Legal Updates

Legal updates covering current topics.

Legal Updates / 29.03.2017

The Finnish Financial Supervisory Authority (FFSA) imposes penalties for breach of conduct rules by investment advisors

Following inspections conducted by the FFSA in 2015 and 2016, the FFSA issued on 6 March 2017 public warnings to and imposed penalty payments on four Finnish investment advisors. The inspections focused on the sale of investment fund products and structured financial instruments to non-professional clients over the age of 70. The public warnings were issued for negligence in relation to the obligations to obtain information from clients and to assess the suitability of the investment products prior to offering relevant investment advice The penalty payments, ranging from EUR 20,000 to EUR 1,000,000, were ordered first and foremost for omissions concerning documentation requirements in relation to the information obtained from clients and suitability assessments.

The inspections by the FFSA revealed multiple cases of non-compliance with statutory obligations. Violations were identified in relation to the obligation to obtain information on, among other things, the clients’ investment objectives, experience and knowledge, risk appetite and risk profile. One of the companies had failed to take adequate action to identify and prevent conflict of interest situations. In addition, there were shortcomings in the documentation of the information obtained and in the documentation of suitability assessments. The FFSA stressed that proper records enable an ex post verification of the course of events, which is necessary for the functioning and effectiveness of the FFSA’s supervision.

The decisions of the FFSA are a stark reminder of the detailed conduct of business rules and obligations that investment service providers must comply with. The decisions highlight the importance of well-designed and functioning internal processes to ensure compliance, proper training of relevant staff members and prudent adherence to the documentation and client assessment requirements. In providing investment advice, special attention must be given to the circumstances, risk profiles and expectations of individual clients. Investment advice must be guided by the interests of the client and extra precautions must be taken to avoid potential conflict of interests.

For further information, please contact

Tarja Wist
Founding Partner
Niko Markkanen

Legal Updates / 05.01.2017

Changes in the Finnish employment legislation

As part of the Finnish Government’s efforts to boost the competitiveness of Finnish companies and balance the public finance, several modifications to the Finnish employment legislation were introduced as of 1 January 2017. The modifications aim to increase flexibility on the Finnish labor market and curtail the increase of costs of the Finnish statutory pension system.

Employment Contracts Act

The maximum duration of a trial period is extended from four to six months. The trial period may be further extended if the employee is absent from work during the trial period due to sickness or family leave.

The employers are given the right to conclude a fixed term employment agreement with duration up to twelve months with a new employee if the employee has been continuously unemployed for the preceding twelve months.

The employer’s obligation to re-employ an employee whose employment has been terminated due to redundancy is limited from current nine months to four months for employees who have been employed by the employer for less than twelve years prior to the termination and to six months for other employees.

Employers who employ 30 or more employees in Finland are obliged to provide outplacement services to employees whose employments are terminated due to redundancy. The value of the outplacement services has to be approximately equal to the higher of the employee’s monthly salary or the average monthly salary of the employer’s all employees in Finland and the services have to be provided to the employees within two months after the expiry of the applicable notice periods.

Act on Co-operation within Undertakings

The Act’s scope of application is extended to cover branch offices of foreign entities in the same way as Finnish companies. Accordingly, a branch office of a foreign entity is obliged to observe the provisions of the Act if the branch office regularly employs 20 or more employees in Finland.

Employees Pensions Act

The statutory employment pension system is reformed and the statutory pension age increased. At the first stage the statutory pension age increases incrementally from 63 years and 3 months (for employees born in 1955) to 65 years (for employees born between 1962 and 1964). Beginning from 2030, when the employees born in 1965 start to reach the statutory pension age, the statutory pension age will be reviewed annually based on the expected life span.

For further information, please contact

Jouni Kautto
Specialist Partner
Legal Updates / 21.12.2016

The Finnish Financial Supervisory Authority (FFSA) implements the Guidelines issued by the European Securities and Markets Authority (ESMA) under the Market Abuse Regulation (EU) No 596/2014 (MAR)

The MAR Guidelines regarding legitimate interests of issuers to delay disclosure of inside information and situations in which the delay of disclosure is likely to mislead the public (ESMA/2016/1478), issued by ESMA on 20 October 2016, have been implemented in the FFSA Guidelines 6/2016 with effect from 20 December 2016 by way of a direct reference to ESMA’s Guidelines. In the same connection, the FFSA reminds issuers that the obligation to disclose inside information, unless legitimately delayed, arises under MAR earlier than under the domestic legislation previously applied, and stresses that the reasoning of any decision to delay disclosure must be well documented. Once the inside information is disclosed, the FFSA must be informed of the delay of its disclosure. The FFSA also calls for the update of the issuers’ disclosure policies to ensure that any  information is accurately classified when disclosed and that only inside information and other regulated information is disclosed as company announcements (fi. “pörssitiedote”). According to the FFSA, the classification of the disclosed information as a company announcement is sufficient to identify the information as inside information, as required by the Commission Implementing Regulation (EU) 2016/1055.

