The new Finnish Limited Liability Companies Act and already registered ‘old’ limited companies

The new Limited Liability Companies Act (624/2006) enters into force on 1 September 2006 and repeals the old Limited Liability Companies Act (734/1978). As a rule, the entry into force of the new Act will not require companies to take any measures that need registration. To be able to use the new opportunities given in the Act, companies may, however, be required to alter their articles of association. When making such alterations, it is worthwhile to check whether the old or the new Act is applied to the decision that has to be reported to the Trade Register. The transitional provisions are given in the Act on the Implementation of the Limited Liability Companies Act (625/2006). Below is a description of the most important principles given in that Act in respect of the notifications to be filed with the Trade Register.

The new or the old Act?

If a decision to be notified to the Trade Register is made when the old Act is in force, i.e. before 1 September 2006, the old Act is usually applied to the decision and its registration. Some examples:

The limited company’s memorandum of association is signed on 5 July 2006 -> the old Act will be applied to the notification for example in respect of the minimum capital and the written consents required from the members of the board of directors, even if the notification is not filed with the Trade Register until after the new Act enters into force.
A decision to increase the share capital is made on 30 August 2006 -> the old Act will be applied to the decision and to its notification to the Trade Register.

The provisions of the articles of association

If a provision included in the articles of association conflicts with the new Act, the new Act must be applied instead of that provision. If a company alters its articles of association in other respects, it also has to alter the provisions in the articles of association that contravene the new Act and report the provisions for registration. Provisions contravening the new Act have to be altered and reported to the Trade Register for registration on 1 September 2009 at the latest.

The Act on the Implementation of the Limited Liability Companies Act also lists the provisions in the articles of association that do not have to be altered. The most essential of them is:

The share capital and the nominal value can still be given in Finnish marks in the articles of association if the company was established before 1 January 2002.

The new Limited Liability Companies Act gives companies new opportunities and includes more presumption provisions than before. To be able to make use of these new features, the companies may have to alter their articles of association.

Housing companies and mutual real estate limited companies

The old Limited Liability Companies Act will be applied to housing companies in so far as the Housing Companies Act refers to that Act: the old Limited Liability Companies Act will be applied for instance to the formation and merger of housing companies.

The old Limited Liability Companies Act will also be applied, according to the same principles as to housing companies, to such mutual real estate limited companies to which the Housing Companies Act is applied.

How to alter the articles of association in advance

Before the new Act enters into force, the general meeting can decide to alter the articles of association to bring them into line with the new Act. A notification on such alteration can be filed with the Trade Register before the new Act enters into force. However, the alteration cannot be registered until on 1 September 2006 at the earliest.

The new minimum capital requirement and old companies

Under the new Act, the minimum share capital for limited companies is 2,500 euros. Under the old Act, the minimum share capital was 8,000 euros for companies established on 1 September 1997 or thereafter.

If a company wishes to decrease its share capital to less than 8,000 euros once the new Act has entered into force, the decision on that fact has to be made according to the provisions given in the new Act concerning the decrease of the share capital.

The provision in the new Act on the minimum capital of 2,500 euros will not be applied to companies registered earlier, i.e. companies established before 1 September 1997, which have a share capital below 2,500 euros. Such companies cannot, however, decide to decrease their share capital, if it would be less than 2,500 euros after the decrease.

Trade Register’s instructions

New instructions based on the new Limited Liability Companies Act and concerning the notifications of limited companies will be available on the Trade Register’s web pages on 1 September 2006. Because of the new Act, we will also change the appendix forms 1, 13 and 16 used in Finnish and in Swedish by limited companies together with the Y forms.

The instructions according to the old Limited Liability Companies Act will for the most part still be available on our web pages after 1 September 2006. The instructions and forms based on the old Act are needed when decisions that have been made when the old Act was in force are notified to the Trade Register and when housing companies and certain other companies file their notifications with the Trade Register.

For further details, please contact the Trade Register’s Advisory Service on + 358 (0)9 6939 5900.