Company Formation in Finland

1. Finland >
2. Starting a Business >
3. Company Formation

Company Formation

A foreign investor may choose to establish a business as a:

• Private entrepreneur
• Partnership
• Limited liability company formed of one or more individuals or legal entities
• Cooperative
• Branch

The process of incorporation in Finland is fairly straightforward - just 3 stages:

1. Deposit the share capital in full in the company bank account, pay the registration fee and obtain a receipt. This takes one day.
2. Submission of a basic declaration to the National Board of Patents and Registration Trade Register department. This takes between 5 days and 3 weeks. The cost is approximately 330.
3. Register for employees' pension, accident and medical insurance. This takes one day and can be done simultaneously with stage 2.

When establishing a business in Finland, whatever type of business that may be, it is essential to enter it in the Trade Register maintained by the National Board of Patents and Registration (NBPR).

Enterprises submit their entry into the trade register with the start-up notification.

Start-up Notification to the Trade Register

The Trade Register is a public data system providing information on Finnish business. Its role is to serve and supervise business life in the country. The Trade Register also establishes rights and protects businesses, by offering legal effects, set out by law.

Start-up Notification - Limited Company

Every limited company is required to file a start-up notification with the Trade Register. It is essential for the company to register within three months of the signing of the Memorandum of Association. The National Board of Patents and Registration provides a package for limited companies in English in order to aid the completion of the application documents, for those who don't speak Finnish or Swedish. However, you must not submit the application form in English.

The limited company must complete a Form Y1 and Appendix Form 1. Appendix Form 1, must be sent either in Finnish or in Swedish, and these must be sent to The National Board of Patents and Registration.

In addition to the Y1 form, a limited company must have a signature from either an ordinary member of the Board of Directors or a person whom they have authorised to sign the notification. If an authorised person has signed the document, then the original general power of attorney or a certified copy of a special power of attorney must be provided.

Enclose:

• Company's Memorandum of Association
• A receipt of payment of handling fee

Additional documents that may be required:

• A copy of the Articles of Association, if it does not form part of the Memorandum of Association
• Statement of the members of the Board of Directors and the Managing Director, and verification that the formation of the company meets the stipulations of the Limited Liability Companies Act
• Auditors' certificate, confirming that the requirements of the Limited Liability Companies Act, with regard to payment of shares have been adhered to (if not already submitted) If there is no auditor report, you must provide another document relating to the payment of shares, such as a bank statement
• Certified copy of the minutes of the Board Meeting
• Account of an authorised auditor, if the share is paid with other assets than cash
• A certified copy of your passport may be required if you don't have a Finnish personal identity code
• An extract from the register in the company's home country, if the foreign company subscribes for shares

The handling fee is 330, and registering an auxiliary company name costs 60 for each one.

Start-up Notification - General partnership or limited partnership

In a general partnership, profits and losses are distributed among the partners as decreed by law or in the partnership agreement.

In a limited partnership, a silent partner exists who is first paid a share of the profits on his investment as at the beginning, as set out in the partnership agreement. The remaining profit will be distributed among the general partners in compliance with the partnership agreement. General partners are personally liable for the responsibilities and debts of the partnership.

Requirements:

• Complete the Form Y2
• Fill in the basic part on pages 1-3 for the NBPR and the Tax Administration, and page 4 for the Trade Register. Page 5 must be completed for the tax authorities if the partnership is recorded on a register maintained by the Tax Administration
• Signature by a partner or a person authorised by a partner (General partnership)
• Signature by a general partner (also known as active partner) or a person authorised by the partner (Limited partnership)
• If someone who has been authorised signs the notification, the original power of attorney, or a certified copy of the power of attorney must be enclosed

Enclose:

• Original partnership agreement
• Copy of a trade licence may be necessary

The handling fee is 155 euros.

Generally, a high level of contractual freedom is permitted, regarding Partnership Agreements or general or limited partnerships.

The Trade Register must be informed of:

• The name of the partnership
• The city where the partnership is carried out
• The type of business
• Who the partners are
• In terms of limited partnerships, please specify who are general partners (active partners) and who are silent partners.
• The amount (in Euros) of the contribution made by a silent partner (limited partnership)

Also to be agreed in the Partnership agreement are issues such as the representation of the partnership, the accounting period, the auditors, the distribution of profits, the assignment of a partnership share, the resignation from the partnership, the notice to terminate a Partnership Agreement etc.

The Partnership Agreement must be dated and signed by all the partners (including silent partner).

Start-up Notification - Branch of a foreign trader

A branch is a part of a foreign organisation that conducts the majority of its business and trade in Finland, from a permanent place of business there.

