Corporate compliance is a critical aspect for businesses operating in Finland, especially for those structured as Limited Liability Companies (Osakeyhtiö, Oy). This guide provides a detailed overview of the compliance requirements, entity setup, legal liabilities, tax implications, and more, tailored specifically for Oy entities in Finland.
Introduction to Limited Liability Company (Osakeyhtiö, Oy)
An Osakeyhtiö (Oy) stands as a distinct legal entity managed by a board of directors, responsible for making significant business decisions and overseeing the company’s general affairs. This entity type is prevalent in Finland due to its structure, providing a separation between the owners’ personal assets and the company’s liabilities.
Key Characteristics:
- Entity Type: Limited Liability Company (Osakeyhtiö, Oy).
- Management: Board of directors and optionally, a managing director for day-to-day operations.
- Shareholders: Unlimited number, with no personal liability beyond their financial contribution.
- Taxation: Corporate level taxation at 20%, with dividends to shareholders also taxed.
Entity Setup Process
Initial Documentation and Registration:
- Charter Documents: Articles of association, agreement of incorporation, organizational board resolutions, stock certificates, and stock ledger.
- Registration: Mandatory incorporation with the Finnish Trade Register (Kaupparekisteri).
Corporate Governance:
- Board of Directors: Holds overall management responsibility.
- Share Types: Different classes of shares can be issued, e.g., with varying voting and dividend rights.
- Annual Requirements: Filing of an annual report with the Finnish Trade Register.
Compliance Essentials
Minimum Capital Requirement:
- Private Oy: EUR 0
- Public Oy (Oyj): EUR 80,000
Legal Liability:
Shareholders generally bear no liability for the company’s debts beyond their investment.
Tax Presence:
The company faces double taxation: corporate income tax and shareholder tax on dividends.
Incorporation and Maintenance
Incorporation Process:
- Agreement of incorporation signing, share capital payment (if applicable), and registration with the Trade Register.
Annual Maintenance:
- Mandatory annual shareholders’ meeting within 6 months after the fiscal year-end.
- Directors and officers must meet specific eligibility criteria, e.g., age and legal capacity.
Business Operations
Banking and Treasury:
- No stipulation for local bank account opening prior to incorporation. However, if share capital is paid in cash, a bank account is required.
Auditing Requirements:
- Applicable if certain financial thresholds are met, requiring at least one auditor, who must be an authorized public accountant within the EEA.
Share Transferability:
- Generally unrestricted but can be limited by the articles of association or shareholders’ agreement.
Expanding Beyond Basics
The Finnish corporate landscape offers a robust framework for businesses, especially Oy entities. While the process appears straightforward, navigating the intricate details of corporate compliance demands a comprehensive understanding and strategic planning. Whether it’s structuring your business, managing tax liabilities, or planning for expansion, staying informed and compliant is key to leveraging the advantages that the Finnish legal system offers to limited liability companies.
This guide aims to arm current and prospective business owners with the knowledge needed to ensure their ventures thrive within Finland’s regulatory environment, fostering growth and stability in the ever-evolving world of commerce.
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