FINLAND Law and Practice Contributed by: Timo Lehtimäki, Niklas Thibblin, Essi Hietaoja and Oona Honkamaa, Waselius
have been issued by the target company, the pledge is perfected by the pledgor delivering the share certificates to the possession of the pledgee, endorsed in blank. If no share certifi - cates have been issued, the pledge is perfected simply by notifying the target company of the pledge and instructing it to register the pledge in its shareholder register. Assuming non-dematerialised form, there are no registration fees, stamp duties or other costs involved in a pledge of shares (and in the case of dematerialised shares, only minor registration fees apply). Bank Accounts and Receivables A bank account pledge is created by entering into a security agreement and is perfected by a notice to the account bank, including instructions to block or remove the pledgor’s rights to with - draw or otherwise dispose of the funds held in the pledged bank account. The same principles apply to receivables. Accordingly, a pledge over receivables (whether account/trade receivables or intra-group receivables) is created by enter - ing into a security agreement and is perfected with a notice to the underlying debtor. In order to duly perfect the pledge, the underlying debtor needs to be notified of the pledge and instructed to make payments directly to the pledgee from day one (and not, for example, only upon a later trigger event). A contrary interpretation can also be argued, though the traditional view taken in Finnish legal doctrine is strict on this. Accordingly, owing to commercial reasons, it is rare that pledges over bank accounts or receiva - bles would be fully perfected under Finnish law outside receivables-based financing structures. Instead, final perfection measures are typically taken only upon the occurrence of an event of default or similar trigger event. Such delayed
perfection may, however, entail that the pledge will be subject to a hardening period and claw- back. Partially for this reason, it is common that floating charges are provided to give additional comfort and protection for the lenders. No registration fees, stamp duties or other costs are involved in a pledge of bank accounts or receivables. Floating Charge A floating charge (also known as a business or enterprise mortgage) will, by operation of law, cover all the chargor company’s movable assets in so far as any specific assets have not been separately pledged. Assets capable of being subject to a mortgage (generally land and build - ings thereon, certain vehicles, aircraft and ves - sels) are always outside the scope of the float - ing charge. Consequently, a floating charge will typically cover inventories (finished and semi- finished goods), raw materials, tools and equip - ment, as well as receivables and bank accounts, to the extent they are not specifically pledged. A floating charge is created by the chargor company issuing one or more so-called float - ing charge promissory notes of a notional prin - cipal amount agreed with the secured lender. This establishes the maximum amount that can effectively be secured by the floating charge, but does not need to reflect the actual value of the assets or even the amount of debt secured by the floating charge. Consequently, it is common for the principal amount to considerably exceed the actual asset value of the relevant chargor company; the principal amount is therefore no indication – in insolvency proceedings or other - wise – of the actual recovery available for claims secured by the relevant floating charge. By mar - ket practice, the principal amount of the prom - issory note is the total commitments under the
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