Also the MAR Guidelines (ESMA/2016/1477) regarding persons receiving market soundings has been implemented in the FFSA guidelines 10/2016 with effect from 10 January 2017. Market  sounding  comprises  the  communication  of  information,  prior  to  the  announcement  of  a  transaction,  in  order  to  gauge  the  interest  of  potential  investors  in  a  possible  transaction. The ESMA guidelines are addressed to persons receiving market soundings and detail the features which such persons are to take into account in order to assess whether the market sounding activity amounts to inside information, the steps to be taken by such persons and the records that such persons are to maintain.

Further information, please contact

Tarja Wist
Founding Partner
Ann-Marie Eklund


Legal Updates / 10.11.2016

Cartel damages actions in Finland suffer blow – more to follow

In its landmark judgments of 20 October, 2016 the Helsinki Court of Appeal (the “Court”) heavily reduced the damages awarded by the Helsinki District Court in the significant asphalt cartel damages cases. The Court awarded damages to the Finnish state and 39 municipalities in the total amount of some 34 million euros and rejected the major part of the damages claims against the companies involved in the asphalt cartel.

In many important legal questions of interpretation, the Court deviated from the rather claimant friendly approach taken by the Helsinki District Court.

For example, the District Court applied the EU law doctrine of economic succession to the damages claims based on the principle of effectiveness without any express ground for such application under national law. The Court took a completely different view and found that the EU law principle of effectiveness cannot be used to extend liability for damages to a party outside the sphere of responsibility for such damages. Hence, the principles applicable to the imposition of penalty payments cannot automatically be applied in the context of damages actions.

Moreover, as regards the limitation period based on the claimants’ awareness, the Court considered – in stark contrast to the District Court – that the limitation period started running already when the Finnish Competition and Consumer Authority made its proposal to the Market Court to impose fines on the cartelists. The Court, consequently, found that some of the claims were time-barred. The District Court had considered that the limitation period was triggered only by the final judgment of the Supreme Administrative Court confirming the existence of the cartel.

The judgments also include some other interesting interpretations, which are not in all aspects aligned with the EU Directive on Antitrust Damages (2014/104/EU). Some of the judgments have been appealed to the Supreme Court and are therefore not legally binding. The saga is, thus, not yet complete and the Supreme Court’s judgments may shed further light on, among other, the above controversial issues.

For further information, please contact

Matti Siiteri

Legal Updates / 25.10.2016

Proposal for bondholder trustee legislation gains overwhelming support from stakeholders

The proposal for the Finnish government bill on legislation governing bondholder trustees takes a step forward. The proposed legislation aims to increase legal certainty and promote the efficient functioning of the Finnish bond market by establishing a clear legal framework for the role of the bondholder trustee in Finnish debt issuances and, to an extent, the security agent in other collective financing arrangements. Earlier this year, the Ministry of Finance called for statements from 41 authorities and interest group representatives commenting the proposal.

Yesterday, the Ministry of Finance published a summary of the total 25 statements received, pursuant to which an overwhelming majority of the respondents – including the Bank of Finland, the Central Chamber of Commerce and the Finnish FSA – generally supported the proposal, with only one respondent being against the legislation on the grounds that it increases barriers to market and limits the freedom of contract. The published statements differed in the details, and it remains to be seen how they will shape the draft legislation.

Further information, please contact

Tarja Wist
Founding Partner
Maria Pajuniemi

Legal Updates / 07.10.2016

The Finnish Supreme Court rules on the Board of Directors’ liability for impairment of the environment (KKO 2016:58)

The Supreme Court of Finland has on 9 September 2016 ruled on the Board of Directors’ liability for impairment of the environment. By way of background, a Finnish limited liability company manufacturing potato flakes had caused contamination of the environment by releasing potato soil sludge (in Finnish: perunamultaliete) into the environment during the years 2004-2006. The question before the court was whether A and B, who were members of a three member Board of Directors of the company, had acted with intent or gross negligence and were, therefore, to be held liable for impairment of the environment.

According to the Supreme Court, A and B had duly taken care of obtaining an environmental permit for the company’s operations. However, they had not familiarized themselves with the content of the relevant permit. The company’s Managing Director had been responsible for the company’s daily operations and the compliance with relevant environmental regulations and orders. A and B claimed that the Managing Director had not informed them about the company’s relevant emission problems and, therefore, they had only become aware of the environmental impairment in 2008.

