Skip to content
Valtioneuvosto frontpage

Prime Minister’s announcement concerning state ownership steering policy

Government Communications Department
Publication date 17.5.2016 14.29
Prime Minister's Announcement

(subject to changes)

Honourable Speaker!

Attainment of the vision set out in the Government Programme requires us to use state ownership as a tool for the active renewal of Finnish society. The implementation of the vision requires that we use state ownership steering as a means to improve the efficiency with which capital is used not only for activating existing ownership but also for creating new economic activity in Finland.

This is what the Government is now doing.

Honourable Speaker!

I shall speak first about state ownership as it currently stands and then I shall set out the changes that the Government intends to make and the reasons for these.

The market capitalisation of state-owned companies in Finland is exceptionally high. A comparison across Europe puts Finland at the top. According to OECD data for 2014, the Finnish State in 2012 was an owner in companies and unincorporated state enterprises with a combined value of approximately 53 per cent in relation to GDP. From this it is clear that we will be wasting resources if we cannot boost economic activity above the current level by means of state ownership.

The history of state ownership is an honourable one. The payment of war reparations established a foundation for our industrialisation. To President Kekkonen, State assets offered the nation an opportunity to prosper and move forward. In recent decades, state ownership has been without a firm direction.

State assets have instead been seen as a hindrance, even a restraining factor. There has been no vision for ownership, and there has been no development path set out by the owner for the State's shareholdings. In practice, expansion of ownership has been dictated by necessity, and the sale of state assets and income from state-owned companies have been used to fill gaps in the Budget.

We need to change this. The State's balance sheet must be put to more productive and efficient use. To me, putting the State's balance sheet to work does not mean patching up the Budget or turning the assets into cash. It means activating the present ownership and generating new economic activity and jobs. A particular area of opportunity for the State in its capacity as an owner is the development of the platform economy.

Honourable Speaker!

State ownership must be made an active tool for renewal in society.

Ownership matters. The importance of Finnish ownership with a face behind it has grown in these difficult economic times. Finland must not be allowed to become an economy of subsidiaries. We still need activities that support the creation of corporate equity. The aim should be that more and more Finns should, in one way or another, become owners of employer enterprises and thus reinforce people's capitalism.

A change in the State's ownership policy requires changes in ownership steering practices and structures. To put this in place, the Government is proposing an eight-point reform programme:

  1. Release capital for creating something new
  2. Establish a business development company as a tool for renewal
  3. Parliamentary Advisory Council to provide support in state-ownership steering
  4. A new ownership limit (33.4%) to be established for securing strategic interests
  5. Changes proposed to company-specific ownership limits
  6. Corporate social responsibility as the core value of state-owned companies
  7. Executive management and personnel of listed companies encouraged to engage in ownership
  8. Executive severance packages will be reduced

Firstly, as an owner, the State should stake out evolutionary paths for the companies in which it holds interests in order to generate growth. Changes in ownership structure are also often needed. When it is no longer necessary, in terms of the economy as a whole, for the State to own a company to the present extent, capital can be released for creating something new. Renewal requires courage and also inevitably entails relinquishing something.

The aim in creating something new is that the State should act as an enabler of new business activity and of the economic activities that radiate from this. The State's involvement in new business activity is of course an exceptional situation. It demands full and careful consideration and the threshold for making decisions is high.

Secondly, the Government has decided to set up a business development company as a tool for the renewal process. The task of the business development company will be to provide state-owned companies with an evolutionary path for their renewal and for the development of their ownership structure. Like Solidium, the business development company is an actor outside the on-budget entities. This arrangement makes it possible to use the released capital to

  • generate new business,
  • reinforce the capital base of the companies held in the development company's portolio and
  • implement corporate restructuring efficiently.

The activities of the development company will not overlap with industrial and business policy actos such as Finnish Industry Investment Ltd or Tekes Venture Capital Ltd.

In the first phase, shares of the following companies will be transferred to the business development company:

Neste Corporation (interest in excess of 33.4% of the shares)
Posti Group Corporation (interest in excess of 50.1%)
Vapo Oy (interest in excess of 33.4% of the shares)
Altia Plc
Ekokem Oy Ab
Nordic Morning Plc
Raskone Ltd
Arctia Ltd (interest in excess of 50.1%)
Kemijoki Oy

The holdings will be transferred to the business development company as a capital contribution. Administratively, this activity will be kept closer to political decision-making than is the case with Solidium. In practice this means stricter decision-making control, for instance in purchasing, selling or establishing something new. The Government will decide on development company matters that have far-reaching effects or are of fundamental importance. The minister responsible for ownership steering will be responsible for the ownership steering of the business development company and for appointing the board of directors. The most important decisions will be discussed preliminarily at the Ministerial Committee on Economic Policy.

