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Setting up a business in Finland
Finland has a very strategic location on the interface between the
markets of East and West. A lot of companies wanting to take advantage
of this have established operations in the Helsinki region, and
it is paying off for them. Helsinki can offer them all the services
and infrastructure that a company needs for successful operation
in a competitive economy. Experience has shown that companies that
set up in Helsinki stay on; the number that have pulled up stakes
is vanishingly small. Of the about 3,000 foreign companies that
have established in Finland, around 2,500 are in the Helsinki region
and 1,000 in the capital itself.
Our Services
The OCRA Worldwide Helsinki team is fully conversant
and experienced in the procedures for establishing Finnish business
entities and together with law firms, banks, auditors and accountants.
OCRA will strive to deliver its clients professional services to
the highest of standards.
From inception we will examine and evaluate your
business activities and advise you on the most suitable business
structure to adopt, which could be either the establishment of a
private limited company or public limited company, or branch registration
of a foreign corporation. We can also, in co-operation with M&A
specialists, assist clients who seek to purchase existing companies.
We can also provide the following business support services:
- Registered office address facilities
- Professional directors and nominee shareholders
- Company secretarial services
- Company administration services
- Assistance in the day to day management of the company
- A turnkey administrative service for client companies
- Assistance in opening and operation bank accounts
- Trading and letter of credit services
- Accounting, financial reporting and consolidation
- Virtual office services
- The preparation of management and statutory accounts
- Arranging audits
- Arranging for the provision of legal and taxation advice and
opinions
- Intellectual property, trade mark, patent and royalty work
- Issues relating to work permits and immigration
- Property
Different forms of business
Foreign companies most commonly conduct business
in Finland through limited liability companies. These are divided
into “private” and “public” limited liability
companies. Foreign companies may also conduct business in Finland
through a Finnish branch office.
It is possible, but rare, for foreign companies
to conduct business in Finland through general or limited partnerships
or co-operatives.
Procedure
1. Registration
formalities
A limited liability company must be registered at the Trade Register
of the National Board of Patents and Registration within 6 months
of signing the memorandum of association. The formal incorporation
of a company occurs through registration. The share capital must
be paid in full before filing the registration. The memorandum of
association, articles of association and the minutes of the founding
meeting and Board meeting must be attached to the registration forms.
Registration usually takes between two and eight weeks from submitting
the application. The company may start trading before registration
but with unlimited liability.
2. Share capital
The required minimum paid-up share capital is 8,000 for private
limited liability companies, and 80,000 for public limited
liability companies. There is no limitation on maximum share capital.
Shares can be issued for non-cash considerations. A statement from
an independent auditor is required for the valuation of such considerations
in kind.
3. Restrictions of
rights attaching to shares
All shares carry equal rights in the company, unless otherwise provided
in the company’s articles of association. Different classes
of shares are possible but the voting power of one class of shares
may not exceed that of another by more than 20:1. “Preference
shares” with reduced voting power but better right to dividends,
are also possible. There are no restrictions on foreign shareholders.
4. Management structure
and foreign directors
The management of a limited liability company vests by law in the
company’s Board of directors (the Board), which is also entitled
to represent and sign for the company. A board must consist of at
least three members, unless a company’s share capital is less
than 80,000 in which case the Board may consist of one or
two ordinary members and at least one deputy member. A limited liability
company with a share capital of 80,000 or more must appoint
a managing director. At least half of the Board members and the
managing director must be resident in the EEA, unless the Ministry
of Trade and Industry grants an exemption.
The Board is responsible for the management and
proper arrangement of a company’s operations while the managing
director is in charge of the day-to-day management in accordance
with instructions and orders given by the Board.
The Board is responsible that a statement of the
annual accounts and auditors’ report is given to the shareholders
in their annual general meeting.
5. Directors’
liability
The managing director and members of the Board must act in the best
interest of the company, and in accordance with both the articles
of association and the Companies Act. They are liable to compensate
a) the company for damages caused deliberately or through negligence
by them in their respective positions; b) the shareholders or third
parties for damage caused by breaches of the articles of association
or the Companies Act. Directors can incur criminal liability for
the breach of the Companies Act or Securities Markets Act and other
legislation.
6. Shareholders and
parent company liability
Shareholders or a parent company are not generally liable for the
debt of the company/subsidiary unless guarantees have been given
for such liabilities. Shareholders liability is limited by paid
capital.
7. Reporting requirements
All limited liability companies must submit a copy of their annual
accounts to the Trade Register.
8. Selecting a business name
Before the establishment documents have been completed
and the company has applied for entry in the trade register, a business
name must be selected for the enterprise. The business name must
identify the business and be distinct from the business names already
in the register.