A and B had not provided the Managing Director with instructions or orders concerning the handling and supervision of environmental matters. Therefore, the Supreme Court concluded that A and B had approved that the handling and supervision of environmental matters belonged to the duties of the Managing Director. Furthermore, A and B emphasized their roles as external advisors and that their duties were linked to providing business law and financial consultation to the company. The Supreme Court concluded, however, that although the Managing Director was responsible for the daily operations of the company, this did not eliminate or diminish the duties and responsibilities of A and B as members of the Board of Directors. The Supreme Court held that the due organization of the company’s production, including the handling of waste in accordance with the environmental permit had been essential to the company’s field of operations. Consequently, it was the Board of Directors’ responsibility to see to that environmental matters and the supervision of the same was arranged appropriately. Since A and B had neglected to fulfill their duty to arrange and supervise the company’s environmental matters, the Supreme Court held A and B liable for impairment of the environment.

The Supreme Court held that A and B’s negligence was gross considering that they had not familiarized themselves with the content of the environmental permit and that they had deliberately neglected their duty to appropriately arrange and supervise the environmental matters of the company. The Supreme Court based the ruling on an assessment of how a diligent member of the Board of Directors should have acted in a similar situation.

For further information, please contact

Kim Ekqvist


Legal Updates / 14.09.2016

Changes to employment legislation aim to increase flexibility and lower the employment threshold

The Finnish Government is introducing changes to the Employment Contracts Act with the aim of boosting competitiveness, increase flexibility on the Finnish labor market and lower the employment threshold. The Government bill on the proposed changes is currently being considered by the Parliament and the changes are proposed to enter into force on 1 January 2017.

First, the maximum duration of a trial period will be extended from four to six months. The Government anticipates that these changes would lower the employment threshold and encourage companies to take the risk to hire new employees, as the company would more easily recover from a bad hiring. Further, if an employee is absent from the work during the trial period due to sickness or family leave for more than 30 calendar days, the duration of the trial period may be extended by 30 calendar days for each 30 calendar days’ period of absence. This change aims to ensure that the employer will always have a genuine opportunity to evaluate the employee’s performance during the trial period.

Second, the requirements for hiring an employee for a fixed term will be relaxed if the company hires a long-term unemployed. Generally an employment contract may not be concluded for a fixed term without a justifiable reason, but if the employee has been unemployed continuously for the preceding twelve months, the duration of the unemployment is automatically a justifiable reason to hire an employee for a fixed term of up to twelve months. The Government expects this change to improve the position of the long-term unemployed on the labor market and open up more opportunities for them to return to the workforce.

Third, the employer’s obligation to re-employ an employee whose employment was earlier terminated due to redundancy will be limited. Currently an employer is obliged to offer work to an employee if the employer needs a new employee for a similar position within nine months after the termination of the employee’s employment. Based on the Government bill, the duration of the re-employment obligation would be limited to four months if the employee was employed by the employer for less than twelve years prior to the termination and to six months if the employee was continuously employed for more than twelve years. The purpose of the change is to increase flexibility in the labor market and make it easier for the companies to adapt to changing market conditions.

The new provisions concerning the trial period and fixed term agreements become applicable if the employment commences after the changes have entered into force. The limitations to the employer’s obligation to re-employ dismissed employees become applicable only if the employee’s employment terminates after the changes have entered into force and the current nine months’ re-employment period would remain applicable in respect of employees whose employment would terminate before the changes enter into force. Further, the current re-employment period of nine months has been included in some collective agreements and in those sectors the legal state remains unchanged.

For further information, please contact

Jouni Kautto
Specialist Partner
Legal Updates / 08.08.2016

Suspected cartel on the Finnish bus market

The Finnish Competition and Consumer Authority (FCCA) has made a proposal to the Market Court to impose a EUR 38 million fine on seven bus companies, as well as the Finnish Bus and Coach Association and the bus terminal operator Oy Matkahuolto Ab. The FCCA also ordered Matkahuolto to cease anticompetitive conduct that shuts out bus companies form the market.

The matter relates to EU Regulation 1370/2007 on public passenger transport services pursuant to which bus services were opened up to competition in 2009. The FCCA alleges that the Bus and Coach Association, Matkahuolto and seven of the leading Finnish bus companies reached an agreement on a common strategy no later than in autumn 2008, which to some extent still continues. The objective of the strategy was to prevent, or at least delay, the opening up of the market and sustain the prevailing market conditions despite the regulatory amendment.

