A limited company is the most reliable and respected of the company forms because the entrepreneur's personal finances and the company's finances are separated from each other, and in it the entrepreneur pays themself a salary, which is earned income. Especially for growth, it is good to establish a limited company, because of its tax advantages and it also makes trading abroad easier. A limited company can be founded by one or more natural persons or legal entities, but when founding alone, it should be noted that according to the law, the board of directors needs at least one deputy member.
Establishing a limited company in plain language:
A limited company is established by submitting a start-up notification to YTJ. The start-up notification can be made either online or on a paper form.
The conditions for reporting online are:
- the share capital is zero euros
- the subscription price of the shares is zero euros
- the standard articles of association are sufficient for the company
If the conditions of the notification are not met, it can be done using a paper form, in which case the following information must be provided:
- The limited company's business name, industry, fiscal year, domicile and any subsidiary names and their industries.
- Names and personal IDs of shareholders, possible CEO, and board members.
- Names and IDs of potential auditors, procurators or persons entitled to represent.
After the start-up notification, the limited company is registered in the trade register of PRH. The processing of the establishment declaration made online costs 280€ and the paper form costs 380€. In the UKKO service, the notification of a limited company's establishment can be done online if the entrepreneur does not change the business form from a private trader to a limited company entrepreneur.
Reporting the beneficial owner's of the limited company after establishment:
Public limited companies are required to report information about individuals who own or exercise control over the company (commonly referred to as beneficial owners) to the Finnish Trade Register. Even if the information regarding the board of directors and other responsible individuals is up to date in the Trade Register and the ownership of shares or stakes has been declared in the founding notification, a separate beneficial owner notification is necessary.
Failure to report beneficial owner information and keep it up to date can pose difficulties for a company's operations. Business partners can check a company's Trade Register extract to see if the beneficial owner notification has been submitted.
For example, banks, accounting firms and law firms are obligated to verify their clients' beneficial owner information. They must report to the Finnish Patent and Registration Office (PRH) if there are deficiencies or inconsistencies in a company's information.
Starting from 2024, the PRH has the authority to order a company into liquidation or remove it from the Trade Register if the company fails to report beneficial owner information or correct inaccurate data, despite warnings. This notification process is done through the Business Information System (YTJ).
Other considerations when setting up a limited company:
- The founder of the limited company must not be bankrupt or insolvent, and at least one of the founders must be domiciled in the European Economic Area.
- If a limited company is founded for the purpose of licensed business operations, the permits must be obtained before starting operations.
- From 2019, the minimum requirement for a limited company's share capital was removed, and zero euros can be entered in the trade register if there is no share capital at all. Here, it should be noted that if there is share capital, the declaration of establishment of the sub-company cannot be made online, but only on paper.