Amendments to Finnish Trade Register legislation are being prepared
The Ministry of Economic Affairs and Employment, in cooperation with the Ministry of Justice and the Finnish Patent and Registration Office (PRH), has assessed the need to amend the legislation on the Finnish Trade Register.
The current legislation has led to situations where reinstating companies, that have been removed from the Finnish Trade Register following a failure to provide statutory information, has not been possible, even though the company’s failure to provide information was unintentional.
“We will prepare the legislative amendment soon. The PRH will also suspend the removal of companies from the Finnish Trade Register for the time being. The starting point of the amendment is that companies that have been deregistered due to a human error or an unintentional mistake will be given the opportunity to re-register by submitting an application to the PRH,” says Minister of Employment Arto Satonen.
PRH suspends deregistration of companies until further notice
Based on the assessment, the Ministry of Economic Affairs and Employment has started legislative drafting to allow companies that have been removed from the register due to negligence to be reinstated upon application. During the legislative drafting, the Ministry will also evaluate the conditions for terminating the liquidation of a company ordered into liquidation upon application.
The premise of the law drafting is to enable a company that has been removed from the Finnish Trade Register due to thoughtlessness to be reinstated in the register. A company removed from the register for the second time on the basis of neglect would not have the right to re-register.
More detailed conditions for approving the application will be included in the draft proposal that will be sent out for comments later. The Ministry plans to start the consultation round as soon as possible, at the latest in the first half of October. The Act would apply to companies that the PRH has removed from the register since the beginning of 2023. The PRH has announced that it will suspend the deregistration of companies for the duration of legislative drafting.
A negligence fee for failure to register to the Finnish Trade Register and a late fee for filing financial statements, which will be introduced during 2025, are expected to increase companies’ motivation to remedy the negligence. In addition to the penalty payments, the PRH will continue to have the option of ordering a company into liquidation or deregistering it.
Why is it important to keep the Finnish Trade Register up to date?
The purpose of the Finnish Trade Register is to register current and reliable information on companies and their responsible persons and to make the information available to everyone. This is important in order to promote business-related interaction and to ensure the transparency of business activities.
Companies are required to submit changes to the register data and financial statements to the Finnish Trade Register without a separate request. This also applies to the company’s contact information so that communications between the registration authority, i.e. the PRH, and other users of register data reach their intended destination.
In legislation, certain information has been considered particularly significant and failure to provide this information gives the PRH the last-resort option of ordering certain company types, most importantly limited liability companies, to be liquidated or deregistered. Prior to this, the PRH will have urged the company to correct the deficient data at least twice, in practice more often. Such data include financial statements and data on beneficial owners.
Negligence leads to removal from the Finnish Trade Register
In spite of being urged to do so, some companies do not remedy the neglect. If a company does not react to the request to correct the deficient data, the company will be removed from the Finnish Trade Register. In exceptional situations, the registration authority may also order the company into liquidation. The majority of companies do not react to deregistration in any way, because they do not have any business activities. However, it has turned out that some of the deregistered companies have had business activities that, in practice, cannot be continued after the removal from the registry.
Upon request, the PRH has reinstated deregistered companies until the end of 2022 if the company has remedied the negligence on which the deregistration was based. Companies deregistered from the beginning of 2023 have been reinstated only if the deregistration was due to an error by the registration authority or another material error referred to in the Administrative Procedure Act.
The Helsinki Administrative Court decided on the first appeals concerning the deregistration of companies from the Finnish Trade Register in summer 2024. In these decisions, the decision of the registration authority was considered lawful. The Helsinki Administrative Court has already previously issued decisions in which it stated that the Act does not contain specific provisions on reinstating a deregistered company.
In this situation, the only way to continue the business with the same assets is to liquidate and dissolve the company and to establish a new one. This may lead to tax consequences, termination of agreements and employment relationships and even to termination of business activities, for example.
Inquiries:
Jyri Oksanen, Senior Specialist, Ministry of Economic Affairs and Employment, tel. +358 295 047 123
Marko Peltonen, Head of Unit, Finnish Patent and Registration Office, tel. +358 295 095 752