In this issue:

  • The Supreme Court Precedent on Rescission of Employment Contract due to Absence
  • Shareholders' Rights Directive and Implementation in Finland
  • Pre-Registration Period under Reach Started
  • Finnish Government Proposes Amendments to the Act on the Protection of Privacy in Electronic Communications

CORPORATE

The Supreme Court Precedent on Rescission of Employment Contract due to Absence

The Finnish Supreme Court has redefined an employer's right to rescind an employment contract, i.e. to terminate without notice, due to an employee's absence from work in its recent decision (KKO:2008:50, 19 May 2008). According to Chapter 8, Section 3(1) of the Finnish Employment Contracts Act (55/2001, as amended), an employer is entitled to deem an employment contract rescind if an employee is absent from work for a minimum of seven days without informing the employer of a valid reason.

The issue the Supreme Court considered in the case was whether the seven day period should be calculated as consecutive calendar days or as working days. In the case at hand an employer had deemed an employment contract rescind after an employee with a five day workweek had been absent from work without a valid reason for a week, including five working days and a weekend (i.e. Saturday and Sunday). The Supreme Court ruled that the employer had the right to deem the employment contract rescind even though two non-working days were included in the seven day period of absence. Consequently, the Supreme Court stated that even though previous case law has allowed some exceptions, the main rule for calculating the seven day period of absence is consecutive calendar days.

Shareholders' Rights Directive and Implementation in Finland

Directive 2007/36/EC of the European Parliament and of the Council on the exercise of certain rights of shareholders in listed companies shall be implemented by the EU Member States by 3 August 2009. Minimum standards are set out in the directive to ensure rights of shareholders of companies which have their registered office in an EU Member State and whose shares are admitted to trading on a regulated market situated or operating within a Member State.

The directive focuses on participation in general meetings and includes detailed regulation on e.g. a minimum notice period; the content of the convocation; shareholders' right to timely access of relevant information; abolition of obstacles to electronic participation and participation by proxy; abolition of share blocking; shareholders' right to ask questions, receive answers and to put items on the agenda as well as disclosure of voting results. The directive strives to ensure participation and voting in general meetings particularly when the shareholder cannot attend the meeting in person, especially in cross-border situations where the shareholder is located in another Member State.

Measures for the implementation of the directive have already been initiated in Finland by assessing amendments required to be made into the Finnish legislation. The conclusion is that the minimum requirements set out in the directive seem to be broadly included in the current Finnish legislation. The implementation of the directive will, however, require some amendments to the existing legislation, mainly in the Companies Act.

Even if there is no need to make major amendments to the Finnish legislation, there are several interesting details in the directive that are under discussion. Examples of such details are proxy voting, voting by correspondence and the number of proxy holders one shareholder may appoint.

In Finland the practice regarding proxies issued by nominee registered shareholders has developed so that it is not necessary to present a proxy in writing through the chain of intermediaries, but a proxy in writing including certain representations issued by the nominee account holder is regarded sufficient. The directive is somewhat ambiguous in this respect and it could be interpreted to require that a written proxy from the beneficial owner would have to be presented at a general meeting. However, this interpretation would in practice make it more difficult for foreign shareholders to vote at the general meetings of Finnish companies and would therefore be both counterproductive and against the purpose of the directive.

As regards voting by correspondence endorsed in the directive, a question to be addressed is how votes casted by mail shall be taken into account if the general meeting amends the original proposal by the board. If the original proposal is amended, the votes casted by mail have been casted for or against a proposal that has ceased to exist.

In addition, the directive stipulates that a Member State may not limit the number of proxy holders appointed by a shareholder if the shareholder holds shares of a company in several securities accounts. Currently a shareholder may appoint only one proxy holder and split voting is not considered to be allowed. The implementation of the directive will thus require amendments as to the number of proxy holders that may be appointed. Allowing of split voting has also been discussed as the possibility to appoint several proxy holders makes it difficult to monitor how votes are casted.

Pre-Registration Period under Reach Started

REACH is the Regulation of the European Union for Registration, Evaluation, Authorization and Restriction of Chemicals. The scope of application of REACH is extensive and it is applied with certain exceptions to any chemical element and its compounds in the natural state or obtained by any manufacturing process. The European Chemicals Agency of the European Union which will manage the registration, evaluation, authorization and restriction processes for chemical substances is located in Helsinki.

The first major event to implement the REACH registration process, i.e. the pre-registration period, started on 1 June and will last until 30 November 2008. The pre-registration is of vital importance for anyone who manufactures or imports substances in quantities greater than 1 tonnage per annum. Failing the pre-registration, the manufacturer or importer will not be allowed to place its substances on the market after 1 December 2008 without completing a full registration process. If the manufacturer or importer does pre-register, the deadline for the full registration will be extended till 30 November 2010, 31 May 2013, or 31 May 2018 respectively, depending on the nature and quantity of the chemical in question. Therefore, a failure to pre-register may result in interruptions to supply chains, since the full registration process is likely to be a lengthy and expensive process. Pre-registration is free and will provide relevant companies with more time to obtain and compile the information necessary to complete the registration.

Further, all pre-registered companies will be placed in a Substance Information Exchange Forum (SIEF) established separately for each substance, providing a forum for all registrants to share the chemical data necessary to complete their registration dossiers. Through this data sharing network, it is expected that the impacted companies will be able to obtain chemical profile information more quickly and easily, and at less cost.

IP & TECHNOLOGY

Finnish Government Proposes Amendments to the Act on the Protection of Privacy in Electronic Communications

On 24 April 2008, the Finnish Government submitted to the Parliament a Bill to amend the Act on the Protection of Privacy in Electronic Communications (Government Bill 48/2008). The Bill proposes that corporate subscribers be given the right in certain cases to process identification data in their own systems to identify such acts as disclosures of business secrets and illegal uses of the communication network or information society services subject to a separate charge provided that these acts are liable to cause significant damage or harm. The identification data that could be processed means data which can be associated with a subscriber or user and which is processed in communications networks for the purposes of transmitting, distributing or providing messages. Corporate subscribes, on the other hand are private or public entities that provide communication services to their employees and other users.

The Act on the protection of Privacy in Electronic Communications entered into force in 2004 and implemented the Directive on Privacy and Electronic Communications (2002/58/EC). In the Act the rules regarding service providers also apply to corporate subscribers and thereby the Act has resulted in one of the strictest legislative rules on privacy in the world. The amendment would clarify the situation as regards corporate subscribers' rights and obligations.

The proposal has sparked plenty of controversy since it has been perceived by some as giving companies the right to monitor the identification data of their employees' e-mail communication, although not the content of the email messages. However, according to the Bill, the amended Act would allow the processing of identification data only in certain limited circumstances. Thereby the identification data of regular everyday communication would not be subject to processing. According to the Bill, companies should attempt to protect their communications networks and services as well as business secrets primarily by means of data security and education of employees. Processing of identification data should only be the last resort. Prior to initiating processing, the principles on processing identification data have to be notified to the Data Protection Ombudsman as well as the employees in accordance with the co-operation procedure. Also, the individual user whose identification data has been subject to processing shall be notified about the processing as well as be given the grounds for the processing.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.