FINLAND Law and Practice Contributed by: Timo Lehtimäki, Niklas Thibblin, Essi Hietaoja and Oona Honkamaa, Waselius
2. Regulatory Environment 2.1 Licensing and Regulatory Approval Lenders may require a licence to provide loans to Finnish borrowers. Whether a foreign lender needs a licence depends first on whether they have actively solicited a Finnish borrower for the lending transac - tion. In cases where the foreign lender has actively solic - ited an entity in Finland for the lending transaction, it becomes necessary to analyse the position fur - ther. Generally, private credit funds do not need to be licensed to lend into Finland or to take the benefit of security over assets located in Finland. Reverse solicitation is also available. 2.2 Regulators of Private Credit Funds The Finnish Financial Supervisory Authority is the prin - cipal local regulatory authority supervising regulated entities within the financial sector. 2.3 Restrictions on Foreign Investments There are no restrictions on foreign investment in pri - vate credit funds in Finland (apart from customary know-your-customer (KYC), anti-money laundering (AML) and sanctions checks). 2.4 Compliance and Reporting Requirements No Finnish compliance or reporting requirements would apply, assuming the foreign lender would originate loans on a cross-border basis to entities in Finland in circumstances where no licence would be required. 2.5 Club Lending and Antitrust There are no significant concerns regarding club lend - ing by private credit providers in Finland, nor is there any specific focus on these providers by local antitrust regulators at present. 3. Structuring and Documentation 3.1 Common Structures Private credit structures are typically fairly similar to structures used in traditional, senior-secured bank lending with full cross-collateralisation across the
relevant group. However, since private credit provid - ers do not generally provide revolving facilities, it is quite customary for a bank to provide a super-senior revolving facility to the borrower group. The super- senior status is most typically achieved contractually, not structurally. Delayed draw facilities are a feature offered by private credit providers, most commonly to borrowers planning bolt-on acquisitions. 3.2 Key Documentation Private credit transaction documents are typically sim - ilar to those used by banks, which are usually based on the Loan Market Association (LMA) standards but are often at least somewhat tailored to the Nordic market. If the loan is granted on a bilateral basis, the lender side will often propose their standard transac - tion documents. The documentation package usually includes the loan agreement, intercreditor or subor - dination agreement, security agreements and typical conditions precedent. Unitranche structures with “first out, last out” ele - ments and an agreement between lenders are used; however, they have not been very prevalent in recent years with the rise of unitranche facilities having a senior term loan with a super-senior revolving credit facility, where the priority and waterfall provisions are included in the intercreditor agreement, to which the borrower is also a party. In sponsor-backed financings, the sponsor often plays a key role in drafting the relevant finance documents and holds a good negotiation position. 3.3 Restrictions on Foreign Direct Lenders Foreign lenders may require a licence to be able to provide loans in Finland, as outlined in 2.1 Licensing and Regulatory Approval . Other than that, there are no restrictions on providing private credit or taking security. 3.4 Use of Proceeds and Acquisition Financings The borrower’s use of proceeds in acquisition financ - ing is limited, in particular by the Finnish rules on financial assistance. However, this typically has very little or no relevance for the use of the acquisition facil -
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