Isnare Free Articles
Authors Contents [Add OpenSearch]
Distribute your articles to more than 6,000+ sites and 40,000+ email group publisher subscribers for as low as $2 / article...
Index  Article Directory  Legal
Embed this Article  
Esa Wuorenpaa

Esa Wuorenpaa x 2 articles

Liked the article? Consider buying me a beer!
$

LEGAL ASPECTS IN BUSINESS ACQUISITIONS IN FINLAND

Finland as the acquisition target country

The process of acquiring a company is seen in many jurisdictions as something complicated and time-consuming. This does not apply to the Nordic countries let alone to Finland. We have a culture of transparency, openness and minimal form requirements. Our legal culture has minimized red tape which fact facilitates business dynamism. Mergers and acquisitions in Finland are generally regulated by the Finnish Companies Act along with special regulation on areas such as tax law, competition law, provisions on the rights of employees, etc.

The Finnish legal system is based on the Scandinavian and continental European tradition of written law. The Finnish contract law is based on the idea of freedom of contract. Although you do not necessarily need lengthy anglo-saxon type contracts in Finland you should still be very clear as contracts that do not contain clear terms may be disputed. A business person hardly wishes it to be left to the judges to decide what is enforceable. Courts interpreting the badly drafted contracts are constantly facing the difficulty of deciding the rights of parties who have expressed themselves incompletely. A number of rules is used in Finland to guide the court in the process of interpreting and determining an ambiguous expression. At the end of the day the court will have to consider a contractual provision as an expression of free will and at the same time our courts are likely to try to reconstruct the original intention of the parties in that specific contractual context.

Type of acquisition

One of the first decisions to be reached by the buyer and seller in an acquisition process is whether the purchase will go forward as a business acquisition (the assets of the business) or a share acquisition. Many buyers prefer a business acquisition as it often comes with the opportunity to pick and choose the assets that are acquired, and to avoid any hidden liabilities which may reveal themselves later on. The sellers of a company mostly prefer to get rid of any potential future liability offered by a share sale.

There are many factors influencing the choice between business acquisition and share acquisition, and the buyer and seller often have conflicting interests. Almost without exception the seller prefers a straight forward transfer of title due to tax and liability reasons. The buyer prefers a business purchase for the ability to choose assets, and for the tax advantages from the buyer's viewpoint. The Finnish fiscal system grants a good base cost of assets for tax purposes, and income tax relief in the form of capital allowances and depreciations on the price paid for certain assets e.g. plant and machinery. Labor issues need to be scrutinized carefully as employees enjoy certain rights in connection with a takeover, whether this occurs as an acquisition of assets, shares or otherwise. For instance, an acquirer of assets succeeds in the liabilities towards employees.

At the end of the day the bargaining power of the parties will determine how the transaction proceeds.

How to structure the deal

During the pre-contract period the parties often enter into a letter of intent setting out the main terms according to which the parties have agreed to proceed, and the seller may grant the buyer a period during which it has the exclusive right to negotiate the purchase. A confidentiality agreement is almost always entered into between the buyer and seller, obliging the buyer to keep confidential information about the business that may disclosed during the pre-contract stage of the transaction, and usually also obliging both seller and buyer to keep the fact of the proposed deal itself a secret.

Supported by the letter of intent and a possible exclusive bargaining right, the buyer will proceed to acquire as much information as possible about the target business.

The due diligence process inevitably leads into the drafting and negotiation of transaction document (purchase agreement). It is normally prepared by the buyer's attorneys and contains protection for the buyer in the form of representations and warranties - and indemnities that the seller agrees to give with respect to the object company.

Due diligence of a Finnish company

when going through the target business, the buyer is trying to protect itself by ensuring that the company is worth the contemplated purchase price, and by requesting representations and warranties from the seller in areas where there may be potential liabilities of both hidden or clearly visible nature. The buyer's accountants prepare a report covering the commercial activities of the business, its management structure and employees, profitability and taxation. The legal investigation will be customized due to the objectives and past of the target business, but it always covers the target company's most important contracts, financial arrangements, premises, and company law matters. A careful buyer pays special attention to the quality of assets he purchases and meticulously verifies if the change of ownership terminates or entitles to terminate any important agreements. An acquisition of assets usually means that only the rights and liabilities agreed upon between the parties are transferred. So it is very important to obtain consent from customers and suppliers.

