The Finnish Corporate Governance Code 2020 (2020 CG Code) came into force and applicable to listed companies on Nasdaq Helsinki Ltd. (Helsinki Stock Exchange). What is the key recommendation with respect to Related Party

The Finnish Corporate Governance Code, 2020 is a collection of recommendations on good corporate governance for listed companies. The recommendations of the Corporate Governance Code supplement the obligations set forth in legislation. On the matter of related party transactions, the code contains that the company procedure concerning related party transactions is also a part of good corporate governance. Whenever the company conducts business transactions with related parties, the company must ensure that the transactions are appropriate from the perspective of the company and the shareholders. The company must take into account the legislation that sets specific requirements for the monitoring, assessment, deciding, and disclosure of related-party. Key Recommendation: Recommendation 27 requires that Companies define and report their principles for monitoring and evaluation of related party transactions. The purpose of the principles is to ensure proper decision making in related party transactions in accordance with new requirement of the Limited Liability Companies Act. The Board of Directors should consider in particular how the company identifies related party transactions who shall be the receiving party for related party transaction reports and how the procedure will be supervised. The relevant 'related party transaction' is defined as a transaction that is carried out outside the ordinary course of the Company's business or that is not carried out on normal business terms. To identify these transactions, the company must be liable to identify its related parties and the transactions carried out by the Company with the related parties. The main features of the related party transactions principle will be disclosed in the Company's CG report. As a result of that, Company listed on the Helsinki Stock Exchange should without delay review and if needed, update their related party transactions principles to enable them to fulfil the CG reporting requirement.