Practical approach to mergers and acquisitions in Finland Seppo Toivainen Helsingin Liikejuridiikka Oy

2 Helsingin Liikejuridiikka Oy Assists russian companies to operate in Finland and EU Russian and Finnish personnel, understanding of both cultures Finnish legal environment, business culture, M&A, finance and administration Even though Russia and Finland are neighbours, the differencies in business culture are huge.

3 Buying a company from Finland MAIN RULE: Anybody can establish a company in Finland (Oy, ”LLC”, ”Ltd”) Anybody can buy, sell and own shares of a Finnish company Anybody=anybody from anywhere

4 Buying a company from Finland Everything is possible… however, with two exceptions: 1. Act on Protecting Competition on the Market (948/2011) Protects free competition against price fixing, market dominance and monopolies Acquisitions are seldom denied, they are re-negotiated (=re- structured). Maybe 1-2 cases per year.

5 Buying a company from Finland 2. Act on Monitoring Foreign Corporate Acquisitions (1612/1992) Protects important national interests, practically: the defence sector Strategic acquisitions have to be confirmed by the Council of State The law will be updated during this year (EU harmonized) Acquisitions denied during the last 10 years: 0 (none)

6 Buying a company from Finland In practise the Finnish legislation is not an obstacle for foreigners’ corporate acquisition So, we can focus our efforts on real-life challenges. There are many of those, because…

7 Challenges ”Over 60% of corporate acquisitions fail” Why? Unrealistic expectations Inadequate background information Weak agreements Insufficient planning Unsuccessful take-over phase

8 A short acquisition check-list Search possible candidates for acquisition (first contacts, in Finnish!) Non-disclosure-agreement (NDA), Letter-of-intent (LOI) Financial analysis and calculations (local financial specialist) Agreement negotiations, special T & C, milestones (recommended) Plan your ownership structure (many possible variants) Tax consequences (depends on the form of acquisition) Price estimates based on calculations Due Diligence Contacts to banks and financial institutions (sometimes a deal breaker!) Contacts to key employees, personnel issues, EU regulations A shareholders’ agreement (a must!) Payments always via bank transfer (”money laundering” regulations) Plan the take-over phase carefully (respect local culture)

9 Acquisition, please remember: Take your time, do not rush Choose a local advisor to quide you through the process Do your ”homework” well, calculations, scenarios Due Diligence – to avoid unpleasant surprises Be careful with the agreement, special terms and conditions Plan the take-over process well

10 Acquisition in Finland Finland is a stable and secure environment for a company Foreign ownership is not restricted Corporate taxes are among the lowest in OECD countries Corporate legislation is modern and very streamlined Добро пожаловать!

11 THANK YOU FOR YOUR ATTENTION! Helsingin Liikejuridiikka Oy Seppo Toivainen (по-русски)