Reps and Warranties - Liability issues

The buyers' due diligence investigations provide a certain amount of information and endeavor to ensure that that the target company is worth the purchase price. Yet, there is usually not time enough for a full investigation, and a buyer of shares takes the risk of hidden liabilities in buying the shares. The representations and warranties included in the acquisition agreement therefore provide a way of redress for the buyer if the company turns out to be worth less than the buyer expected. If a warranty proves to be false, the buyer is entitled to indemnities.

Warranties and indemnities are an essential post-contract exposure for the seller, a risk that may cost a lot of money. It is therefore logical for the seller to try to limit the extent of this possible liability. The seller should make complete disclosures during the due diligence as it will not be in breach of warranty in relation to matters which have been fully and fairly disclosed. The disclosure letter therefore qualifies the warranties. The seller will also negotiate time limits on its liability in the share purchase agreement itself. The seller can usually expect to be free from the worry of further liability after a period of 1-3 years for most matters. Tax and environment related warranties are, however, substantially longer.

Rate this article:
Visit my website http://www.salvelex.com/ for more information on Mergers and Acquisitions in Finland
Important NoticeDISCLAIMER: All information, content, and data in this article are sole opinions and/or findings of the individual user or organization that registered and submitted this article at Isnare.com without any fee. The article is strictly for educational or entertainment purposes only and should not be used in any way, implemented or applied without consultation from a professional. We at Isnare.com do not, in anyway, contribute or include our own findings, facts and opinions in any articles presented in this site. Publishing this article does not constitute Isnare.com's support or sponsorship for this article. Isnare.com is an article publishing service. Please read our Terms of Service for more information.

Most Recent Articles

Renovate Your Lawn Beautifully With Lawn Care and Maintenance Services

An Article by LAZICH LEO in Gardening

10 months ago

An unkempt and ugly lawn is not only an eyesore, it also creates a negative impact on your property. If you have let go of lawn care so much so that it is over run with weeds or shows bare patches, a lawn renovation is in order. Repairing your lawn may be a good idea if the about 25% of your lawn is in bad shape...

Custom Hanging Signs Sydney - Affordable Way of Promoting Your Business

An Article by Mike Layman in Marketing

10 months ago

Hanging Signs are not just an amazing and highly cost effective way of advertising your products and services; they are easier to setup in comparison to other advertisement signs – just hang them from a pair of hooks or whatever and you're done. Needless to add, this also makes them more economical than other outdoor or indoor advertisement material...

Armor Your Laptop in Style With Printable Laptop Sleeves

An Article by Rohit B in Finances

10 months ago

To help you with both of your purposes, let us discuss about such a service which will help you out here to create your own laptop sleeve. So as I told you in the above paragraph, which I would have started my personal service or something to help you out of this situation. But let me inform you what you must be thinking is just something hypothetical, but that’s not true...

Start School in Time by Using Automatic School Bell

An Article by Vivency Global in Education

10 months ago

School is first place where children learn discipline, good manners and punctuality. The automatic school bell solutions are really important and makes away from manual errors. Humans may ring the bell at in appropriate time but the machine cannot. The most of the school are digitalized with interactive boards, automatic bells, CCTV and many...

Applying For No Credit Check Mortgage Loan? – Expert Tips to Follow

An Article by Roy Robbins in Finances

10 months ago

Interestingly, the option of no credit check mortgage loan has been made available by some lenders. So, one does not need to undergo tedious process of credit assessment. However getting quick approval for an affordable mortgage no credit check loan is not easy. Some stringent approval criteria may apply...

70-345 Microsoft Exchange Server 2016 Study Books

An Article by Chung Crissler in Internet

10 months ago

Examunion offers you a comprehensive look at the best prospects available in 70-345 exam questions throughout the Industry. Not only will you be given theoretical, but also given 70-345 Microsoft Exchange Server 2016 study books which will give you even more practice than before. Try our Designing and Deploying Microsoft Exchange Server 2016 70-345 exam test today and succeed in your Designing and Deploying Microsoft Exchange Server 2016 70-345 exam...

Microsoft MCSE 70-339 Practice Exam SharePoint Server 2016 70-339 Questions Material

An Article by Chung Crissler in Education

10 months ago

Maybe on other web sites or books, you can also see the related training materials. But as long as you compare Examunion product with theirs, you will find that our product has a broader coverage of the certification exam's outline. You can free download part of Microsoft MCSE 70-339 exam books from Examunion website as a try to detect the quality of our products...

