Finland: Changes in Finnish Corporate Law
There are two upcoming changes in the Finnish corporate law, first of which is related to the implementation of the EU Directive on restructuring and insolvency (2019/1023) and the second is national legislation on the organization of general meetings. The most important piece of Finnish corporate law is the Limited Liability Companies Act (LLC Act) and the aforementioned changes will be discussed mostly in terms of the LLC Act, but references to other applicable acts are made where necessary.
Restructuring and Insolvency
The most important change of the LLC Act is that the authority to begin restructuring proceedings will be transferred from the shareholders at general meeting to the board of directors of a company. The amended provisions also retain the possibility to transfer the decision to the general meeting if the board so decides.
The purpose of this amendment is to streamline the process of debt restructuring and it won’t transfer powers from the general meeting in relation to decisions affecting the rights of the shareholders, such as issue of shares. Other important provisions affecting companies are the possibility to apply a business for the so-called early restructuring, which can be started even before the debtor is insolvent; a mere threat of becoming insolvent is sufficient. The current debt restructuring at insolvency shall remain in law, termed regular restructuring.
Changes to corporate general meetings
Amendments to general meeting procedure are included in LLC Act, Housing Companies Act, Cooperatives Act and Associations Act. The new provisions make it possible to hold remote annual and other general meetings of the aforementioned legal entities, whereas until present a physical meeting was obliged to be arranged. In the so-called remote meeting under the amended law the shareholders will be able to use their full shareholder rights at the meeting and no physical presence in person by any shareholder is required. In order to hold a remote meeting, the Articles of Association or other entities’ incorporation documents must contain provisions to allow or dictate that meetings may be hold remotely.
In addition to full remote meetings, also so-called hybrid meetings would be allowed in a separate provision. Hybrid meetings would allow some participants in person while others remotely. The general meeting would be able to decide to include amendments to the Articles of Association to utilize such a meeting structure by a simple majority decision. The board of directors would have the authority to call for a hybrid meeting unless the Articles or Rules of Association prescribe that hybrid meetings aren’t allowed.
To provide proper organization for the meetings a provision will also dictate that under certain circumstances, registration for remote participation could be binding. This would allow meeting premises to be accommodated to the right number of in-person participants.