Finland Company Formation

INCORPORATING A COMPANY AND SETTING UP A BUSINESS IN FINLAND

Introduction

Finland's economic stability and high-tech industrial base has made it a key target for international investors. There are no restrictions based on the place of residence or registered office, or citizenship, when it comes to the right to own shares. There are, however, some special situations regarding managerial positions and board memberships in which a special permit from the Trade Register should be applied for.

Regarding the board memberships, the situation is looked into separately for the part of ordinary members and deputy members respectively. If at least one of both the ordinary members and the deputy members (even when computed separately) are residents of the EEA, no permit from the Trade Register is required. The EEA compromises all the EU countries plus Iceland, Liechtenstein, Norway and Switzerland.

The managing director (and his or her deputy, if any) must have a place of residence in the EEA. If he or she is not residing in the EEA, he or she has to apply for a permit from the Trade Register. The managing director is not mandatory for private limited companies but it is mandatory for public limited companies.

A limited liability company must have a representative who is entitled to receive summons and other notifications on behalf of the company. The representative must have a place of residence in Finland and is entered in the Trade Register. If the company has a member or deputy member of the board of directors, a managing director, a person authorised to sign for the company, or a holder of procuration who has been notified to the Trade Register, and the person in question is resident in the EEA, it is not necessary to elect a separate representative.

Every limited liability company is obliged to file a Start-up Notification with the Trade Register. Limited liability companies are effectively existent when registered.

If you want to know more about opening a company in Finland, contact us  or read on.

What is the most common type of company in Finland?

The two most popular forms of business entity in Finland are:

  • public limited company - osakeyhtiö Oyj
  • private limited company – osakeyhtiö Oy

How much share capital is required to establish a public limited company (Oyj)?

  • The minimum share capital for a public limited company is €80,000.

What other requirements are there for a public limited company?

  • a minimum of three board directors plus a managing director
  • memorandum of association
  • articles of association
  • audit mandatory; at least one of the auditor’s must be “KHT auditor” which means an auditor who is approved by the Auditing Board of the Central Chamber of Commerce, or, a “KHT firm” which means an audit firm approved by the same;
  • financial statements (profit and loss account, balance sheet, notes to the accounts & annual report) should be filed with the Trade Register within 8 months after the financial period has ended
  • cash flow statements should be attached if two out of three conditions are satisfied for consecutive years:
    • turnover of at least €40,000,000
    • balance sheet of at least €20,000,000
    • employs at least 250 people
  • interim reports should be published semiannually
  • income tax return should be filed with the Tax Administration within 4 months after the financial period has ended
  • corporate income tax rate of 20%
  • turnover of at least €40,000,000
  • balance sheet of at least €20,000,000
  • employs at least 250 people

 

How much share capital is required to establish a private limited company (Oy)?

  • The minimum share capital for a private limited company is €2,500.

What other requirements are there for a private limited company?

  • at least one board director and one deputy
  • memorandum of association
  • articles of association 
  • audit mandatory if two out of three conditions are satisfied for consecutive years:
    • turnover of at least €200,000
    • balance sheet of at least €100,000
    • employs at least three people
  • financial statements (profit and loss account, balance sheet & notes to the accounts) should be filed with the Trade Register within 8 months after the financial period has ended
  • income tax return should be filed with the Tax Administration within 4 months after the financial period has ended
  • corporate income tax rate of 20%
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What other types of company are there?

  • general or limited partnership
  • private trader
  • branch of a foreign company

How easy is it to recruit staff?

Finland has one of the most advanced education systems in the world, and the workforce is highly skilled. Despite an unemployment rate of around 8.1% (October 2016), there are recruitment difficulties in certain sectors such as telecommunications and IT. It is worth noting that there are important labor regulations regarding employment contracts and so professional advice will be needed. 

What is the regulatory environment like?

Although the business environment in Finland is liberal and investor-friendly, the regulatory environment is strict and any breach of the legal or tax code is taken very seriously. For this reason it is particularly important to seek expert advice from the outset. To learn more about our local team of legal and financial specialists in Finland, please contact us.