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Guide to Doing Business Finland Prepared by Lex Mundi member firm, Roschier, Attorneys Ltd. This guide is part of the Lex Mundi Guides to Doing Business series which provides general information about legal and business infrastructures in jurisdictions around the world. View the complete series at: www.lexmundi.com/GuidestoDoingBusiness. Lex Mundi is the world’s leading network of independent law firms with in-depth experience in 100+ countries. Through close collaboration, our member firms are able to offer their clients preferred access to more than 21,000 lawyers worldwide – a global resource of unmatched breadth and depth. Lex Mundi – the law firms that know your markets. www.lexmundi.com LEGAL FRAMEWORK FOR DOING BUSINESS IN FINLAND Roschier, Attorneys Ltd. Published: April 2012 2 INTRODUCTION This booklet, “Legal Framework for Doing Business in Finland”, has been prepared by Roschier, Attorneys Ltd. The purpose of the booklet is to provide an introduction to Finnish business law, the focus being on areas of law that may be of interest to business people and investors. The booklet should not be construed as legal advice or a legal opinion on any specific facts or circumstances. We have used reasonable efforts in collecting, preparing and providing the information in this booklet, but we do not warrant or guarantee the accuracy, completeness or adequacy of the information contained herein. The contents of this booklet are intended for general informational purposes only, and you are urged to consult a lawyer concerning your situation and any specific legal questions you may have. The information contained in this booklet is current as of April 2012, unless otherwise expressly indicated. We hope that you will find this booklet useful when considering investments or other business activities in Finland. We would be pleased to render legal services to you in connection with such activities. ROSCHIER, ATTORNEYS LTD. Helsinki, Finland April 2012 3 CONTENTS 1. ABBREVIATIONS & TERMS .................................................................................... 4 2. FACTS ABOUT FINLAND ......................................................................................... 6 3. INTRODUCTION TO THE FINNISH LEGAL SYSTEM ............................................. 8 4. BANKING AND FINANCIAL INSTITUTIONS, INSURANCE .................................. 10 5. COMPANY LAW ...................................................................................................... 16 6. COMPETITION AND MERGER CONTROL ............................................................ 24 7. CONTRACT LAW AND DAMAGES ........................................................................ 34 8. CORPORATE GOVERNANCE ................................................................................ 40 9. DISPUTE RESOLUTION AND ARBITRATION ....................................................... 45 10. INSOLVENCY AND CORPORATE REORGANIZATION........................................ 56 11. INTELLECTUAL PROPERTY ................................................................................. 60 12. LABOR LAW ........................................................................................................... 69 13. MERGERS AND ACQUISITIONS ........................................................................... 75 14. PROPERTY AND ENVIRONMENTAL LAW ........................................................... 82 15. SECURITIES MARKET ........................................................................................... 91 16. TAXATION ............................................................................................................. 100 17. COMMUNICATIONS LAW .................................................................................... 105 18. MARITIME AND TRANSPORTATION LAW ........................................................ 114 4 1. ABBREVIATIONS & TERMS ADR = Alternative dispute resolution Agency Act = the Act on Commercial Representatives and Salesmen (417/1992, as amended) AIF = Act on Investment Funds (48/1999, as amended) APIs = application programming interfaces EPGs = electronic programming guides CEDR = Centre for Dispute Resolution CFC = Controlled Foreign Corporation CMR Convention = the Convention on the Contract for the International Carriage of Goods by Road EC Merger Regulation = Council Regulation (EC) No. 139/2004 of 20 January 2004 on the Control of Concentrations Between Undertakings ECN = the European Competition Network Euroclear = Euroclear Finland Ltd FCA = the Finnish Competition Authority FFSA = the Finnish Financial Supervisory Authority FIFA = Act on Foreign Investment Firms (580/1996, as amended) HLR = home location register IFA = Act on Investment Firms (922/2007, as amended) IFRS = International Financial Reporting Standards IPPC = Council Directive on Integrated Pollution Prevention and Control (2008/1/EC) KIID = the Key Investor Information Document MiFID = Directive on Markets in Financial Instruments (2004/39/EC) Model Law = UNCITRAL Model Law on International Commercial Arbitration MREC = mutual real estate company MVNO = mobile virtual network operator New Control Act = the Act approved by the Finnish parliament on 28 February 2012 that has replaced the Old Control Act has but has not yet been ratified by the president OHIM = the Office for Harmonization in the Internal Market Old Control Act = the Act on Control of Foreign Acquisitions of Finnish Companies (1612/1992, as amended) OREC = ordinary real estate company PCT = the Patent Cooperation Treaty Radio Act = Radio Frequencies and Telecommunications Act (1015/2001, as amended) Shipping Terms = the Finnish Standard Shipping Terms SIEC = significant impediment of effective competition SMA = Securities Markets Act (495/1989, as amended) SMP = significant market power 5 SPA = a share purchase agreement Stock Exchange = NASDAQ OMX Helsinki Ltd TFEU = the Treaty on the Functioning of the European Union TRIPS = Agreement on Trade-Related Aspects of Intellectual Property Rights VAT = Value Added Tax VoIP = voice over IP VPNs = virtual private networks VR = Valtion Rautatiet Oy WIPO = the World Intellectual Property Organization 6 2. FACTS ABOUT FINLAND 2.1 Introduction Finland is the fifth largest country in Europe covering an area of more than 338,000 sq. km. Neighboring countries to Finland are Sweden, Norway, and Russia; and south of the Gulf of Finland, Estonia, Latvia and Lithuania. Midway between Finland and Sweden lie the Åland Islands that form an autonomous, de- militarized, Swedish-speaking province of Finland. With a population of 5.4 million, Finland is one of the most sparsely populated countries in Europe. Sixty- seven percent of the population lives in cities and other urban districts. The biggest city is Helsinki, the capital city, with a population of approximately 595,000. Helsinki, Espoo (252,000 inhabitants) and Vantaa (203,000 inhabitants) form the metropolitan area, which is home to over one sixth of the country’s total population. Other large cities are Tampere (215,000 inhabitants), Turku (179,000 inhabitants) and Oulu (144,000 inhabitants). The official languages are Finnish and Swedish. Finnish is spoken as a first language by 90 percent of the population and Swedish by 5 percent. In addition, Lapland has an indigenous language, Sami, which is the first language of about 1,800 people. Finnish and Sami are members of the small Finno-Ugric group of languages, which also includes Estonian and Hungarian. Finns have a good knowledge of foreign languages and English in particular is widely spoken. In Finland, mobile phone ownership is one of the highest in the world with more than 1.4 mobile phone connections per capita. In spring 2011 up to 85 percent of households had an internet connection. 2.2 History and Political System Finland is a parliamentary democracy with a republican constitution. Before gaining independence in 1917, Finland had been a Grand Duchy under Russia since 1809. Prior to that, Finland was a Province of the Kingdom of Sweden for seven hundred years. This common history is the basis of many similarities between Finnish and Swedish societies, which can be seen in the culture as well as in legal and political structures. Finland became a member of the European Economic Area on 1 January 1993 and a member of the European Union on 1 January 1995. Legislative power is exercised by the Parliament (FI: eduskunta). The Parliament consists of one chamber with 200 members who are elected through a direct and proportional vote every four years. In the 2011 parliamentary elections, the seats were divided among eight parties as follows: the National Coalition Party 44 seats, the Social Democratic Party 42 seats, the True Finns 39 seats, the Centre Party 35 seats, the Left Alliance 14 seats, the Green League 10 seats, the Swedish People’s Party 9 seats, the Christian Democrats 6 seats and Others (Province of Åland representative) 1 seat. The supreme governmental powers are shared between the President of the Republic and the government and its subordinate ministries. The president is elected for a six year term by direct popular vote. The incumbent president, Mr. Sauli Niinistö, was elected in 2012. The coalition government of Finland is headed by Prime Minister Mr. Jyrki Katainen, who represents the National Coalition Party. 2.3 Economy Finland has traditionally been a small open economy with a large export sector in relation to GNP. Industrialization has been rapid in Finland after having begun in earnest