Is your company applying for listing?
A company applying for listing must be prepared to fulfil its statutory disclosure obligation from the date on which the company submits its application to be listed on the stock exchange. The information disclosed by a listed company must be timely, consistent and reliable. Factors related to the disclosure obligation are often reflected in other listing conditions, such as the fulfilment of qualitative capabilities required for listing, the company’s obligation to apply the International Financial Reporting Standards (IFRS) or the corporate governance of the company.
Preliminary reviews, development of requisite processes and familiarisation with regulation on the securities markets should begin well ahead of the launch of the actual listing process. In particular, the processes and routines required for regular monitoring and reporting of the result and the preparation of annual financial statements cannot be created in an instant, and the preparedness of a company applying for a stock market listing to adopt financial reporting in accordance with the International Financial Reporting Standards has a significant influence on the listing schedule.
The disclosure obligation of a listed company consists of the prospectus under the Securities Markets Act or a company description under the rules of the Multilateral Trading Facility at the listing phase, and thereafter of the periodic and ongoing disclosure obligation.
In addition to statutory obligations, listed companies must comply with the rules of the stock exchange or MTF. The rules, guidance and other information by Nasdaq Helsinki Ltd (Helsinki Stock Exchange) for companies planning a listing are available on the website of the stock exchange. The Helsinki Stock Exchange operates both the securities exchange in Finland and a multilateral trading system called First North Finland.
In this directory, we have included links to the pages at this website covering subject areas that a company planning to apply for listing should study well in advance.
In addition, the Finnish Foundation for Share Promotion has published the guidebooks "Pörssilistautujan käsikirja" and "Listautujan käsikirja - Monenkeskinen markkinapaikka Suomessa" (in Finnish) which are available on the foundation’s website.
The FIN-FSA considers that listing should only be undertaken after a due diligence review of the company’s operational and structural conditions for operating as a listed company, i.e. review of the qualitative listing requirements. Key qualitative prerequisites for listing include the timeliness, reliability and quality of financial reports issued by the company, due monitoring of reports, the realistic nature and robustness of forecasts, and attention paid to the disclosure obligation in the management's working methods, resource allocation and internal guidance.
An investment firm functioning as the manager or certified advisor of an IPO must pay adequate attention to the capabilities of the listing company to manage its reporting and disclosure obligation as a listed company, and the service provider must have systematic procedures to conduct such an assessment. The assessment must be documented so that information on the assessment and related observations can be found from a single source. The FIN-FSA may request the supervised entity to present a summary of the reviews made, where deemed necessary.
The FIN-FSA finds it important that particular consideration is given to the first IFRS financial statements issued for the prospectus required for listing and that enough time is reserved for their issuance. When the IFRSs are applied for the first time, questions related to financial reporting often surface, on which the company, in complying with Finnish accounting conventions, has not had to adopt a position.
Prospectus and company description
A prospectus under the Securities Markets Act is usually prepared as part of the listing process. Subject to certain conditions, it is possible to seek admission in an MTF with a company description under the rules of the MTF. The FIN-FSA approves prospectuses, while the content of company descriptions is supervised by the operator of the MTF.
The company must allocate enough time and also its internal resources for the preparation of the prospectus, in addition to external advisors. The prospectus process requires effort in particular by the company’s accounting function, since the company’s historical financial information have a significant role in the prospectus. In practice, we always request further information in the context of our inspections and make comments on the financial information contained in the prospectus. If the prospectus concerns listing on a stock exchange, a review of the issuer’s IFRS financial statements should be agreed on before the inspection of the prospectus with IFRS Supervision within the FIN-FSA.
Further information on the preparation of prospectuses is available at the Offering of securities and prospectuses site.
The purpose of the disclosure obligation is to ensure investors have equal, non-discriminatory and simultaneous access to information in order that they could have sufficient information to make an informed assessment of the issuer and its security.
The disclosure obligation of a listed company is based on the Securities Markets Act, the Market Abuse Regulation (MAR) and the rules of the Helsinki Stock Exchange. In First North Finland, the disclosure requirements are easier and based on MAR and the rules of the trading venue. MAR and the lower-level regulations issued thereunder are directly applicable regulation in Finland.
The requirements concerning the distribution and availability of stock exchange releases are based on the Transparency Directive, and the requirements are incorporated nationally in the Securities Markets Act. Lower-level EU regulation is also implemented as FIN-FSA regulations and guidelines. Companies traded on First North Finland comply with the rules of the trading venue as regards the distribution and availability of company announcements.
Further information on the disclosure obligation and the disclosure procedure for stock exchange releases is available at the Disclosure obligation site [linkki] and on MAR at the Market Abuse Regulation site.
