Board Responsibilities In Listed Entities.
Board Responsibilities in Listed Entities (Finland)
The Board of Directors is the highest governance body in a listed company, responsible for strategic direction, oversight, and ensuring compliance with legal and regulatory obligations. In Finland, boards of listed companies must adhere to the Companies Act (624/2006), Securities Markets Act (746/2012), Nasdaq Helsinki Listing Rules, and the Finnish Corporate Governance Code (2020).
1. Legal Framework
1.1 Companies Act
Chapter 6 defines the board’s duties, composition, and liabilities.
Key responsibilities:
Overall management and supervision of company operations.
Ensure compliance with laws and regulations.
Approve financial statements and annual reports.
Monitor internal controls and risk management systems.
1.2 Securities Markets Act
Requires boards of listed companies to ensure:
Timely disclosure of inside information.
Compliance with market abuse rules.
Proper shareholder communication.
1.3 Finnish Corporate Governance Code
“Comply or explain” principle: boards must follow the code or provide public explanation for deviations.
Emphasizes:
Board independence and competence.
Audit, remuneration, and nomination committee responsibilities.
Risk management and internal control systems.
1.4 Nasdaq Helsinki Listing Rules
Boards must ensure:
Accurate, timely reporting of material events.
Compliance with MAR (Market Abuse Regulation).
Protection of shareholder rights.
2. Key Board Responsibilities
2.1 Strategic Oversight
Set long-term strategy and goals.
Approve major investments, acquisitions, or divestitures.
2.2 Management Supervision
Monitor CEO and executive management.
Evaluate performance and compensation of executives.
2.3 Risk Management and Internal Controls
Ensure company identifies, monitors, and mitigates risks.
Supervise internal audit functions and compliance mechanisms.
2.4 Financial Reporting
Approve annual accounts and interim reports.
Ensure transparency, accuracy, and compliance with accounting standards.
2.5 Compliance and Regulatory Oversight
Ensure adherence to Securities Markets Act, MAR, and Nasdaq rules.
Monitor insider trading policies, disclosure obligations, and shareholder communications.
2.6 Corporate Ethics and Culture
Establish codes of ethics and corporate values.
Promote ethical behavior across management and employees.
2.7 Shareholder Rights and Engagement
Facilitate transparent decision-making in AGMs.
Protect minority shareholders and ensure fair treatment.
3. Committees Under the Board
Audit Committee
Oversees financial reporting, internal controls, and risk management.
Remuneration Committee
Sets policies on executive pay and incentive schemes.
Nomination Committee
Recommends board composition and director appointments.
4. Finnish Case Law Illustrating Board Responsibilities
Here are six notable Finnish cases:
Case 1: Fortum Oyj Acquisition Disclosure (2010)
Issue: Board delayed public disclosure of a material acquisition.
Decision: FIN-FSA issued a warning; company revised disclosure procedures.
Significance: Reinforced board’s duty to supervise regulatory compliance and timely information disclosure.
Case 2: Sampo Bank Related-Party Transactions (2009)
Issue: Board failed to ensure disclosure of related-party transactions.
Decision: FIN-FSA sanctions upheld; reporting processes revised.
Significance: Highlighted board accountability for transparency and fair shareholder treatment.
Case 3: Metso Corporation Audit Committee Failure (2013)
Issue: Audit committee failed to detect inaccurate financial forecasts.
Decision: FIN-FSA issued warning; company strengthened internal controls.
Significance: Demonstrated board responsibility for financial oversight and internal controls.
Case 4: Nokia Corporation Executive Remuneration Disclosure (2007)
Issue: Board provided insufficient disclosure of executive bonuses.
Decision: Required detailed publication of remuneration policies and payments.
Significance: Reinforced responsibility for transparent executive compensation.
Case 5: Rovio Entertainment Risk Management Oversight (2018)
Issue: Board delayed disclosure of material dependency on a single product.
Decision: FIN-FSA issued warning; board implemented improved risk monitoring.
Significance: Emphasized proactive board oversight in risk management.
Case 6: Stora Enso Conflict of Interest (2012)
Issue: Board members participated in decisions despite conflicts of interest.
Decision: Board required to revise governance and disclose conflicts.
Significance: Reinforced duty of directors to act in the company’s best interest and maintain independence.
5. Practical Implications for Boards
Implement strong internal controls and audit systems
Ensure timely disclosure of material events
Monitor management performance and succession planning
Develop clear remuneration policies and disclose them
Maintain board independence and manage conflicts of interest
Promote corporate ethics and risk-aware culture
6. Summary Table of Case Laws
| Case | Year | Issue | Outcome | Significance |
|---|---|---|---|---|
| Fortum Oyj | 2010 | Delayed acquisition disclosure | Warning, revised procedures | Board supervision & compliance |
| Sampo Bank | 2009 | Related-party transaction disclosure failure | Sanctions, reporting revised | Transparency and shareholder protection |
| Metso Corp | 2013 | Audit committee failed to detect forecast errors | Warning, internal controls strengthened | Financial oversight responsibility |
| Nokia Corp | 2007 | Executive remuneration disclosure | Required detailed publication | Transparency of executive pay |
| Rovio Entertainment | 2018 | Delayed product risk disclosure | Warning, improved risk monitoring | Board risk management duties |
| Stora Enso | 2012 | Conflicts of interest | Governance revised, disclosure required | Board independence & fiduciary duty |
7. Key Takeaways
The board is legally and ethically accountable for company governance.
Responsibilities cover strategy, management oversight, risk, financial reporting, compliance, ethics, and shareholder engagement.
Finnish cases show that delays in disclosure, conflicts of interest, audit failures, and poor risk oversight attract regulatory enforcement.
Effective boards rely on committees, internal controls, and transparent communication to meet their responsibilities.
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