October 10, 2016 | Jon Hautamäki
How to establish a foreign branch in Finland
On our quest to demystify certain basic legal procedures, we have often encountered new foreign clients that have requested from us a second price quote for certain basic corporate legal assignments. Said clients have prior to coming to us been to a bigger law firm, where they have gotten a price quote of thousands for very simple legal procedures. The establishing of a foreign branch can be classified as a simple legal procedure.
In this article we will in an easy-to-follow manner describe the essential steps if a foreign company wishes to establish a local presence in Finland through a foreign branch.
The Finnish Patent and Registration Office (PRH) define a branch of a foreign trader as ‘’a part of a foreign organization that runs a continuous business in Finland, from a permanent place of business located in this state, in the name and for the benefit of the foreign organization’’. Hence, opposite to a subsidiary company, the branch is a part of the foreign organization and thus not its own legal person per se.
The establishing process of a branch in Finland varies depending on whether the foreign trader comes from outside the European Economic Area (EEA) or within the EEA. The foreign traders from within the EEA are only required to register their branch in Finland whereas foreign traders from outside the EEA need a permit to establish a branch in Finland before registering it.
Establishing a branch in Finland from within the EEA
A foreign trader from within the EEA can conduct business in Finland through a branch once the branch has been duly registered to the Trade Register held by PRH.
The registration process is initiated by making a Start-Up Notification to PRH prior to the commencement of business operations. The Start-Up Notification shall include several details concerning the branch and the foreign trader. Such worth pointing out here are the trade name of the branch that must include the foreign trader’s business name with a supplement showing that a branch is concerned (e.g. Nordic Law Ltd., the Finnish Branch) and the field of business operations of the branch that has to be the same or only a little bit narrower than that of the foreign trader’s. The other details mostly concern the contact information of the branch and the foreign trader.
There are several enclosures required in the Start-Up Notification of which the evidence of the establishment of the branch, the appointment of a branch representative and the right to sign for the company can be verified by a copy of the Minutes of the Board Meeting of the foreign trader. Another enclosure worth mentioning in this context is the requirement to provide a copy in Finnish or Swedish (alternatively a legally valid translation) of the Memorandum of Association (MOA), the Articles of Association (AOA) and rules or other corresponding documents of the foreign trader. In addition, all documents in a foreign language shall be translated into Finnish or Swedish.
The handling fee of the registration is 380 euro.
Establishing a branch in Finland from outside the EEA
A foreign trader from outside the EEA who wishes to conduct business in Finland through a branch is required to apply for a permit from PRH before it can register its branch in Finland.
The branch must have a representative referred to in section 6(3) of the Act on the Right to Carry on a Trade. The representative has to reside either within the EEA or Finland depending on where the foreign company has been founded.
The Permit Application shall be in either Finnish or Swedish and it must include the following information:
i) The name and registered office of the applicant and the country in which the registered office is located.
ii) The permit applied for (the permit to establish a foreign branch).
iii) Why the permit should be granted.
iv) The postal address and other contact details of the applicant or his or her representative.
The Permit Application must be dated and signed. In addition, there are certain enclosures that must be included:
i) An extract from the register in which the foreign organisation is entered.
ii) A copy of the organisation’s AOA or rules.
Any foreign-language document accompanying the Permit Application must be translated into Finnish or Swedish.
The fee of the Permit Application is 120 euro even if the permit is not granted. Furthermore, it is good to notice that the foreign trader is also required to pay the registration fee of 380 euro.
PRH has generally granted a permit to establish a foreign branch in Finland if the foreign trader is duly registered in its home state outside the EEA. Hence, the permit process should not be anything to feel too nervous about.
You can find more detailed information of the Start-Up Notification and its enclosures, the Permit Application and its enclosures and the payment instructions in English from PRH’s website.
There are also various tax aspects that are essential when contemplating whether to establish a foreign branch in Finland, but that is a topic for another article.
Interested in doing business in Finland? If yes, do not hesitate to contact us at Nordic Law – we offer all-encompassing corporate legal services with a strong emphasis on professional competence.