Ministry of Economic Affairs and Employment screens foreign corporate acquisitions and acts as national contact point for the EU screening regulation
The purpose of the Act on the Screening of Foreign Corporate Acquisitions in Finland (172/2012) (here-after the Act) is to screen and, if key national interests so require, to restrict transfer of influence to foreigners and to foreign organisations and foundations.
A positive attitude to foreign investments is the guiding principle of the Act. However, the authorities can exercise control over the ownership of companies considered essential in terms of the security of supply and national security and, if necessary, restrict foreign ownership in such companies.
In practice, key national interests mainly refer to:
- military national defence
- functions vital to society (including safeguarding critical infrastructure and security of supply)
- national security and public order
Official matters concerning the screening and approval of corporate acquisitions are considered by the Ministry of Economic Affairs and Employment, which also requests statements from other authorities to the extent necessary. The screening of corporate acquisitions is supported by a National Authority Network, led by the Ministry, which screens foreign acquisitions and participates in the confirmation processes related to them. The Ministry must approve the corporate acquisition unless it could endanger a key national interest. In that case, the Ministry must refer the matter for consideration to the government plenary session.
The National Contact Point required by Regulation (EU) 2019/452 of the European Parliament and of the Council establishing a framework for the screening of foreign direct investments (hereafter EU Regulation) has been established to the Ministry of Economic Affairs and Employment. The role of the National Contact Point is to strengthen the communication and cooperation between the EU Member States and the European Commission. Other Member States and the Commission must be notified of cases in the process of confirmation under the Act starting on 11 October 2020. From 12 October 2020, applications and notifications submitted to the Ministry of Economic Affairs and Employment must be accompanied by a separate form prepared by the Ministry for these purposes.
When do corporate acquisitions require approval of the Ministry of Economic Affairs and Employment?
Under the Act, corporate acquisition refers to activities as a result of which:
- a foreign owner gains control of at least one tenth,
- at least one third,
- or at least one half of the aggregate number of votes conferred by all shares in the company, or a corresponding actual influence in a limited liability company or other monitored entity.
For a specific reason, the authority dealing with the matter (Ministry of Economic Affairs and Employment or the Government) may also require the buyer to file an application or a notification concerning a measure to increase the buyer’s influence that will be taken after the consideration and that will not result in the exceeding of these limits.
In accordance with section 4 of the Act, acquisitions in the defence and dual-use products sector (= defence industry) and in the security sector always require prior confirmation by the authority (application). In the non-military sector, Finnish companies considered critical for securing vital functions of society are subject to screening. As concerns these other corporate acquisitions that fall under the scope of application of section 5 of the Act, the foreign owner may also submit the acquisition for advance approval of the Ministry of Economic Affairs and Employment if the acquisition is in the phase immediately preceding the final implementation (notification). The Ministry may also, in the cases that fall under the scope of the Act, require that the matter be submitted to the Ministry for examination in the formal confirmation process.
As regards the defence materiel industry, monitoring covers all foreign owners. In other sectors, screening only applies to foreign owners residing or domiciled outside the EU or EFTA.
There are no formal requirements for the layout of the application and notification submitted to the Ministry of Economic Affairs and Employment. However, the Ministry has drawn up instructions for preparing the application/notification and these are set out in the appendix. The application and notification must also be accompanied by a form containing the information required by the EU Regulation.
The Decree of the Ministry of Economic Affairs and Employment on the Chargeable Performances of the Ministry of Economic Affairs and Employment (1182/2020) entered into force on 1 January 2021 and will remain in force until 31 March 2022. From 1 January 2021, a fee of EUR 5,000 will be charged for the processing of each application for confirming a foreign corporate acquisition.
Marjaana Aarnikka - marjaana.aarnikka(at)tem.fi
Lasse Puroma - lasse.puroma(at)tem.fi