Gain Weight and Build Muscle

An Article by Arati Shah in Wellness, Fitness and Diet

10 months ago

Several individuals do not succeed in their passion to maintain a healthy diet due to the lack of knowledge of eating healthy at work. When at work, many find it difficult to stay committed to a diet plan due to several unavoidable reasons such as colleagues might request to eat with them, availability of lots of delicious food at workplace, etc...

XenApp and XenDesktop 7.6 LTSR 1Y0-202 Questions

An Article by Kruis Barry in Education

10 months ago

1Y0-202 is a challenging exam, with our XenApp and XenDesktop 7. 6 LTSR 1Y0-202 questions; you can feel safe with our question and answers that will help you in obtaining your successful completion of your 1Y0-202 exam. All of our practice exams including the 1Y0-202 exam will prepare you for success...

VSphere 6.5 Foundations Exam 2V0-602 Dumps

An Article by Kruis Barry in Education

10 months ago

Passcert vSphere 6. 5 Foundations 2V0-602 dumps 2V0-602 help you to save a lot of time and effort. You 2V0-602 also use the extra time and effort to earn more money. Passcert provide you the product with high quality and reliability. You 2V0-602 free download online part of Passcert providing vSphere 6...

Citrix Certification 1Y0-202 Exam Answers Passtcert

An Article by Nigel Reyez in Computers and Technology

10 months ago

Passtcert is a website which can help you save time and energy to rapidly and efficiently master the Citrix certification 1Y0-202 exam related knowledge. If you are interested in Passtcert, you can first free download part of Passtcert Citrix Certification 1Y0-202 exam answers on the Internet as a try...

Benefits to Your Wedding Provided by Limo Service in Pittsburgh, PA

An Article by Iris K. Allen in Marriage

10 months ago

Using professional transportation on your wedding day may seem like a given and a basic booking to make, but considering the effect that it can have, you’d serve your wedding day well to be selective with your booking. Find a worthwhile company and secure every wedding transportation need with a suitable Pittsburgh Limousine...

Mark the Family Wedding With a Denver Bus Rental

An Article by Lucille W. Hill in Travel

10 months ago

The obligatory family wedding comes with challenges, but it also offers opportunities. A Coach Bus Denver will make it possible for your extended family to reconnect, save some cash, and all attend the family wedding as part of a group. Take Note of Transportation NecessitiesComprehensive research into all elements of transportation should come before you make reservation from any of the Charter Bus Companies Denver...

Killtest 2017 Microsoft MCSA 70-764 Test Questions Microsoft 70-764 Practice Test

An Article by Delia Green in Education

10 months ago

70-764 Administering a SQL Database Infrastructure is among the many most respected exams so you can get good work opportunities. We can complete devoid of much frantic use the particular help regarding Microsoft MCSA 70-764 Test Questions Microsoft 70-764 Practice Test that are exclusively made for people who will need advice...

2V0-602 VSphere 6.5 Foundations VMware VCP6.5-DCV 2V0-602 Exam Test Prep

An Article by Morris Porreca in Education

10 months ago

About VMware 2V0-602 exam, you can find these questions from different web sites or books, but the key is logical and connected. Our questions and answers will not only allow you effortlessly through the exam first time, but also can save your valuable time. Examgood can provide professional and high quality products...

MLA Style Citation:
Wuorenpaa, Esa "Legal Aspects in Business Acquisitions in Finland." Legal Aspects in Business Acquisitions in Finland. 13 Feb. 2013 Isnare.com. 18 Jun. 2018 <https://www.isnare.com/?aid=1816028&ca=Legal>.
APA Style Citation:
Wuorenpaa, Esa (2013, February 13). Legal Aspects in Business Acquisitions in Finland. Retrieved June 18, 2018, from https://www.isnare.com/?aid=1816028&ca=Legal
Chicago Style Citation:
Wuorenpaa, Esa "Legal Aspects in Business Acquisitions in Finland." Legal Aspects in Business Acquisitions in Finland Isnare.com. https://www.isnare.com/?aid=1816028&ca=Legal
Copy and paste the code below to embed this article:
<a class="embedly-card" href="https://www.isnare.com/?aid=1816028&ca=Legal">Legal Aspects in Business Acquisitions in Finland</a> <script>!function(a){var b="embedly-platform",c="script";if(!a.getElementById(b)){ var d=a.createElement(c);d.id=b,d.src=("https:"===document.location.protocol?"https":"http")+"://cdn.embedly.com/widgets/platform.js"; var e=document.getElementsByTagName(c)[0];e.parentNode.insertBefore(d,e)}}(document);</script>