Ongoing disclosure obligation
The ongoing disclosure obligation refers to the obligation to disclose inside information in accordance with MAR. Inside information means information of a precise nature, which has not been made public, relating, directly or indirectly, to the issuer and which, if it were made public, would be likely to have a significant effect on the price of a security. Listed companies must disclose inside information as soon as possible. The Regulation also provides on the conditions on which listed companies may postpone the disclosure of inside information.
Periodic disclosure obligation
The periodic disclosure obligation of a company listed on the stock exchange includes the IFRS financial statement, management report and half-yearly report. In addition to these financial reports, listed companies may, on a voluntary basis, disclose interim reports and other financial reports. In accordance with the rules of the Helsinki Stock Exchange, listed companies have an obligation to publish a financial statement release.
Companies traded on First North Finland are not, however, obliged to prepare an IFRS financial statement. They must observe the rules of the marketplace in their financial reporting.
Listed companies’ financial statements in accordance with the IFRSs
Companies listed on the stock exchange issue financial statements in accordance with the International Financial Reporting Standards (IFRS). The FIN-FSA is responsible for monitoring compliance with these standards by Finnish listed companies. According to the Commission’s Regulation on Prospectuses, the prospectus of a company applying for listing must include financial information from the company’s IFRS financial statements for at least the two most recent financial periods. If the company has observed the Finnish generally accepted accounting principles for the financial periods concerned, the data must be retrospectively restated to comply with the IFRS.
Information on IFRS supervision is available on the separate IFRS supervision website.
Other disclosure obligation and insider lists
Disclosure of major holdings and voting rights
The obligation to notify major holdings and proportions of voting rights applies to listed companies’ and other target companies’ shareholders, persons comparable to a shareholder and the target company itself. The notifications are published by the target company. The obligation to notify major holdings does not apply to shareholders of companies traded on First North Finland or such companies.
No notification obligation arises in respect of changes in holdings and voting rights occurring before the company’s share is admitted to trading on a regulated market. In order to ensure investors’ access to information, listing companies must disclose via a stock exchange release the shareholders which will have significant proportions of holdings and voting rights in the company after the listing has been executed.
Further information on the obligation to notify major holdings is available at the Notification of major shareholdings site.
Repurchase and surrender of own shares
In order to take advantage of the safe harbour provision related to buy-back programmes under MAR, listed companies must comply with the procedures provided in MAR and the Commission Delegated Regulation issued thereunder as well as the disclosure and reporting obligation.
In addition, transactions conducted by listed companies on their own shares must always be notified to the Helsinki Stock Exchange and disclosed in accordance with its rules. Transactions on the company’s own shares are also subject to regulation on the notification of major shareholdings.
Listed companies must draw up an insider list of all persons with access to inside information and who are working for them under a contract of employment, or otherwise performing tasks through which they have access to inside information, such as advisers, accountants or credit rating agencies.
Provisions on the drawing up and updating of insider lists are laid down in MAR and in the Commission Implementing Regulation adopted by virtue of MAR.
More information on insider lists is available on the Insider issues page.
Listed companies disclose transactions conducted in their financial instruments by their managers and persons closely associated with them. Listed companies must ensure that persons discharging managerial responsibilities are aware of their responsibilities under MAR to notify transactions conducted by them and persons closely associated with them to the company. These transactions are disclosed in a manner similar to stock exchange releases.
More information on the notification procedure is available at the Managers’ transactions site.
Further information on MAR and lower-level regulation issued thereunder is available at the Market Abuse Regulation site.
Compliance with the Corporate Governance Code
Listed companies must comply with the Securities Market Association’s Corporate Governance code. The Commission’s Regulation on Prospectuses requires that a company applying for listing adopts a position in its prospectus on how it complies with a domestically issued recommendation. Companies traded on First North Finland are not obliged to comply with the Corporate Governance Code.
The Securities Market Association’s code has been issued according to the “comply or explain principle”, i.e., as a rule, companies should comply with the recommendation in its entirety. If a company diverges from a recommendation, it must disclose and justify such divergence. The following topic areas addressed in the recommendations are considered particularly important by the FIN-FSA from the perspective of the qualitative listing capabilities: competence and independence of the members of the board of directors, remuneration of the board of directors and management, operating principles for internal control and the organisation of risk management.
Contact the FIN-FSA in time
It is recommended that you contact the FIN-FSA already at an early stage of the listing process in order that the need for a prospectus meeting can be assessed. If the prospectus concerns a corporate transaction or involves other special characteristics, such as a need to diverge from the language requirements for a prospectus, we request that you contact us well in advance before filing an application concerning the prospectus.
If the prospectus concerns an initial public offering, please make arrangements with IFRS Supervision within the FIN-FSA to arrange a review of the IFRS financial statements well in advance.
Whenever possible, we also arrange meetings with the management of companies planning a listing. Such meetings focus on such sub-areas of listed companies’ obligations that are most important from the perspective of supervision by the FIN-FSA.