Focus on Finland, Part 1: Investment Climate in Finland - Building Up Windmills Instead of Wind Shelters
Due to the limited size of the Finnish market, companies and entrepreneurs located in Finland have – from the very beginning – gone overseas to grow business. Also, the amount of capital available in Finland is limited and, especially in the areas requiring large investments like the mining industry, foreign investors are appreciated.
Investments made from Finland to other countries used to be regulated but several amendments of legislation during the 1980’s and in the beginning of the 1990’s have changed the environment. As of October 1, 1991, movement of capital to and from Finland have not been restricted. Restrictions regarding foreign ownership of Finnish securities have also been dissolved and from the beginning of 1993 there has been no restriction. Certain acquisitions of large Finnish companies may require follow-up clearance from the Ministry of Employment and the Economy in accordance with the Act on Control of Foreign Acquisitions of Finnish Companies. The purpose of the clearance is to protect essential national interests. However, except for those relating to money laundering, there are practically no legal obstacles to direct foreign investments in Finnish securities or exchange control regarding payments into and out of Finland.
The state owns portions of several Finnish companies, some publicly-listed, which are considered to be critical for the society or from the point of maintenance surety. The state, however, has no majority ownership in these publicly-listed companies and the government does not interfere to the day-to-day business in order to avoid reducing attractiveness in the eyes of other investors. Debate regarding areas where the state should keep its ownership is ongoing and every now and then the foreign ownership raises discussion. For example, the sale of the Finnish company responsible for national transmission and broadcasting networks, as well as for the radio and television stations, to the French company have raised some criticism. At the end of 2009, it was reported that the government has planned to acquire the ownership to the said networks to Finnish owners. Lately, there has also been some political activities regarding more efficient supervision of non-Finnish ownership in order to prevent takeovers on the areas and of the companies that are considered to be essential from the national and welfare perspective. The previous Minister of Labor of Finland sent a working group of officials to examine the above mentioned supervision but no proposal or conclusion of the working group has yet been reported.
For the purposes of promoting direct investments to and from Finland, two organizations have been established. Invest in Finland, a government agency promoting foreign investments into Finland and Finpro, an association founded by Finnish companies, aims to assist Finnish companies in their business activities outside Finland. So far, the net amount of capital flow has been negative for Finland, i.e., more investments and related capital transfers have been made from Finland than to Finland.
A special thanks to Ville Heikkinen, Sullivan & Worcester’s Finnish intern, for his assistance in preparing this post.
