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.
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:
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.
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.
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.
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.
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.
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.
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.
All limited liability companies must submit a copy of their annual accounts to the Trade Register.
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:
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.
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):
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.
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. Back to top
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.
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.