FINLAND Law and Practice Contributed by: Timo Lehtimäki, Niklas Thibblin, Essi Hietaoja and Oona Honkamaa, Waselius
secured facilities plus a reasonable buffer, most often 30%. The promissory notes are registered against the chargor company in the register of floating charges maintained by the Finnish Patent and Registration Office. After registration, the prom - issory notes are, legally speaking, pledged under a security agreement for the benefit of the pledg - ee and are delivered to the pledgee in original. There are only minor registration fees, and no stamp duties or similar are levied. Furthermore, a floating charge has certain draw - backs under Finnish law – namely as follows. • The chargor company retains the right to dispose of the assets covered by the floating charge in the ordinary course of business. • The floating charge will not crystallise until enforcement, where, in practice, only 50% of the net proceeds of the assets covered by the floating charge are used to satisfy the secured claims of the beneficiary of the float - ing charge with priority. The remaining 50% will be distributed to unsecured creditors (where the floating charge holder will stand pari passu and pro rata for the amount of its unsatisfied claim). • The floating charge may not cover all assets of the company, as the chargor company may have pledged some assets separately. 5.2 Floating Charges and/or Similar Security Interests Finnish law recognises and permits a floating charge over all present and future qualifying movable assets of a chargor company, as out - lined in 5.1 Assets and Forms of Security .
Finnish law does not recognise the concept of a fixed charge similar to English law (for example), nor are the US-style UCC filings available. Private credit providers lending into Finland have typically agreed to lighter security packages than traditional Finnish banks, which commonly insist on a very heavy security package. The approach taken by international private credit providers with regard to the scope of a typical security package is in line with the approach used for decades by international banks lend - ing into Finland. 5.3 Downstream, Upstream and Cross- The borrower, its parent companies, subsidiar - ies and group companies may provide collat - eral and guarantees for financing purposes (ie, the guarantees may be upstream, downstream and cross-stream). Finnish financial assistance rules, as well as the rules on the unlawful distri- bution of assets (both of which are related to the concept of corporate benefit), will, in practice, impose limits on which entities can effectively grant guarantees and security. Financial assis - tance rules are discussed in more detail in 5.4 Restrictions on the Target . Corporate Benefit All arrangements entered into by a Finnish lim - ited liability company must provide “adequate” corporate benefit for the relevant Finnish com - pany. This is something that cannot be math - ematically measured under Finnish law, and there is no universal definition for corporate benefit either. Therefore, the matter needs to be assessed on a case-by-case basis, taking into account the unique properties of each company, the then-current circumstances and the informa - tion available to the company/board of directors. Stream Guarantees Guarantees in General
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