Transparency of the Regulatory System
The Securities Market Act (SMA) contains regulations on corporate disclosure procedures and requirements, responsibility for flagging share ownership, insider regulations and offenses, the issuing and marketing of securities, and trading. The clearing of securities trades is subject to licensing and is supervised by the Financial Supervision Authority. The SMA is at: http://www.finlex.fi/fi/laki/kaannokset/2012/en20120746.pdf.
See the Financial Supervisory Authority’s overview of regulations for listed companies here: http://www.finanssivalvonta.fi/en/Listed_companies/Regulation/Pages/Default.aspx. Finland is not on www.businessfacilitation.org.
The Act on the Openness of Public Documents establishes the openness of all records in the possession of officials of the state, municipalities, registered religious communities, and corporations that perform legally mandated public duties, such as pension funds and public utilities. Exceptions can only be made by law or by an executive order for reasons such as national security. For more information see the Ministry of Justice’s page on Openness: http://oikeusministerio.fi/en/index/basicprovisions/legislation/actontheopennessofgovernmentactivities.html#06. The Act on the Openness of Government Activities can be found here: http://www.finlex.fi/en/laki/kaannokset/1999/en19990621.
Finland ranked third on The World Justice Project (WJP) Rule of Law Index (2016) regarding constraints on government powers, absence of corruption, open government, fundamental rights, order and security, regulatory enforcement, civil justice and criminal justice. For more, see: http://worldjusticeproject.org/rule-of-law-index and the World Bank rulemaking Finland report: http://rulemaking.worldbank.org/data/explorecountries/finland
International Regulatory Considerations
Finland respects common rules and expects other EU Member States to do the same. The Government seeks to constructively combine national and joint European interests in Finland’s EU policy, and seeks better and lighter regulation that incorporates flexibility for SMEs. The Government will not increase burdens detrimental to competitiveness in its national implementation of EU acts.
Finland, as a member of the WTO, is required under the Agreement on Technical Barriers to Trade (TBT Agreement) to report to the WTO all proposed technical regulations that could affect trade with other Member countries. In 2015, Finland submitted one notification of technical regulations and conformity assessment procedures to the WTO, and has submitted 75 notifications since 1995.
Legal System and Judicial Independence
Finland has a civil law system. European Community (EC) law is directly applicable in Finland and takes precedence over national legislation. The Market Court is a special court for rulings in commercial law, competition, and public procurement cases, and may issue injunctions and penalties against the illegal restriction of competition. It also governs mergers and acquisitions and may overturn public procurement decisions and require compensatory payments. The Court has jurisdiction over disputes regarding whether goods or services have been marketed unfairly. The Court also hears industrial and civil IPR cases.
A working group set up to reform the Competition Act concluded in March 2017 that the Act should be further amended with regard to inspections, sanctions and information exchange between authorities, among others. For more information see the Competition Act (No 948/2011) at: http://www.finlex.fi/fi/laki/kaannokset/2011/en20110948.pdf.
Laws and Regulations on Foreign Direct Investment
A non- European Economic Area (EEA) resident (persons or companies) operating in Finland must obtain a license or a notification when starting a business in a regulated industry. A comprehensive list of regulated industries can be found at: https://www.yrityssuomi.fi/en/luvat. See also the Ministry of Employment and the Economy’s Regulated Trade guidelines: https://tem.fi/en/regulation-of-business-operations. The autonomously governed Aland Islands, located midway between Finland and Sweden, are an exception. Property ownership and the right to conduct business are limited to those with the right of domicile in the Aland Islands. This does not prevent people from settling in, or trading with, the Aland Islands. Immigrants who have lived in Aland for five years and have adequate Swedish may apply for domicile and the Aland Government can grant exemptions.
The Competition Act allows the government to block mergers where the result would harm market competition. The Finnish Competition and Consumer Authority (FCCA) issued guidelines in 2011: http://www.kkv.fi/en/facts-and-advice/competition-affairs/merger-control/.
EnterpriseFinland/Yrityssuomi.fi is a free online service offering information and services for starting, growing and developing a company. Users may also ask for advice through the My Enterprise Finland website: https://www.yrityssuomi.fi/en/. Finnish legislation is available in the free online databank Finlex in Finnish, where some English translations can also be found: http://www.finlex.fi/en/laki/kaannokset/
Competition and Anti-Trust Laws
FCCA protects competition by intervening in restrictive practices, such as cartels and abuse of dominant position, and violations of the Competition Act and the Treaty on the Functioning of the European Union (TFEU). Investigations occur on the FCCA’s initiative and on the basis of complaints. Where necessary, the FCCA makes proposals to the Market Court regarding penalties. In international competition matters, the FCCA’s key stakeholders are the European Commission (DG Competition), the OECD Competition Committee, the Nordic competition authorities and the International Competition Network (ICN). FCCA rulings and decisions can be found in the archive in Finnish. More information at: http://www.kkv.fi/en/facts-and-advice/competition-affairs/
Expropriation and Compensation
Finnish law protects private property rights. Citizen property is protected by the Constitution which includes basic provisions for expropriation. Private property is only expropriated for public purposes (eminent domain), in a non-discriminatory manner, with reasonable compensation, and in accordance with established international law. Expropriation is usually based on a permit given by the government or on a confirmed plan and is performed by the District Survey Office. Compensation is awarded at full market price, but may exclude the rise in value due only to planning decisions.
