Elo's ownership policy

Background and purpose

Ownership policy is a central aspect of Elo’s investment activities and responsible investing. Elo plays a significant role as a shareholder in Finnish listed companies. The purpose of this document is to describe Elo’s role as an active owner and the principles that are important to Elo in terms of the companies in which it has holdings and in the selection of new investments.  Within Elo, the practical implementation of the ownership policy is carried out by an ownership steering group.

The principles of Elo’s ownership policy are in line with the Finnish Corporate Governance Code for listed companies issued in 2015 by the Securities Market Association. Elo’s ownership policy primarily concerns Finnish companies. Additionally, this document describes the principles by which Elo’s Managing Director or employees may participate in the administrative bodies of other entities and foundations (see Section 2).

Content of the ownership policy

In all aspects of their operations, companies must act responsibly and in the interest of their shareholders. Elo requires the companies in which it invests to apply effective and efficient corporate governance practices. As a long-term shareholder, Elo wants to promote corporate responsibility and to monitor the observance of good governance.

The minimum requirement is that companies should comply with the recommendations concerning corporate governance systems that are valid at any given time, such as the Finnish Corporate Governance Code for listed companies. This minimum requirement concerns, in particular, listed companies but also non-listed companies, as applicable. Regarding the latter, the statement on good corporate governance in non-listed companies issued by the Central Chamber of Commerce of Finland in 2006 is also relevant.

Implementation of the ownership policy

 Elo primarily exercises its ownership policy in three ways: by participating in the general meetings of the companies in which it holds an interest, by engaging in dialogue with company management and, when necessary, with the Board of Directors as well, and by participating in the nomination boards of listed companies. Elo participates in the general meetings of all the companies based in Finland in which it holds an interest.  Elo can exercise its ownership policy either directly or indirectly on its own or in co-operation with other shareholders. Elo also contributes to public discourse, for example on issues concerning corporate governance.

Elo realises its indirect ownership policy by discussing with fund managers the objectives and tools of ownership policy as exercised by the fund, and endeavours to draw attention to issues that Elo feels are important. Related party and insider trading regulations are always considered as part of ownership policy

Matters to consider in ownership policy

As part of its ownership policy, Elo sets the following expectations for companies in which it holds an interest, with consideration for the special features of each individual company.

General meetings

Elo requires that the companies pay special attention to the content of the notices of their general meetings to ensure that they are clear and that the proposals are sufficiently justified. Shareholders shall receive information about all the matters to be decided on at the general meeting well in advance of the actual meeting. The notice of the meeting shall provide sufficiently detailed grounds for all exceptional proposals. The principles of the remuneration system for management shall be presented in the general meeting.


Auditors are of great importance to shareholders. For this reason, the selection of an auditor is one of the most important decisions made by the annual general meeting, and the selection process shall be explained to those participating in the general meeting. It is recommended that auditors be changed at regular intervals in accordance with good international practice.

Board of Directors

Elo seeks to ensure that the company in question has a competent Board of Directors for the purposes of the company’s development and to increase the value of the investment. Elo views it as particularly important that the Board of Directors possesses the necessary professional skills, experience, and broad and diverse competence within the company’s operational environment, with regard to the developmental phase of the company. The diversity of the Board of Directors should be reported in accordance with the Finnish Corporate Governance Code for listed companies. Board members shall have sufficient time to carry out their duties properly. To facilitate the evaluation of their input, the company shall report on the Board members’ attendance rates, any other Board memberships and other positions of trust. As stipulated by the Corporate Governance Code, the majority of the Board members must be independent of the company. Furthermore, at least two members who are independent from the company must also be independent from the company's largest shareholders. If one of the owners is clearly the main owner of the company, however, Elo views it as appropriate for a representative of the main owner to be included in the Board of Directors.


In order to increase efficiency, a company can establish different committees. Elo supports this if such committees help to clarify reporting and administrative work. If the company has a nomination committee comprised of members of the Board of Directors, Elo recommends that the opinions of the largest shareholders be heard. The nomination board consists of shareholders or their representatives. If this is the case, the company shall provide an explanation of the selection process and of the composition and activities of this nomination board. 

Managing Director

 As a general rule, the company’s Managing Director should not be selected as a member of the Board of a listed company and, above all, not as the Chair of the Board.  In addition, the tasks of the Chair of the Board and the Managing Director should be clearly specified and kept separate.  

Incentive systems

The purpose of the incentive systems should be to encourage and challenge, and to help foster the long-term commitment of the management and personnel, thereby also supporting the long-term interests of the company and its shareholders. Shareholding by company management should also be encouraged. In order to ensure independence, major listed companies, in particular, shall have a separate remuneration committee headed by a member of the Board, preferably the Board Chair. The overall impact of the incentive system on the position of the shareholders shall not be excessive.   Any information about existing incentive systems shall always be available to shareholders.

Internal control and risk management systems

Companies shall make clear the key principles of their internal supervision and risk management systems and the method by which they ensure the functionality and independence of these systems.


Elo considers the transparency and sincerity of the operations of the companies in which it invests as an essential foundation for its ownership policy. Comprehensive, sufficient, accurate and timely communications and reporting are essential aspects of transparency. The comply-or-explain approach can be used to ensure transparency. The primary tasks of the relevant administrative bodies and the compensation and rotation of their members should be specified in the annual reports of the companies. Any exceptional administrative structures should be described separately. Elo views it as important that, in addition to financial information, companies report on the key aspects of the implementation and targets of their corporate responsibility. A presentation of the company’s tax policies and tax footprint is also recommended.

