partnership in the form of money, assets or work. General partners are personally liable for the obligations of the partnership, whereas limited (or silent) partners have no such personal liability. At least one of the partners in a general partnership or of general partners in a limited partnership must have a place of residence or, if the partner is a legal person, its registered office in the European Economic Area (EEA). Otherwise, a permit from the Finnish Patent and Registration Office must be applied for all partners that are not from the EEA. General and limited partnerships are similar forms of business and in principle, are set up the same way. A general partnership is ideal for a small business with a trusted partner and a limited partnership could be well suited for business activities based on personal work input combined with an investor. One advantage of a partnership form is that the income flows through to the partners and is not taxed at the partnership level, which makes the partnerships the most common form of Finnish closed-end funds (private equity and venture capital funds). A BRANCH OF A FOREIGN CORPORATION A foreign corporation or foundation may establish itself through a branch office that runs a continuous business or trade in Finland, from a permanent place of business located in Finland. The branch office is considered an extension of the foreign corporation, and it must operate in the same line of business as the foreign entity. The foreign entity is liable for all debts and other obligations as the branch office is not considered to be a separate legal entity as such but a part of the foreign entity. A branch office is rather easy to establish, and no separate management is required especially when the foreign entity comes from the EEA. The foreign entities outside of the EEA need a

license to establish a branch in Finland before registration, whereas foreign entities within the EEA may only register the branch without any separate licenses. CO-OPERATIVE A co-operative society is a separate legal entity from its members established through registration. A co-operative is an association which has one or more members. The members may be private individuals, undertakings or other associations. The main purpose of this type of business entity is typically to allow the members to use the services provided by the co-operative. The members are not personally liable for the obligations of the co-operative. The regulations regarding co-operatives are set out in the Co-operatives Act (421/2013). The co-operative is not usually a suitable form of business for a foreign business. STEPS AND TIMING TO ESTABLISH LIMITED LIABILITY COMPANY The registration of a limited liability company is quite easy, and notification may be in certain standard cases submitted online. When the limited liability company is being established, the founders register all shares of the company. At least one of the ordinary members of the board and one of the deputy members (calculated separately) must have permanent residence in the EEA area. If not, a license must be sought from the Finnish Patent and Registration Office for all board members from outside the EEA area. The founders of a limited liability company must sign and provide specific documents to the Trade Register to establish the company along with the Trade Register notification. These include data forms, memorandum of association and articles of association. Memorandum of association shall include, among others, the initial share subscriptions

ILN Corporate Group – Establishing a Business Entity Series

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