A Year In Review – Developments In Corporate Legislation And How They Affect M&A Activity

Originally published in IFLR the 2007 Guide to Mergers & Acquisitions

During 2006 there have been a few quite large transactions involving Finnish parties, but much of the M&A activity has taken place on the mid-sized market. Last year was also exceptional in that sense that there have been changes within the legal framework, which substantially effects the M&A market.

One of the most essential laws for the business activities including M&A activity is of course the legislation concerning limited liability companies. As of September 1, 2006 there is a new Companies Act in force in Finland. In general the new Act aims to provide more flexibility. On the other hand the new Act emphasizes general corporate law principles such as the equality of shareholders. Although the accentuation of the general principles is a welcomed development, this can also expose the Act to more interpretation, endangering the predictability of the new regulation.