Markets
Finland: a directed issue needs a weighty financial reason
Finland permits the instrument and gates it with a judgement rather than a formula. A convertible sits in the Companies Act as a special right entitling to shares, and a directed issue that deviates from pre-emption needs a weighty financial reason for the company, assessed with special attention to the relation between the subscription price and the fair price of the share.
Key takeaways
- No percentage anywhere. Finland sets no minimum price, no reference window and no maximum discount. The constraint is the painava taloudellinen syy test, and a qualitative test is harder to plan around than a number, not easier.
- Price against fair value is part of the test. The assessment of a suunnattu anti pays special attention to the relation between the subscription price and the fair price of the share. That is the limb an open-ended deep discount fails.
- The judgement is made at every drawdown. The test attaches to the issue, not to the authorisation behind it, so a facility asks the question again each time it is drawn.
- The prospectus is not the constraint. Nasdaq Helsinki is exempt below 30% fungible over 12 months; First North Finland is an MTF with no admission prospectus. Company law binds first.
What a Finnish board is actually being asked
Most markets in this directory answer the pricing question with an arithmetic rule: a floor, a cap, a reference window. Finland does not have one. Its Limited Liability Companies Act (osakeyhtiölaki 624/2006) starts from the shareholders' pre-emptive subscription right, merkintäetuoikeus, and allows an issue to deviate from it only where there is a weighty financial reason for the company. In assessing whether a directed issue is permissible, special attention is to be paid to the relation between the subscription price and the fair price of the share.
That is a good rule for shareholders and an awkward one for a facility. There is nothing to comply with in advance. The board forms a view, the issue happens, and the view is tested later, by a court, on a challenge brought by someone who did not get shares. A financing that would be routine under a stated 10% cap somewhere else has to be argued from first principles here, and the argument has to be as good on the twelfth drawdown as on the first.
Where a convertible sits in Finnish company law
Finland does not treat convertibles as a distinct instrument with its own chapter. They are issued as erityiset oikeudet, special rights entitling to shares, alongside option rights, and the Companies Act carries the share-issue rules through to them. The practical effect is that a convertible placed with a single investor is a directed issue in substance, and the weighty-financial-reason test reaches it. There is no separate, lighter regime for debt with an equity kicker.
The authorisation route is the same one used for shares: the general meeting authorises the board to resolve on an issue and on the issuance of special rights, and the authorisation can permit the issue to be directed. What the authorisation cannot do is pre-supply the reason. It confers power; it does not discharge judgement.
| Point | Finnish Companies Act | What the structure needs |
|---|---|---|
| The pricing rule | None. A qualitative test instead | A ceiling to design against |
| The gate | A weighty financial reason for the company | Authority settled once, at signing |
| Price against fair value | Expressly part of the assessment | A discount defensible on every draw |
| When it is tested | Afterwards, on a shareholder challenge | Certainty before funding |
| Prospectus | Exempt below 30% fungible; none on the MTF | Not the binding constraint here |
| Structural comparison only. Not an offer, a quote, or a rate card. | ||
The floor Finland may not have
Everywhere else in the Nordic region there is a hard number under the conversion price: quota value in Sweden, the underkurs prohibition in Denmark, pålydende in Norway. Finland abolished mandatory nominal value in the 2006 Act, and Finnish practice routinely books subscription proceeds to the reserve for invested unrestricted equity, sijoitetun vapaan oman pääoman rahasto or SVOP, rather than to share capital.
If that is right, Finland has no effective accountable-par floor at all, which would make it the only Nordic market where the conversion price can go arbitrarily low as a matter of company law. It would also mean the qualitative test is doing all the work. That reading could not be confirmed against the statute for this note, and it is too load-bearing to publish as settled. Treat it as the first question for Finnish counsel, not as a feature.
General information, not legal advice. The Finnish statutory text could not be opened for this note, so this page deliberately states the tests without chapter or section numbers and without a majority threshold. Whether subscription proceeds may be booked to the SVOP reserve so that no par floor applies is unresolved. Take advice from qualified Finnish counsel.
Admission, resale and the two venues
Shares issued on exercise of a special right are registered with Euroclear Finland and are fungible with the listed line. There is no Finnish holding period and no resale registration, so the investor's exit is an ordinary market sale once the shares are admitted. On Nasdaq Helsinki, a regulated market, admission of fungible securities is exempt below 30% of the number already admitted over 12 months, raised from 20% by Regulation (EU) 2024/2809. Nasdaq First North Growth Market Finland is an MTF and carries no admission prospectus obligation at all.
The closest analogue outside Finland is Norway, where an equivalent duty to justify unequal treatment lives in securities law rather than company law and is answered in market practice by a repair issue. On instruments, see equity facilities for listed issuers and convertible notes; a Finnish issuer with US holders should read Rule 144 and restricted securities. Send the standing authorisation and the funding need behind the raise.
Primary sources
- Finlex — osakeyhtiölaki 624/2006
- Finanssivalvonta (FIN-FSA)
- Prospectus Regulation, consolidated
- Directive (EU) 2017/1132
Financing a Finnish listed issuer: frequently asked questions
What is a weighty financial reason?
It is the Finnish gate on a directed issue: an issue may deviate from shareholders' pre-emptive rights only where there is a weighty financial reason for the company. It is not defined by a percentage. Speed, a funding need that a rights issue could not meet on the available timetable, and the entry of a strategic subscriber are the kinds of reason boards rely on. Convenience is not.
Does Finland cap the discount on a directed issue?
No. There is no statutory maximum discount and no minimum price expressed as a proportion of a preceding average. What the Companies Act does instead is direct that, in assessing the permissibility of a directed issue, special attention be paid to the relation between the subscription price and the fair price of the share. That is a standard rather than a ceiling, and it is applied after the fact.
Why does a facility face the test more than once?
Because the test attaches to the directed issue, not to the authorisation behind it. A board authorised to issue shares can be authorised to direct them, but each drawdown is a fresh issue and a fresh exercise of judgement. A structure defensible as an emergency measure in one quarter is harder to defend in the next, once the company has had time to convene a general meeting.
Is the prospectus a problem in Finland?
Rarely. Nasdaq Helsinki is a regulated market, so admission of securities fungible with an existing line is exempt below 30% of the number already admitted over 12 months, a threshold raised from 20% by Regulation (EU) 2024/2809. Nasdaq First North Growth Market Finland is a multilateral trading facility and carries no admission prospectus obligation. The company-law test is the constraint.
If this is about a live situation
Finland puts a board's judgement rather than a number between an issuer and a directed issue, and the question returns at every drawdown. If the funding need is documentable and the discount modest, the eligibility criteria are the faster read.