COMPANY LAW
1. Types of Companies
There are three forms of companies in Finland, the general partnership, the limited partnership and the limited liability company, which is the most important form of company in Finland. It is important to bear in mind that only one single form of limited liability company exists in Finland, regardless of whether a company is privately or publicly owned.
The most important laws regulating the formation and administration of companies in Finland are the Companies Act and the General and Limited Partnerships Act of 1988. A large legislation project is in progress to adapt the Companies Act to corresponding EC-legislation. The new law is planned to come into force on January 1, 1996. Important issues of the law will be highlighted at the end of this presentation.
LIMITED LIABILITY COMPANY
1. Founding a Limited Liability Company
The shareholders of a limited liability company (osakeyhtio, Oy in Finnish, aktiebolag, Ab in Swedish) are not normally personally liable for the debts and obligations of the company. The minimum amount of share capital is fifteen thousand (15.000) Finnish marks. The shares, the minimum number of which is three, have to have the same par value.
A limited liability company must have at least one founder, who is responsible for the practical work involved in the establishment. No less than half must be residents of the European Economic Area, unless the Ministry of Trade and Industry grants exemption.
The establishment of a company must be recorded in a Deed of Formation, drawn up in Finnish or Swedish, and it must include a proposal for the Articles of Association. The subscription to the stock of shares is usually made in the Deed of Formation. A constituent meeting of shareholders must be held to form the company. The meeting decides on the establishment of the company and elects the members of the Board of the Directors and the auditors.
Within six months from the date of establishment a statutory notice must be made for entry into the Trade Register of the limited liability company. If the notice is not fulfilled in the above period of time, the formation is deemed to have lapsed. The handling of the formation documents at the Trade Register will normally take about half a year. On request a speedier handling is possible under certain conditions.
2.2 Management of a Limited Liability Company
The management of a limited liability company usually consists of the Board of Directors and the Managing Director. If the share capital is at least one million marks, it is not uncommon that the Articles of Association stipulate that the company shall have a Supervisory Board. The company must have at least one auditor.
The Supervisory Board supervises the actual management of the company by Board of Directors and the Managing Director.
A limited company may have a Managing Director, who is appointed by the Board of Directors. The Managing Director is in charge of the current affairs of the company in accordance with the instruction issued by the Board of Directors. The Managing Director may also be a member of the Board of Directors. The company whose share capital or maximum share capital is at least one million marks must always have a Managing Director.
At least half of the members of the Board of Directors or the Supervisory Board as well as the Managing Director have to be residents of the EEA, if the Ministry of Trade and Industry does not grant the company an exemption.
PARTNERSHIPS
A partnership is a common form of business organisation for small entities. Partnerships are classified as general (avoin yhtio, Ay; oppet bolag, Ob), or limited (kommandiittiyhtio, Ky; kommanditbolag, Kb). The partners in a general partnership are jointly and severally liable for the partnership's obligations. In the limited partnership at least one partner's liability is unlimited. A partnership is formed by the parties entering into a partnership agreement. The new partnership has, however, to register with the Trade Register and the tax authorities.
JOINT VENTURES
There are no special rules in Finland for joint ventures. They are frequently organised as silent partnerships, that is, a partnership in which one participant in the venture manages the partnership's affairs on the behalf of the others. Joint Ventures in the form of limited liability companies are also commonly used.
BRANCHES OF FOREIGN COMPANIES
Branches of foreign companies may be established in Finland subject to permission from the Ministry of Trade and Industry. This permission is not required for companies resident in EEA countries.
The branch should be registered with the Trade Register. The notice to the Trade Register must be signed by the individual who will be in charge of the branch.
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.