Rights of shareholders

Company shareholders shall be treated equally. Elo favours the principle of one vote per share. Various voting right restrictions or consent clauses can decrease the value of a company, so Elo does not support such approaches.

Dividend policies and the repurchase of shares

Any company in which Elo is investing shall have a dividend policy, which is, from the shareholders' perspective, active and target-oriented. Elo requires the publication of the dividend policy. The grounds for the repurchasing of shares shall be reported in an explicit manner. The reporting on repurchases shall be clearly stated in the company's annual report and website.

Ownership policy for direct investments in non-listed companies

Equity investments in non-listed companies often involve the drafting or updating of shareholders’ agreements in order to specify the rights of shareholders. For Elo, important factors for consideration in shareholders’ agreements include access to information about the company in question (including monthly reports and, preferably, also Board materials), Board positions and/or the rights of the shareholder representatives to participate and be heard at Board meetings, decisions that require the written consent of the parties concerned (such as corporate acquisitions) and rights related to the exit from an investment.

Involvement of Elo’s Managing Director or other employees as members in the administrative bodies of other entities or foundations 

 When the composition of a particular administrative body and possible membership therein is being considered, it is essential to observe the circumstances and requirements of the legal entity in question. Through active involvement, Elo primarily seeks to ensure that any company in which Elo is a shareholder has a competent Board of Directors to safeguard its development and investment value.

When a membership in an administrative body is being considered on the basis of Elo’s shareholding, it is essential that the possible membership is clearly motivated and relevant in terms of the interests of both Elo and the company in question. Thus, each case calls for individual deliberation, the importance of which increases with the proportional shareholding by Elo.

When any matter related to the participation in the administrative body in question is being prepared or decided on, as well as during the actual work within the administrative body, it is necessary to review possible related party, insider and disqualification issues pertaining to both Elo and the company in question.

As concerns those companies that have issued financial instruments as specified in the EU's Market Abuse Regulation (MAR), Elo’s possible inclusion in the inner circle of the issuer shall be taken into consideration, together with the obligation to notify about any transactions using the issuer’s financial instruments within three days to the company and the Financial Supervisory Authority (or comparable foreign authority) in the manner stipulated by the MAR and in accordance with the guidelines and interpretation of the authorities.

As regards the membership in administrative bodies, Elo can be represented either by a person who is external to Elo, or by the Managing Director or other member of staff at Elo (the last mentioned are collectively referred to as “Elo employees”). This guideline concerns the involvement of Elo employees in the administrative bodies of other legal entities or foundations. When any Elo employee serves as a member in an administrative body of another entity or foundation, it is necessary to consider and evaluate the impact of such administrative body membership in relation to Elo’s interests.

Being a member of an external administrative body must not interfere or prevent the Elo employee from performing his or her normal tasks and duties at Elo. The legal entities referred to in this context include Elo’s investments or other ownerships, as well as Elo’s strategic partners. As a matter of principle, Elo is not involved in the administrative bodies of such foundations that would be subject to the principles of this ownership policy. If such a situation should occur in the future, the principles described here would be observed where applicable. 

In the case of participation in an administrative body of a listed company or of an entity that is Elo’s strategic partner, the decision shall be made by the Board of Directors of Elo.

In the case of ownership-based membership in an administrative body of an entity other than a listed company, the decision on the membership shall be made by the Managing Director of Elo; however, if the member candidate is the Managing Director or acting Managing Director, the decision shall be taken by the Board of Directors of Elo.

In the case of a residential or real estate company or a real estate investment company that is fully or partially owned by Elo, or any other entity related to real estate investment activities, the involvement in the relevant administrative bodies is viewed as part of the day-to-day operations pertaining to real estate investments, and consequently, the decision on participation in the administrative body shall be taken by the Managing Director of Elo or the person appointed by the Managing Director; however, if the member candidate is the Managing Director or acting Managing Director, the decision shall be taken by the Board of Directors of Elo.

In all of the above-mentioned situations, the proposal on a membership in an administrative body shall be substantiated by and deliberated on the basis of specific motivations as regards the relevance and necessity of the membership, the requirements and qualifications related to the membership, as well as appropriate descriptions of the impacts of the membership on the work duties and performance of the Elo employee in question (use of time, effects on Elo’s normal processes), possible remunerations, and potential conflict-of-interest and disqualification issues and their handling. If a conflict of interest appears, the situation shall be resolved in compliance with the currently valid operational principles related to the matter. It is also possible for an Elo employee, as a representative of Elo, to take part in the work of an investment council within a fund-type investment (including, for example, capital and real estate funds).

An Elo employee can also serve as a member of an administrative body in other entities or foundations than those governed by these ownership policy principles and, by virtue of them, subject to an approval of Elo’s own administrative bodies. Such memberships are considered as belonging to the sphere of the individual’s private life and, in terms of Elo’s interests or for any other reasons, there is no need to include provisions on such memberships in the ownership policy approved by the Board of Directors of Elo. 

The Managing Director may give more detailed instructions concerning the application of this guideline and related operational practices as necessary. 

Nomination committees and boards

Elo can contribute to the appointment of the members of possible nomination boards and also take part in the actual work of such committees or boards, if it is deemed necessary in cases of a significant investment or shareholding. The decision regarding involvement in such cases shall be made by the Managing Director, and the Board of Directors shall be informed.

List of positions of trust

Elo maintains a list of positions of trust as stipulated in Section 10 c of the Act on Pension Insurance Companies (TVYL 354/1997). The Compliance Officer is responsible for the maintenance of the list at Elo. 

Elo reprecentation in the Nomination Board of listed companies (pdf) >

Elo participation in general meetings and votings 2018 (pdf) >

Elo participation in general meetings and votings 2017 (pdf) >