Requirements:

• Submit a Form Y1 and Appendix Form 3 (Again, Appendix Form is only available in Swedish or Finnish)
• The notification is signed by either the representative of the branch or the person authorised to sign the company name of the branch

Essential Information for the Notification

• Company name and residence
• Postal address of the branch
• The accounting period
• Company name, and legal form (e.g. company limited by shares) as well as the company name of the branch
• The register in which the trader opening the branch has been entered in his home country and the number of the trader
• The type of activity conducted by the branch
• The personal details of a representative referred to in Section 6 (3) of the Act on the Right to Carry on a Trade. The representative must usually be resident in the EEA
• Personal information about each person who is authorised to sign the company name of the branch and an explanation of how the company name must be signed
• Person data and names of those authorised to represent the trader as a statutory body or members of that body (i.e. Board of Directors of the foreign country)

Enclose:

• Proof of the establishment of the branch
• Proof that a representative has been appointed, regarding Section 6, paragraph 3, of the Trade Act
• Note members of the Board of Directors, or others, who have been authorised to represent the trader, who have the right to sign the company name, and decided how it is signed
• An extract from the home country register in which the foreign trader has been entered
• A Finnish or Swedish copy or a legally valid translation of the memorandum of association, articles of association etc
• Evidence of your permission to establish a branch, obtained from the National Board of Patents and Registration of Finland (if you are not a member of the EEA)
• Proof of existence, if you have no Finnish personal identity code (for example, a certified copy of his or her passport. If the person is mentioned in the extract from the register concerning the foreign organisation, no other proof of existence is needed)

A copy of the minutes of a board meeting of the foreign company usually operates as evidence of the establishment of the branch, of the appointment of a representative and right to sign for the company is granted. The laws of the company's home country will often come into play, for instance determining the body which will make decisions on important issues.

If you supply a document in a foreign language with the notification, it must be accompanied by a Finnish or Swedish translation.

The handling fee is 330 euros.

Processing time for applications is usually 8 days.

Once you have submitted your start-up notification, you are then able to apply for registration with the National Board of Patents and Registration.

National Board of Patents and Registration of Finland Trade Register
Arkadiankatu 6 A
Helsinki P.O.Box 1150
FI-00101
Helsinki
Phone: +358 (0)9 6939 500
Fax: +358 (0)9 6939 5328

Registering a business name

The business name must identify the business, be relevant, and most importantly, be distinct from names that already exist in the register. Business names are registered in Finnish or Swedish in the Trade Register.

The Business Information System is very useful. It is free of charge and contains information on registered company names, auxiliary company names and information on new companies whose names have yet to be registered. It does not contain information on pending name changes of registered companies.

Important information/useful contacts

Employment and Economic Development Centres (TE Centres) in Finland provide useful and practical business advice. The TE Centres' business staff specialise in individual financing plans for companies and businesses. As experts in their field, they are able to offer significant advice and information to customers, so it is advisable to contact the specialists at your nearest TE Centre as soon as possible once you are there or before you decide to enter into a business contract.

Business license

The following are entitled to conduct a legal trade without a licence from the authorities:

• Individuals resident in the EEA (United Kingdom is a member of the EEA)
• Finnish corporations and foundations
• Foreign corporations and foundations that have a registered branch in Finland, have been established under the law of a EEA State and have their residence, central administration or main place of business in an EEA State

Offshore Companies

By choosing to incorporate an offshore company, business owners and  investors can set-up a business outside the jurisdiction of its operations. Offshore companies are traditionally, but not exclusively, incorporated for lower fees and taxes. Business owners must abide the regulations of the offshore jurisdiction, and must not trade within the jurisdiction.

The benefits are vast. As aforesaid, reduced tax and fees are often big factors when considering offshore incorporation. A company may also choose and offshore location to:

• Simplify set-up and maintenance - entrepreneurs may find bureaucracy and red tape less of an obstacle in offshore jurisdictions
  
• Assume anonymity - the names of owners and directors are not for public record, and references to the company may only be made in its registered agent
  
• Ensure legal protection - for instance, some jurisdictions favour corporate governance, meaning a company is only liable to offshore laws as opposed to those in its areas of operation
  
• Protect assets - business owners may opt to arrange their assets and transactions in such a way that protects them from liability
  

Characteristics of an offshore company:

• Memorandum and Articles of Association
  
• Certificate of Incorporation
  
• Registered Office/Agent
  
• Shareholders / Members
  
• Directors / Managers
  
• Company secretary
  
• Statutory Register
  
• Bookkeeping
  

Traditional locations for offshore incorporation are tax havens, such as the British Virgin Islands, Panama and Monaco. Other favoured areas include India, the Bahamas, Dubai, the Cayman Islands, Cyprus, Seychelles, Marshall islands, Delaware, Turks & Caicos Islands, Hong Kong, Jersey, Guernsey and the Isle of Man.

Click here to Ask an Expert about Company Formation in Finland