The EU corporate governance framework, Green Paper (COM(2011) 164

European Commission

With reference to the matter above Federation of Finnish Enterprises states the following:

In general we do not see the need for EU-level regulation on the subject of corporate governance. The principle of subsidiarity should be taken into account and in our view the national regulatory framework and soft-law instruments are sufficient and functioning well.

In Finland, for example, the Securities Market association administers the Finnish Corporate Governance Code 2010, the Guidelines for Insiders and Helsinki Takeover Code. The Corporate Governance Code is meant for listed companies on a ”comply or explain” –basis. Moreover, some Member States have already conducted studies and drafted agendas for corporate governance practices in unlisted companies (e.g. in Finland the Central Chamber of Commerce has issued An agenda for Improving Corporate Governance of Unlisted Companies).

Therefore (with regard to the Q2 of the Green Paper) EU should not focus on promoting development and application of corporate governance codes for non-listed companies. If deemed necessary voluntary codes can be issued nationally for non-listed companies as is already the case. This way the national characteristics of companies, company forms and business life in general can be taken into account.

The world of non-listed SME’s is totally different from the world of listed companies. For example the shareholders of the non-listed small and medium sized companies are usually also members of the board of directors. Thus, the need for corporate governance regulation for SME’s is significantly lower (or even non-existent) compared to listed companies. In addition, the possible EU-level corporate governance practices would face the difficulty of applying the code across the range of types, forms and sizes of non-listed companies.

Finally we find it absolutely necessary to rigorously assess the impacts of the possibly contemplated new regulation and take results into account when making decisions or proposals. Moreover, the Think Small First –principle must be applied to the whole process. In any case we stress the importance of not creating unnecessary burden to European companies, whether they are SME’s or not.

Federation of Finnish Enterprises

Janne Makkula
Chief of Legal Affairs