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   Tax credit for major clean transition investments passed in Parliament – application period until 29 August 2025

   Companies must apply for this tax credit from Business Finland before commencing work on the investment project. This refers to the commencement of investment-related construction works or the first legally binding equipment order commitment or other such commitment that renders the investment irrevocable, whichever occurs earlier. However, land purchases and preparatory work, such as obtaining permits and carrying out preliminary feasibility studies, would not be considered as commencing work. The application period for the tax credit started on 24 March 2025 and it will end on 29 August 2025. Who can apply for the tax credit? The tax credit is granted upon application to companies that carry out a major investment of at least EUR 50 million aiming at a climate neutral economy in Finland. Eligible companies can deduct the investment costs directly from their corporate income tax. The tax credit will be deducted on the basis of a separate claim in euro made by the (eligible) company. What types of investments are credited? The tax credit may be granted if the investment concerns one of the following: • energy production from renewable sources, including the production of renewable hydrogen and fuels based on renewable hydrogen, but excluding electricity generation; • electricity or thermal storage and, under certain conditions, storage of renewable hydrogen, biofuels, bioliquids, biogas, biomethane or biomass fuels; • decarbonisation of industrial production processes and improvement of energy efficiency. In addition to those listed above, the tax credit may be granted for investments: • in sectors that are strategic for the transition to a climate-neutral economy, such as the production of relevant equipment for the transition to a climate neutral economy, and the production of related components, or the production or recovery of related raw materials. The plant or equipment on which the tax credit is based must be completed and operational within 36 months of the date on which the tax credit was granted. Failing this, the amount of the tax credit will be reduced by one (1) per cent for each month exceeding this period. The maximum amount of the tax credit is EUR 150 million per company The amount of the tax credit is 20 per cent of the costs eligible as the basis for the tax credit. The amount credited is deducted directly from the company’s corporate income tax before the tax is paid. However, the tax credit may be deducted up to a maximum of 10 per cent of the total amount of the credit per year or the amount of the company’s income tax for the tax year in question. The maximum amount of the tax credit is EUR 150 million per company. If the company belongs to a group, the maximum amount of the tax credit is calculated for each group. The maximum time limit for using the tax credit is 20 years The calculation of the time limit starts from the tax year beginning in calendar year 2028 or from the year of completion of the investment if the investment is completed after the tax year 2028. The tax credit can be used for the last time in a tax year starting in calendar year 2047. The tax credit is a very welcome incentive to help channel industrial investment and help build a green transition in Finland. However, we recommend that you take a closer look at the conditions and restrictions for claiming the tax credit before applying for it. Our experts in tax , energy and green transition , and capital markets will be happy to assist you with any questions or uncertainties regarding the tax credit.

   Published: 7.4.2025

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   The renewed Finnish Corporate Governance Code: Advancing greater diversity in boardrooms

   The updated code superseded the 2020 version and introduced some changes, particularly in promoting diversity and transparency of diversity principles within corporate boards. The code’s release is timely, aligning with the national implementation of the European Union’s directive on gender balance and the related amendments in the Finnish Companies Act, which entered into force on December 28, 2024. Besides the more substantial changes discussed below, the Corporate Governance Code 2025 also contains a couple of other minor updates. The applicability of the code is expanded to include companies listed on the Nasdaq First North Premier Growth Market, in addition to those on the main market of Nasdaq Helsinki. Furthermore, the presentation of the corporate governance statement as a stand-alone report is no longer recommended, and companies may therefore present the corporate governance statement as a separate section in the annual report. Latest Updates in a Nutshell The most significant change in the code is the updated recommendation on gender representation. The previous recommendation for both genders to be represented on boards is now replaced with a mandate for ‘balanced’ representation, to be achieved by June 30, 2026. The balance of representation is assessed in the same way as under the Finnish Companies Act, although the code applies its standard to all companies within its scope, not just those covered by the relevant provision of the Companies Act (i.e., stock exchange listed companies with an average number of employees of over 250, and a reported balance sheet of over 43 million euros or a reported turnover of over 50 million in the last financial year and the immediately preceding financial year). The code also enhances the reporting requirements. Companies must now include detailed descriptions of the implementation of the board’s diversity principles and data on the gender distribution in their corporate governance statements. Way Forward The changes necessitate an updated approach to planning board composition and governance reporting. If companies haven’t already begun evaluating their current board structures and diversity policies to ensure compliance by the 2026 deadline, they should do that now. This may involve revisiting recruitment and nomination processes to foster a more diverse board. Additionally, the enhanced reporting recommendations mean that companies must be prepared to provide detailed disclosures on diversity and gender representation. Looking ahead, further updates in the Corporate Governance Code are expected in the next couple of years, since the second phase of renewing the code has started. The second phase will focus, in particular, on incorporating sustainability considerations and recent sustainability regulation into the Code. Additionally, the functioning of the code’s recommendations on remuneration reporting will be assessed and updated where necessary.