Besides normal expropriation according to the Expropriation Act, a municipality or the State has the right to expropriate land for planning purposes. Expropriation is mainly limited to acquiring land for public purposes, such as street areas, parks and civic buildings. The method is rarely used: less than 1% of land acquired by the municipalities is expropriated. Credendo Group ranks Finland’s expropriation risk as low (1), on a scale from 1 to 7: https://www.credendo.com/country_risk/finland#
ICSID Convention and New York Convention
In 1969, Finland became a member state to the International Center for Settlement of Investment Disputes (ICSID Convention). Finland is a signatory to the convention of the Recognition and Enforcement of Foreign Arbitral Awards (1958 New York Convention).
Investor-State Dispute Settlement
The Finnish Arbitration Act (967/1992) is applied without distinction to both domestic and international arbitration. Sections 1 to 50 apply to arbitration in Finland and Sections 51 to 55 to arbitration agreements providing for arbitration abroad and the recognition and enforcement of foreign arbitral awards in Finland. The share of international arbitration cases in which at least one party was not Finnish increased from 27% in 2015 to 36% in 2016. Of 197 international parties in 2016, two were from the United States. There have been no reported investment disputes in Finland in recent years.
International Commercial Arbitration and Foreign Courts
Finland has a long tradition of institutional arbitration and its legal framework dates back to as early as 1928. Today, arbitration procedures are governed by the 1992 Arbitration Act (as amended), which largely mirrors the UNCITRAL Model Law on International Commercial Arbitration of 1985 (with amendments, as adopted in 2006). The UNCITRAL Model law has not yet, however, been implemented into Finnish Law. The Finland Chamber of Commerce is discussing amendments with the Ministry of Justice regarding the need to make the Act fully consistent with the Model Law.
Finland’s Act on Mediation in Civil Disputes and Certification of Settlements by Courts (394/2011) aims to facilitate alternative dispute resolution and promote amicable settlements by encouraging mediation, and applies to settlements concluded in other EU member states: http://www.finlex.fi/en/laki/kaannokset/2011/en20110394.pdf. In June 2016, the Finland Chamber of Commerce launched its Mediation Rules under which FAI, the Institute of the Finland Chamber of Commerce, will administer mediations: http://arbitration.fi/mediation/mediation_rules/.
Any dispute in a civil or commercial matter, international or domestic, which can be settled by agreement may be referred to arbitration. Arbitration is frequently used to settle commercial disputes and is usually faster than court proceedings. An arbitral award is final and binding. FAI promotes the settlement of disputes through arbitration, commonly using the “FAI Rules”: http://arbitration.fi/arbitration/rules/. In 2014, a Guide to the Finnish Arbitration FAI Rules was published: http://arbitration.fi/2015/01/15/guide-finnish-arbitration-rules-published/. The Institute appoints arbitrators both to domestic and international arbitration proceedings, and administers domestic and international arbitrations governed by its rules. It also appoints arbitrators in ad hoc cases when the arbitration agreement so provides, and acts as appointing authority under the UNCITRAL Arbitration Rules. The Finnish Arbitration Act (967/1992) states that foreign nationals can act as arbitrators. For more information see: http://arbitration.fi/arbitration/ and http://www.finlex.fi/fi/laki/kaannokset/1992/en19920967.pdf.
Finland signed the UN Convention on Transparency in Treaty-based Investor-State Arbitration (“Mauritius Convention”) on March 17, 2015. Under the new rules, all applicable documents and hearings associated with international investment disputes are open to the public, interested parties may deliver statements, and protections for confidential information have been strengthened.
The Bankruptcy Act includes provisions on the prerequisites for initiating bankruptcy, bankruptcy proceedings, claims in bankruptcy, administration and the management and sales of assets: http://www.finlex.fi/en/laki/kaannokset/2004/en20040120.pdf. Companies bankrupt elsewhere may file for bankruptcy in Finland if they have Finnish assets. Finland has consistently applied its commercial and bankruptcy laws, with secured interests in property recognized and enforced.
The Reorganization of Enterprises Act (1993/47), http://www.finlex.fi/fi/laki/kaannokset/1993/en19930047, establishes a legal framework for reorganization with the aim to provide an alternative to bankruptcy proceedings. The Act excludes credit and insurance institutions and certain other financial institutions. Recognition of restructuring or insolvency processes initiated outside of the EU requires an exequatur from a Finnish court.
The bankruptcy ombudsman, http://www.konkurssiasiamies.fi/en/index.html, supervises the administration of bankruptcy estates in Finland. The Act on the Supervision of the Administration of Bankruptcy Estates dictates related Finnish law: http://www.konkurssiasiamies.fi/material/attachments/konkurssiasiamies/konkurssiasiamiehentoimistonliitteet/6JZrLGPN1/Act_on_the_Supervision_of_the_Administration_of_Bankruptcy_Estates.pdf.
Finland can be considered creditor-friendly; enforcement of liabilities through bankruptcy proceedings as well as execution outside bankruptcy proceedings are both effective. Bankruptcy proceedings are creditor-driven, with no formal powers granted to the debtor and its shareholders. The rights of a secured creditor are also quite extensive. According to the 2017 World Bank’s Doing Business Report, Finland ranks first out of 190 for the ease of resolving insolvency: http://www.doingbusiness.org/data/exploreeconomies/finland#resolving-insolvency