Corporate governance of business premises companies

Tennispalatsin julkisivu

Assessment objective

The main question of the assessment was whether the corporate governance of business premises companies has been organised appropriately. This was examined by assessing whether the corporate governance procedures are in accordance with the Finnish Local Government Act, the City’s Administrative Regulations and the corporate governance principles, whether the owner’s will is clear and whether it has been conveyed to the companies. It was also assessed whether the owner directs the companies to act in accordance with the City Strategy, the policies of the ownership strategy and the City’s environmental goals.

Conclusions

Based on the assessment, the corporate governance procedures are in accordance with the corporate governance principles with one exception. The City’s position is not being asked for in advance when selecting managing directors purchased through a property management company. Another key observation related to the corporate governance principles was that the role of board members in limited companies is not described sufficiently clearly. In addition to this, the section of the corporate governance principles regarding the issuance of guidelines to the representatives of the City in the governing bodies of various subsidiary communities leaves room for interpretation. Based on the assessment, the corporate governance principles need to be clarified in order to describe the differences between the roles of the board members of foundations and limited liability companies.

The Built Assets Management service of the Urban Environment Division manages the premises of joint-stock property companies. It is important that there is adequate communication between the management service and the City Executive Office’s City Group Governance Unit and that no communication breakdowns occur. Cooperation has recently improved, but there is still room for improvement in the flow of information.

The Audit Committee concludes that

the City Executive Office must
◼ prepare the supplementation of the corporate governance principles, so that the document or its appendices show how the issuance of guidelines differs in companies and foundations, and how the provisions of the Limited Liability Companies Act affect a company’s board member’s activities as a City representative.
◼ act in such a way that there is no conflict between the advance position procedure of the corporate governance principles and the current practice in the selection of managing directors acquired as a purchased service. 

the City Executive Office and Urban Environment Division must
◼ further improve the flow of information so that the Urban Environment Division is more aware of the activities related to corporate governance and, respectively, the City Executive Office is provided with the most relevant information from the Urban Environment Division managing the premises.

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In Assessment Report: