AUTHORITY OF ACTORS

Owner’s responsibility for the company’s liabilities Business form PRIVATE ENTERPRENEUR Yksityisyritys Tnmi GENERAL PARTNERSHIP Avoin yhtiö LIMITED PARTNERSHIP Kommandiitti- yhtiö Ky LIMITED LIABILITY COMPANY Osakeyhtiö Oy, Oyj Owner Number of Owners Founding documents Owner’s responsibility for the company’s liabilities Acting on behalf of the company (Within the line of business) Profit sharing Entrepreneur Partner Personally liable and silent partner Shareholder 1 2 or more 1 + 1 or more 1 or more - Founding contract Founding contract Contract, Articles of Assoc. Owner liable with his entire personal property The partners are personally, jointly and separately responsible for the company’s liabilities Personally liable partner: as in partnership, silent partner: liability limited to his contribution Shareholders’ liability limited to their contribution Entrepreneur Each partner independently Personally liable partner: as in partnership Board of Directors All the proceeds of the enterprise belong to the entrepreneur 1) According to the contract 2) Interest to the partners’ contributions First silent partner’s share of profit, liable partner’s as in partnership Non-restricted equity capital can be distributed as dividends among the shareholders

1. PRIVATE ENTERPRENEUR Not a juristic person Owner the entrepreneur and his firm are not separate Owner One natural person Must have his habitual residence in the European Economic Area, unless exempted by the National Board of Patents and Registration of Finland (NBPR) Acts on behalf of the firm Is responsible for commitments made on behalf of his firm Liable with his entire personal property Bookkeeping is required No auditing required

2. GENERAL PARTNERSHIP Partners’ authority Each partner may represent the company within the company’s line of business Deviations: Partners’ agreement => effective if the third party knew => best to register Each partner has a veto right => effective toward a third party only if he knows about the veto

3. LIMITED LIABILITY COMPANY Board of Directors 1-5 members At least one of the members must have his habitual residence in the EEA Responsible for administration and organisation of company operations Represents the company The right to sign on behalf of the company can be extended by the Articles of Association Duly convened when 50% of members present

2. LIMITED LIABILITY COMPANY (cont.) Managing Director By virtue of the Articles of Association Responsible for day-to-day operations and administration Responsible for financial administration and accounting Represents the company in matters within his authority Appointed by Board of Directors Accountable to the Board of Directors

REPRESENTATION (1) A person appears on behalf of another person (juristic or natural) Representative Agent Merchandise THIRD PARTY PRINCIPAL Money

REPRESENTATION (2) Based on: Forms: Prescription of law Commission Direct representation Contract will be in the name of the principal Indirect representation Contract will be in the name of the representative

REPRESENTATION BASED ON COMMISSION Power of attorney/letter of authorization Notice to a third party Appointment of a procurator Authorisation on basis of one’s position Oral authorisation Power of attorney

REPRESENTATIVE (AGENT) 1. DIRECT REPRESENTATION In the name and on behalf of the principal Contracting parties are the principal and the third party > Contract is binding to the principal, not to the representative Goods Contract P.Principal T.Third REPRESENTATIVE (AGENT) PRINCIPAL THIRD PARTY Money

REPRESENTATIVE (AGENT) 2. INDIRECT REPRESENTATION In the name of the representative, on behalf of the principal Contracting parties are the representative and the third party Goods Contract A.Agent T.Third REPRESENTATIVE (AGENT) THIRD PARTY PRINCIPAL Money

I authorise Pekka Pykälän (160666-666Z) to sell CASE 1 Jussi lived abroad and wished to sell his piano which was in his Helsinki apartment. He authorised Pekka by the following letter of attorney: I authorise Pekka Pykälän (160666-666Z) to sell my white Hellas piano on behalf of me. Sydney, 14.4.2004 Jussi Jussila Pekka sold at a good price the piano and also the music books Jussi had left sitting on the piano. He sent the money to Jussi. How do you comment the case?

Agent’s competence: Always shows outwards => if exceeded, the principal will not be bound PRINCIPAL Agency agreement AGENT Contract P.Principal T.Third Letter of Attorney ”Piano” => COMPETENCE Goods THIRD PARTY ?

CASE 2 Jussi lived abroad and wished to sell his piano which was in his Helsinki apartment. He authorised Pekka by the following letter of attorney: I authorise Pekka Pykälän (160666-666Z) to sell my white Hellas piano on behalf of me. Sydney, 14.4.2004 Jussi Jussila Jussi told Pekka to try first to sell the piano at €1.000, and not to sell it under € 800. Since there were very few potential buyers, Pekka finally sold the piano at € 740 eurolla and sent the money to Jussi. Give your comments?

Letter or attorney: ”Piano” Agent’s authority: Based on the Agency agreement => Even if exceeded, the principal will be bound if the third party was in good faith PRINCIPAL Agency agreement ” € 800” => AUTHORITY AGENT € 60 Contract € 740 P.Principal T.Third Letter or attorney: ”Piano” Goods => COMPETENCE ? 740 THIRD PARTY

COMPETENCE AUTHORITY INSTRUCTIONS AUTHORISATION

4. ASSIGNMENT Consider the negotiating roles of the actors of your company focusing on their rights to represent the company and their potential need of authority Draw up a Power of Attorney for one of the actors for some legal act he or she will have to make during the contract process. This legal act can also be the signing of the final contract.