At the end of 1997, the Ministry of Finance appointed a working group the task of which was to assess the future role of the Finnish Central Securities Depository (FCSD). Based on the assessments carried out within the working group, a memorandum was published in April 1999. At present, FCSD maintains the Finnish book-entry securities system, which consists of five book-entry registers operated by different commercial registrars and bilaterally connected to FCSD. This decentralized system of registration has complicated and delayed the settlement of securities. In order to improve the efficiency and the international competitiveness of the Finnish book-entry securities system, the working group proposes that the different book-entry registers be combined into one single book-entry register to be operated by FCSD. According to the memorandum, entries into the consolidated register will in the future be made by the present registrars and other authorized parties involved in the securities trading in Finland.
Under Finnish law, non-Finnish shareholders may appoint a commercial registrar or a securities intermediary to act as nominee shareholder on their behalf. Such nominee shareholders are entitled to all financial rights pertaining to the shares (including the receipt of dividends) but are prevented from exercising any administrative rights (such as voting rights). The memorandum only proposes technical amendments relating to legislation governing nominee shareholdings, but the intention of the working group is that such legislation will be revised in the near future and possibly extended to also allow Finnish shareholders to appoint a nominee shareholder.
The memorandum includes a detailed proposal for a government bill on the basis of which amended legislation governing the book-entry securities system is intended to become effective no later than March 1 2000.
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