According to the FCCA, the intention of the parties to the alleged cartel was primarily to influence the new national legislation through lobbying. The lobbying activities are not subject to the fine. The FCCA alleges that the parties also agreed on restricting their internal competition and on excluding new bus companies from Matkahuolto’s ticketing system and parcel services.

The FCCA finds that the conduct qualifies as a serious breach of national and EU competition rules. The matter is currently pending with the Market Court.

For further information, please contact

Legal Updates / 13.07.2016

Working group evaluated different subsidy schemes for renewable energy

A working group, established by the Finnish Ministry of Employment and the Economy, has published a report according to which different subsidy schemes have been evaluated for the purpose of determining the most suitable model for fulfilling the targets set for a new subsidy scheme for renewable energy. The working group submitted the report to the Minister of Economic Affairs, Mr. Olli Rehn, on 13 May 2016.

The working group has evaluated certain subsidy schemes in relation to investment subsidy, production subsidy and certificates and has made some conclusions regarding the implementation of such schemes. The assignment also included e.g. the evaluation of a tender process as part of the subsidy scheme.

The relevant assignment was limited to the evaluation of schemes where the share of emission-free renewable energy can be increased in industrial scale combined heat and electricity production as well as in separate electricity production. Please find below in brief some of the conclusions made by the working group:

Investment subsidy scheme

In an investment subsidy scheme, power plant projects would be supported at the investment phase and the relevant subsidy would be directed towards the initial investment costs. According to the report, an investment subsidy scheme is particularly suited for e.g. demonstration projects and for the commercialisation of new energy technology.

Production subsidy scheme based on a tender process

In a production subsidy scheme, the subsidy amount is connected to the amount of electricity produced. In Finland, a production subsidy scheme is in practice only possible to finance with funds from the state budget. According to the report, a production subsidy scheme based on a tender process would be a cost efficient way of ensuring the increase of production capacity of renewable energy, which would also direct relevant investments into Finland. From a cost efficiency perspective, such scheme would also need to be technology-neutral. According to the report, a production subsidy scheme would be the most suitable alternative for project developers.

The production subsidy referred to above would, at the outset, require the approval of the European Commission in order to ensure that the scheme is in compliance with the EU regulation on state aid. The report further states that such subsidy scheme (incl. the level of subsidy) could be executed in several ways e.g. by means of a floating or fixed premium (or a combination of both) based on the market price for electricity and the emission allowance price.

Certificate scheme

A certificate scheme is financed by the electricity users (and not by the state) and all (new) power plants which produce electricity through renewable energy sources would become part of such scheme. Although such scheme would, at the outset, be technology-neutral, the report underlines the risk of the certificate scheme leading to over-subsidising as a consequence of the level of subsidy being, at the outset, same for each relevant project. Furthermore, the report states, inter alia, that such scheme would not necessarily increase the investments made into Finland. In addition, the execution of the said scheme would not be possible within a tight time frame.

To get further information on the report, please see link (only available in Finnish):

For further information, please contact

Kim Ekqvist
Legal Updates / 23.06.2016

Debt push-down schemes in the spotlight

The Finnish Supreme Administrative Court (SAC) rendered on 19 May 2016 two landmark rulings on the deductibility of interest expenses in so-called “debt push-down structures”. On the same day, the applications for leave of appeal in three similar cases were rejected by the SAC, where the arrangements had been viewed as tax avoidance by administrative courts.

In all cases, debt had been allocated to a permanent establishment (branch) in Finland of a foreign corporate entity. According to the rulings by the SAC, the deductibility of interest expenses can be denied in circumstances where the acquisition debt cannot be allocated to the branch or where the arrangements can be considered artificial aimed at not having to pay tax. Although the reasoning of the SAC is not entirely clear, it appears that the SAC generally views that a branch does not normally perform the necessary significant people functions in order to enable the allocation of a shareholding to the branch. The use of branches for debt push-down structures will therefore become significantly more difficult.

Following the rulings, the Finnish Tax Administration published on 27 May 2016 a guidance, according to which the rulings could also have an impact on the debt push-down arrangements carried out through a Finnish holding company. Such structures could generally be challenged as being abusive under the general anti-avoidance rules. As the Finnish (and international) norm has been to allow interest expenses to be deducted for tax purposes, we now find ourselves in a landscape where this norm has come under a potential attack.

Based on the above, it will be increasingly important to demonstrate valid business reasons for the chosen structure and that the structure corresponds to its economic goals. Preferably, the holding company should also have sufficient substance (for example personnel) and reasonable functions. As the current legal position nevertheless is uncertain, investors should consider applying for an advance tax ruling prior to setting up a new acquisition structure.

In order to analyse the impact of the rulings on any existing debt push-down structures, please contact

Niklas Thibblin
Managing Partner
Matti Koivusalo