Thirdly, the State’s ownership policy involves a long-term approach that calls for a parliamentary commitment spanning several electoral periods. The change now proposed regarding state ownership is great.

The Government proposes that a Parliamentary Advisory Council be established in connection with the Prime Minister's Office. This will enable a controlled implementation of the change and involve the whole of Parliament in the process. The Advisory Council would serve in an advisory capacity, reviewing the Government’s ownership policy, evaluating the general principles of ownership steering and more generally determining the limits of changes in government holdings for which parliamentary authorisations are required. All company-specific issues would remain outside the Council's remit. A request to nominate candidates for the Advisory Council will be submitted to the parliamentary groups in May.

Fourthly, the Government proposes a new ownership limit (33.4%) in order to implement the strategic interest. With one third of the shares, the right of veto can, in practice, be exercised over the company's most important decisions.

As an owner, the State has so far implemented its strategic interest either through full ownership (100%) or to retain a majority interest (50.1%).

Fifthly, the Government proposes to Parliament, in connection with a second supplementary Budget proposal, the following seven changes regarding the ownership limit:

In the first instance, the ownership limit for Gasum and Fingrid will be raised from 0% to 50.1%. Here the policy is clearly that the State's gas and electricity grids represent strategic ownership for the State also in the long term.

The strategic interest in Neste Corporation and Vapo will in future be implemented with a new 33.4% ownership limit.

In the case of Posti, we want to provide the opportunity to benefit more effectively from the core competence in logistics and services to people's front doors, by developing the ownership structure as well. The State's majority ownership will nevertheless be retained in Posti.

With Arctia Ltd, we want to ensure that in the financing for major future investments it will also be possible amend the ownership structure.

Up to now, there has been no strategic interest defined in Kemijoki Oy, and the ownership limit is now being cut to zero. For Kemijoki, any decision to sell will require a shareholder agreement to be signed among the present owners. No changes to the State's ownership will be made before this.

The limits of ownership and adjustments to these limits are always determined by Parliament. The change of the ownership limit adopted by Parliament is not a decision to sell. The Government will decide separately on the possible sale of the interest in each company.

The ministries responsible for ownership steering in respect of the various state-owned companies were re-assessed in connection with the preparation of the resolution. The goal is to boost the efficiency of ownership steering and to separate regulation and ownership steering as fully as possible. In addition to the earlier decision on the gambling company, merging Veikkaus, Finland's Slot Machine Association (RAY) and Fintoto, ownership steering in respect of the following companies will, in future, be exercised by the Prime Minister’s Office:

  • Finavia Corporation, responsible for airport and air navigation services,
  • Finnpilot Pilotage Ltd, responsible for pilotage, and
  • Finnish Aviation Academy Ltd, responsible for pilot training.
  • In addition, Finrail Oy, responsible for controlling rail transport, will be transferred from the Prime Minister's Office to the Ministry of Transport and Communications.

Honourable Speaker!

Sixthly, corporate social responsibility must become a core value of state-owned enterprises. Values provide the foundation on which all decision-making is based. State-owned companies need to set an example on corporate social responsibility. Underlying this concept is the idea that the success of a company is largely determined by the success of the community in which it operates.

In a global economy, it is of great importance that state-owned companies adopt a long-term view in the efforts to enhance their competitiveness. Corporate social responsibility is also an integral part of sustainable competitiveness. As a responsible corporate citizen, the company will contribute to the long-term development and renewal of society. Corporate social responsibility must also be visible in the following ways:

  • Taxes are paid to the country in which the profits are earned.
  • Minimisation of taxes through the use of tax havens, for instance, is unacceptable.
  • Attention will be given to the wellbeing and development opportunities of the personnel.

State-owned enterprises are already well advanced in these matters, but our aim is that they should become even better at these.

Points seven and eight of the reform programme are of importance to me, personally. We can change things if the will is there.

State-owned enterprises must also set an example when it comes to executive remuneration and must give out a message of moderation.

Executive management and personnel of listed companies are encouraged to engage in ownership. As a shareholder in listed companies, the State wishes to promote people’s capitalism by encouraging personnel to acquire shares in their employer companies.

Executive severance packages will be halved. This naturally applies to new contracts, but we hope that this amended guideline will also act as a strong message to society at large.

Honourable Speaker,

This Government is strongly committed to the renewal of Finland. Reforms that have long been left undone will now be put into effect. The amount of room for manoeuvre in central government finances is very slight. This is why the balance sheet, reflecting the State's assets, must be put to work. This will also help the Government to achieve its employment goal, the creation of 110,000 new jobs.

Thank you.  

Back to top