An investment service provider that provides asset management services within the meaning of the Act on Investment Services (asset manager) by investing its clients’ assets in shares of a (listed) company traded on a regulated market must establish an active ownership policy.
The active ownership policy must describe how ownership is manifested in the asset manager’s investment strategy. The policy must describe the procedures for monitoring the performance of a company traded on a regulated market in matters relevant to the asset manager’s investment strategy and for exercising voting or other rights attached to shares. The policy must also describe how the asset manager engages in dialogue with the investee company, its other shareholders and stakeholders.
This policy has been drawn up to provide guidelines for Illusian Partners Oy as regards the rights and ownership related to investments in shares of listed companies, to be applied when Illusian Partners Oy manages its clients’ investment assets under an asset management contract. This policy also guides the assessment of the principle adverse impacts associated with the investment portfolio. (PAI, Principal adverse impact*).
Illusian Partners Oy provides asset management services to its clients mainly by investing in funds. However, investments may also be made directly in individual listed shares.
Decision-making power and the active means of exerting influence described in the active ownership policy and, in particular, in relation to exerting shareholder voting rights and other rights of shareholders for asset management clients must be determined in the asset management contract. Exerting the means of influence may also be concluded in a separate case-specific agreement.
The funds selection process takes into account the active ownership policy and sustainable investment activities of each fund manager in line with clients’ sustainability preferences.
These policies are approved by the Board of Directors of Illusian Partners Oy.
Active ownership policy – our expectations and available means of influence
Active ownership is a factor that can contribute to good governance of the investee companies and improve the conditions for the good long-term performance of the investee companies or investment portfolios. Illusian Partners Oy applies a comprehensive analysis to evaluate the equity investments held in its clients’ portfolios, taking into account both financial and non-financial reporting data and the material risks and opportunities that can be analysed. In particular, it is ensured that the investee companies comply with international law and standards relating to environmental protection, human rights, workers’ treatment and anti-corruption activities. This also ensures that potentially relevant PAIs* are understood and reported.
As a rule, all companies are expected to comply with good governance practices of their home market and any corporate governance code (in Finland, the Securities Market Association’s Corporate Governance Code).
It is important that companies describe their governance and administration systems and report to investors not only financial information but also sustainability factors relevant to their strategy and operating environment so that Illusian Partners is able to analyse the company’s risks and return potential in a comprehensive manner. Companies are expected to comply with the NFRD and, in the future, the CSRD reporting regulations, if they are subject to such regulation. Companies are expected to communicate and report in an accurate and truthful manner at all times.
Illusian Partners Oy monitors matters relevant to its investment strategy using the companies’ financial reporting data, other company communications and market information and carries out its own investment analysis and, where appropriate, by meeting with the companies’ representatives and discussing issues of importance to the companies’ development.
In the case of direct investments of asset management clients, Illusian Partners may attend meetings of shareholders either itself or through a proxy representative, but only if the client so wishes and in a manner consistent with the client’s wishes. Illusian Partners may participate in formal means of investor co-influence if the asset management client so wishes in relation to a company.
Public disclosure of the active ownership policy and an annual report on its implementation
This Illusian Partners Oy corporate active ownership policy may be made public and is discussed with all asset management clients and included in the client contracts. The client’s preferred model of active ownership is specified in the asset management contract. The client’s suitability assessment and asset management contracts take into account the client’s sustainability preferences and any desired exclusions.
Attendance at shareholder meetings and any voting are always agreed separately with the asset management client.
Illusian Partners Oy’s clients are unlikely to be major shareholders in any listed investee companies.
Illusian Partners Oy considers that disclosure of the implementation of its corporate governance policy is not essential, as any exertion of influence and corporate governance are agreed with each asset management client separately and the implementation of such governance is reported. As objectives and actions are agreed separately with each asset management client, it is not rational to report a uniform single set of policies and objectives for each company, or to report unequivocally on how influence is exerted.
Corporate governance and any influencing activities are, of course, reported directly to those clients who request them.
In line with Illusian Partners Oy’s strategy, direct investments in shares of listed companies are likely to be very limited in the portfolios of asset management clients, with investments mainly consisting of fund investments and unlisted shares.
*Negative externalities of investment desicions, PAI definition by ESMA: “Negative, material or likely to be material effects on sustainability factors that are caused, compounded by or directly linked to investment decisions and advice performed by the legal entity.”