, Stockholm Stock Exchange proposes, among other recommendations, that the Code Group be complemented through the appointment of a special representative for small and midsize companies.

Although Stockholm Stock Exchange intends to incorporate the code into its rules, it emphasized in its formal opinion on the official report that the final formulation of the code will influence the way this will be conducted. Incorporation of the code in the Stock Exchange’s rules requires broad support and acceptance among Swedish enterprise, particularly from listed companies. The fact that the code, or certain rules contained in the code, should apply only to a few of the largest Swedish companies would have unfortunate effects on its credibility. The code should therefore largely reflect current practices in the market.

In its formal opinion on the official report, Stockholm Stock Exchange states that the Code Group’s proposal is excessively detailed and that trivialities should be deleted. In addition, a number of rules are excessively far reaching and the Exchange therefore forwards its own views and proposals regarding a number of the rules contained in the proposed code.

”We welcome a Swedish code of corporate governance. However, it is essential that the code reflect standard practices in Sweden and has extensive support. This would increase confidence in Swedish enterprise and in the securities market” says Henrik Paulsson, Acting President of Stockholm Stock Exchange.