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[ESTABLISHING A BUSINESS ENTITY IN FINLAND]
chairperson must be named. The representation rights of directors and the managing director can be defined in the articles of association. An annual general meeting must be held, and other meetings must be held if needed. Decisions of unanimous shareholders and board of directors can be adopted without convening any physical meetings, provided the decisions are recorded in writing in the minutes, which makes the decision- making process quite flexible. Certain decisions, like share issuance or issuance of share options, a change of board members and managing director as well as change of representation rights must be registered to the Trade Register. Financial reporting Financial statements and consolidated financial statements must be prepared annually in accordance with the Finnish generally accepted accounting principles (GAAP) or, if the company is listed on the stock exchange, in accordance with the IFRS. The form and the scope of financial reporting depends on the size of the company; small companies are for instance exempt from the requirement to prepare financial statements in accordance with the Finnish GAAP and IFRS. The Financial Statements must be submitted for publishing to the Trade Register eight months after the end of the financial period at the latest. Minority shareholders’ rights and protection The minority shareholders are protected by an equal treatment principle in the
Companies Act. Shareholders that represent 10 % of all the shares in the company are further protected by certain minority protection provisions and may for example demand a special audit or election of an auditor, demand that an extraordinary general meeting is held to address a certain matter or demand that a minority dividend is distributed, or they may bring an action on behalf of the company. A minority shareholder can also require a squeeze- out (to redeem the shares of the minority shareholder at a fair price) on a shareholder holding at least 90 % of the shares. Minority shareholders may waive certain minority rights, which is typically done in a shareholders’ agreement. The liability of a shareholder is limited to the value of their shares, but a shareholder may be personally liable if he/she has caused damage to the company deliberately or by negligence by violating the Companies Act or the articles of association of the company. 3.2 Public Limited Liability Companies A public limited liability company form is typically used for larger companies or listed companies. Therefore, the Companies Act provides certain additional obligations to the public limited liability company concerning the corporate governance and reporting compared to a private limited liability company. 3.3 Partnerships A general partnership ( in Finnish; Avoin yhtiö, AY ) consists of at least two partners who jointly carry on business based upon the partnership agreement. In this business entity type the partners
ILN Corporate Group – Establishing a Business Entity Series
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