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[ESTABLISHING A BUSINESS ENTITY IN FINLAND]
have an equal status and are personally liable for the debts and other obligations of the partnership. The partners have a personal right and an obligation to decide on the matters of the business. The right is limited however; the field of business is agreed upon in the partnership agreement and a decision regarding activities not in the scope of the business field must be agreed unanimously by the partners. The purpose of a general partnership is to work towards a joint financial aim, and this requires a high level of loyalty. As mentioned above the capital of the business consists of the contributions of the partners. The contributions may differ in the amount or quality but both partners are entitled to use the assets of the partnership freely. The use of capital assets of the general partnership can be handled in the bookkeeping as distribution of profits, return of equity, private withdrawal or as a loan. The liability of general partners towards a third party is unlimited. The partners may agree upon a certain mutual arrangement regarding debts and obligations etc. However, a third party has the right to demand payment from any of the partners if the general partnership has not paid the debt, and the personal assets of a partner can be used to pay such debts. The partnership is personal, and it cannot be transferred without the unanimous consent of other partners. A limited partnership ( in Finnish; Kommandiittiyhtiö, KY ) is similar to the general partnership except that there are two types of partners, general (also called active) partners and silent partners. There must be at least one of
each type of partners in the limited partnership. The general partners have the same rights and obligations as in the general partnership described above; they are personally liable for the debts and obligations of the partnership. The liability of the silent partners is more limited, although the partners may agree otherwise in the partnership agreement; the liability of a silent partner may be limited to the amount of the contribution of the partner agreed upon in the partnership agreement. The silent partners receive an agreed interest on the earnings (no “direct” access to funds) and do not have the right or obligation to participate in the decision making. The general partners may contribute money, assets, or work in the limited partnership whereas the silent partner shall invest assets of monetary value in the business and the value is to be declared in the partnership agreement. The silent partner then earns profit for the assets contributed and acts in a role of outside investor and shall have the right to review the bookkeeping of the company. Note that there must be a continuity of operations and to establish a general partnership for a project, such as construction project, has not been
accepted in taxation. Financial reporting
Financial statements and consolidated financial statements must be prepared annually in accordance with the Finnish generally accepted accounting principles (GAAP). The financial statements must be submitted for publishing to the Trade Register if
ILN Corporate Group – Establishing a Business Entity Series
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