The company may use an auxiliary business name to carry on a part
of its activities. The business name may have parallel business
names in different languages, which are translations of the business
name in Finnish or Swedish. The expressions in different languages
must be similar in content. Both the actual business name and the
auxiliary business names may have parallel business names.
The business name must not be such that it can be confused with
a protected business name, a secondary symbol or trademark. Anything
that may be interpreted as another person's last name or professional
name, or the name of a protected literary or artistic work, may
not be used as part of the business name without the appropriate
consent.
Protected national or international appellations or abbreviations
of names may not be used as part of the business name without consent;
and the business name may not be contrary to good practice or public
order, or misleading to the public.
Business names are registered in Finnish or Swedish in the trade
register maintained by the National Board of Patents and Registration.
Although the validity of a business name cannot be examined in advance,
it is possible to verify that an identical business name has not
already been registered or that its registration is not pending.
The name will only be investigated and its validity approved after
the notification has been filed with the trade register. The exclusive
right to use the business name is effective as of the date the notification
is filed with the public authority stipulated in section 10 of the
Business Information Act, provided the business name is registered
in its presented form.
Although the company name is registered either
in Finnish or in Swedish, it can contain an indication of corporate
form also in other languages than in Finnish or Swedish.
Examples:
Oy Candlabra Ab
Star Investments Oy Ltd
Accepted translations for the indications of corporate
form are, among others:
9. Electing an auditor
General partnerships, limited partnerships, limited
liability companies, cooperatives, associations and foundations
always have a legal obligation to keep accounts.
If a company has only elected one auditor, who is not an auditing
firm approved by the Central Chamber of Commerce or any chamber
of commerce, at least one deputy auditor must be appointed.
A company that is a subsidiary of a group must elect at least one
auditor who also serves as auditor of the corporation or foundation
that is its parent company. Deviations from the above are only possible
for justifiable reasons.
The OCRA Worldwide team in Helsinki is happy to
guide you further on the documentation and forms required for a
specific form off business.
10. Licenced
trades
Licensed trades are governed by acts and decrees,
which stipulate the licensing authorities, for example. In some
cases a licence is not required, but the individual/corporation
must deliver a written notification to the appropriate authorities.
Licences are usually granted by the State Provincial Office of the
area in which the business is established.
A copy of the licence granted is attached to the trade register
notification. If a licence has not yet been granted, the applicant
may file the basic declaration with the trade register and deliver
a copy of the licence to the trade register once the licence has
been granted.
Licensed trades include (the licensing authority is given in brackets)
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inspection of motor vehicles (Finnish Vehicle
Administration AKE)
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production, import, export, wholesale, special
sale and usage subjected to the licensing of alcoholic beverages
and spirits, as well as production, import, wholesale and usage
subjected to license (Product Control Centre for Social Welfare
and Health)
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production, import, distribution and selling,
as well as other types of release to consumption, of medicines,
and pharmaceutical companies, pharmaceutical wholesalers and
pharmacies engaged in the aforementioned activities. Hospital
pharmacies and medicine centres in health centres and hospitals
engaged in the production and distribution of medicines. Selling
of pharmaceutical, veterinary and drug preparations. (National
Agency for Medicines)
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production and import of precious metal
products (with the exception of gold or platinum products weighing
less than 1g and silver products weighing less than 10g); a
written application for a stamped signature, or registered stamped
signatures, will be entered in the registry of stamped signatures
(Safety Technology Authority TUKES)
-
mining operations and prospecting: applications
for mining claims and patents (Ministry of Trade and Industry),
reservation notifications (the local register office in which
the reservation area is located)
-
production of synthetic fertilizers and
manufactured feeds and trade in seeds (Plant Production Inspection
Centre)
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commercial airline operations (scheduled
and charter airline traffic): air operator certificates and
operating licenses (Civil Aviation Administration, Flight Safety
Authority): In addition to the above, airline companies in EU
Member States: a company commencing scheduled and charter airline
traffic to and from Finland or within Finland must file a notification
to the Flight Safety Authority at the Civil Aviation Administration.
Airline companies in non-EU Member States: regular scheduled
traffic to and from Finland is based on bilateral flight operations
agreements between Finland the respective countries. Once the
country in question has appointed an airline company or airline
companies to operate on the route specified in the agreement,
the Flight Safety Authority will grant the company permission
to start the agreed traffic. Charter airline traffic operated
by companies in non-EU Member States is subject to a charter
operator certificate granted by the Flight Safety Authority
(Civil Aviation Administration).
