Proposed Changes In The Finnish Companies Act Likely To Affect Structuring Of M&A Transactions

A Ministry of Justice working group has proposed radical amendments to the regulation of Finnish limited liability companies. A complete revision of the Finnish Companies Act (expected to enter into force on 1 July 2006) is expected to give a further boost to the Finnish private equity industry. The new Act would allow much more flexibility for structuring investments into Finnish portfolio companies, for example, by enabling more flexible valuation adjustments and anti-dilution structures, by increasing possibilities to create new classes of shares and other equity instruments, by allowing more flexible distribution of funds, and by abolishing many of the rather detailed procedural rules.

The means proposed by the working group to achieve the above goals include, among other things, emphasis on the non-mandatory nature of the Act and the elimination of several formalities. In addition, many new options and alternatives will be introduced. Concurrently, the general principles of