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credit institutions, pawn broking institutions,
investment service companies, mutual fund companies and custodians
(Financial Supervision Authority)
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collection of debts on behalf of others
(all licenses granted by the State Provincial Office of Sothern
Finland)
-
postal services (postal matters with an
address, weighing less than 2kg). Courier services as well as
distribution and delivery operations concerning minor postal
matters do not require a license (Postal Services Act 313/2001)
(Government).
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stock exchanges, central securities depositories,
option institutions, clearing houses (Ministry of Finance)
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electrical contracting (electrician activities,
repair of electrical appliances): the person responsible for
the service must be a director of electricians' work with appropriate
qualifications. The qualification is indicated by a qualification
certificate issued by the relevant qualification institution
(Henkilö- ja Yritysarviointi SETI Oy). Notification of
operations before starting the operations (Safety Technology
Authority). The aforementioned also applies to the installation
and maintenance of lifts.
-
design, construction, manufacture, repairing,
servicing and using of electrical appliances, production and
transport of electricity for other than personal use (Safety
Technology Authority TUKES and Henkilö- ja Yritysarviointi
SETI Oy)
-
telecommunications activities (Ministry
of Transport and Communications)
- handling and storage of chemicals hazardous
to health and the environment (Safety Technology Authority TUKES)
-
large-scale handling (Safety Technology
Authority TUKES)
-
small-scale handling (local chief fire officer
or chemicals control authority)
-
insurance brokering (Insurance Supervisory
Authority)
-
insurance agencies (Ministry for Social
Affairs and Health)
-
package tour agencies (Consumer Agency)
-
security companies (Ministry of the Interior,
Police Department, Security Sector Supervision Unit)
11. Start-up notification
to the tax administration
A new company
must submit a start-up notification to the tax administration registers
and the Trade Register using the same form. If the company already
has a business ID, it should use the amendment notification form.
The tax administration registers referred to here include the prepayment
register, employer register and VAT register.
12. Opening of a corporate
bank account
Bank accounts in Finland may be opened by anyone
who can present an adequate statement of the person opening the
account, the holder of the account, and the necessity for and purpose
of the account. The bank must ultimately determine what constitutes
an adequate statement for the establishment of a customer relationship
in each case.
A bank account must be opened for a new business
during the establishment process. In the case of a limited liability
company, a bank account must be opened before the company is entered
in the trade register. The share capital of the company must be
paid to the company's account in a Finnish deposit bank before filing
the trade register notification and its entry in the register. It
is only possible to make payments from the account after a certificate
of arrival concerning the delivery of the start-up notice issued
to the trade register and showing the business ID of the company
has been delivered to the bank.
The person opening an account for a limited liability
company or cooperative must present a decision (either minutes of
the meeting or an extract of the minutes) by the decision-making
body (usually the Board of Directors) on the opening of the account
and the persons authorised to use the account, as well as the required
services (electronic funds transfer, Internet service, debit card,
etc.). The right of the person in question to open the account on
behalf of the corporation, or the authorisation granted him/her,
must also be shown in the statement.
With regard to the establishment of customer relationships
and the opening of accounts, banks have a statutory obligation to
carefully identify both the person opening the account and the holder
of the account, if the account is opened by a person other than
the holder. This applies to situations where the holder is a legal
entity, for example. If the person opening an account on behalf
of a corporation does not have a personal identity number, he/she
must present a passport issued by authorities in his/her home country;
otherwise, identification is made on the basis of a Finnish passport
or another valid personal identification document issued by the
police. Banks recommend that individuals moving to Finland make
application to the local register office for a personal identity
number. If the identification documents of the person opening an
account on behalf of a legal entity are not adequate for reliable
identification, the person cannot open a bank account.
The bank may, at its discretion, require a letter
of recommendation concerning the holder of the account from a correspondent
bank or another bank it considers reliable. Banks are obligated
by law to request a statement on the type of the customer's operations,
the purpose of the account and the type and extent of the intended
payment transfers, etc. If necessary, the bank may request a statement
on the origin of the money deposited in the account from the customer.
In the case of a foreign legal entity, the bank may also request
a statement on its owners.
The OCRA Worldwide team in Helsinki is happy to
introduce clients to major Finnish banks.
13. Regulatory environment
in employment issues
Labour laws are highly regulated and fairly complicated
in Finland. To some extent the legislation is still guided by the
policy aiming at protecting the employees. There are rules and regulations
on working hours, minimum holiday entitlement, employment contracts,
terms of employment, compensation packages and employee incentives,
dismissal of employees, redundancy compensations, pregnancy, etc.
14.
Costs of employment
Employers must pay social security, unemployment
insurance, pension insurance, collective life insurance and accident
insurance contributions. The aggregate of these social cost payments
amounts on average to about 25-35% of gross salary, depending on
the size and type of business.
For further details and information on setting
up a business in Finland contact our Helsinki
Office.
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