   Published: 25.2.2025

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   The LMA’s new model provisions for green loans and green loan terms promote sustainable finance

   The new provisions aim to standardise documentation, enhance clarity, and uphold the integrity of green loan facilities across the market. The LMA has also released its green loan term sheet, which supplements the model provisions for green loans on 9 January 2025. These terms are designed to promote clarity and consistency in the structuring and negotiation of green loans and ensure alignment with established market standards. As the market for green loans continues to evolve, these standardised provisions and term sheet are poised to play a crucial role in facilitating the growth and integrity of sustainable finance. This is the first time the LMA has released GLP-aligned model provisions and term sheet, even though it has previously published model provisions and term sheet for sustainability-linked loans (see our previous blogs: term sheet for sustainability-linked loans  and model provisions for sustainability linked loans ). Although these provisions and term sheets differ in certain aspects, both serve a shared goal: to enhance consistency in drafting, simplify negotiations, and ensure the documentation complies with and accurately represents the guidelines that form the foundation of the respective product markets. In this blog we will take a look at the key features of the green loan provisions and term sheet model for green loans. Green loans are designed to finance or refinance projects with clear environmental benefits Green loans are designed to finance or refinance projects with clear environmental benefits. According to the GLP, updated in February 2023, a green loan's proceeds must be exclusively allocated to eligible green projects. The GLP outlines four core components: Use of proceeds: funds should be directed solely toward projects that offer environmental benefits. Process for project evaluation and selection: borrowers must clearly communicate the project's environmental objectives and the criteria for selecting eligible projects. Management of proceeds: borrowers should track the allocation of funds to ensure they are used as intended. Reporting: regular updates on the use of proceeds and the environmental impact of the financed projects are essential. Key features of the LMA's green loan provisions The LMA's green loan model provisions serve as a template for incorporating green loan clauses into standard facility agreements. They are designed to fit into the LMA’s investment grade facility agreement template, however they can also be adapted for other facility agreements. Notable aspects of these provisions include: Applicable facilities: The green loan model provisions assume that the green loans are term loans. The drafting will need to be adapted if the green loans are to be drawn under a revolving credit facility Eligibility and management of proceeds: The facility agreement must clearly define eligible green projects and specify criteria for any future projects financed by the loan. The borrowers are required to provide evidence demonstrating the tracking, monitoring, and evaluation of how the green loan funds are utilised. This ensures transparency in fund allocation and aligns with the GLP. Representations and undertakings: The borrowers must make specific representations, including confirming that all information provided is accurate and not misleading, and that the green projects meet the agreed eligibility criteria. Additionally, the borrowers are expected to maintain policies and procedures to evaluate and select potential eligible green projects and manage any associated environmental and social risks. Breach of green loan provisions: The new provisions specify that non-compliance with a green loan provision does not constitute an event of default. Instead, it results in a "Declassification Event". The term "Green Loan Provisions" encompasses all provisions related to the facility being classified as a green loan, excluding, however, the restrictions on the use of proceeds and publicity restrictions. By excluding these restrictions from the definition of "Green Loan Provisions," a breach of these terms remains categorised as an event of default. Reporting requirements: The provisions include the requirement to deliver a green loan report in the form agreed and scheduled to a facility agreement and detailing compliance with the core components of a green loan. Such report is more comprehensive than compliance certificates and serves to enhance the integrity of green loan facilities. Avoiding Greenwashing: In order to maintain market integrity, the borrowers are advised to consult with lenders before making any public disclosures that reference the loan as "green." This precaution helps prevent misleading claims about the environmental benefits of the financed projects. Highlights from the LMA’s green loan term sheet The LMA’s green loan term sheet expands on the provisions with detailed guidance for practical application: Eligible Green Projects: The term sheet emphasizes the need for a clear definition of eligible projects and criteria, ensuring alignment with environmental goals. Green Loan Information: The borrowers must provide accurate, comprehensive data about projects and their compliance with eligibility criteria. Management of proceeds: A transparent tracking mechanism for fund allocation and usage is critical. The term sheet suggests robust documentation to confirm the alignment of projects with green objectives. Green Loan Report: Annual reports are required, detailing, among others: - Setting out a description of each eligible green project and compliance with certain eligibility criteria. - Allocation of funds. - Environmental impacts of the financed projects. - Updates to project evaluation and risk management policies. Representations and undertakings: The obligors must confirm the accuracy of information provided, ensure compliance with eligibility criteria, and implement robust policies for evaluating green projects. Additionally, they are obligated to supply necessary reports, promptly notify agents of any non-compliance, and maintain adherence to the established criteria for green projects. These measures collectively ensure transparency, accountability, and alignment with the principles governing green loans. Declassification Event: Outlines conditions under which loans can lose their "green" classification, including non-compliance or misrepresentation. Publicity: Restrictions on disclosures about the loan’s green status post-declassification. Events of Default: Failure to comply with green loan provisions does not constitute an event of default. The LMA aims for wider adoption of green loans in the market by streamlining agreements The introduction of these model provisions and accompanying term sheet is expected to streamline the drafting and negotiation of green loan related clauses in the agreements, fostering greater consistency and efficiency in the market. They also highlight the critical need to avoid "greenwashing" by ensuring all claims about environmental benefits are substantiated. By providing a standardised approach, the LMA aims to reduce complexities and promote wider adoption of green loans. However, it's important to recognize that these provisions and term sheet are not one-size-fits-all but serve as a foundational framework that can be tailored to the specifics of each transaction. Customisation is essential to address the unique aspects of each transaction, including sector-specific considerations and the nature of the projects being financed. A pivotal step toward standardising and promoting sustainable finance practices The LMA's publication of model provisions and term sheet for green loans represents a pivotal step toward standardising and promoting sustainable finance practices. By aligning with the GLP, these provisions offer a robust framework for structuring green loans, enhancing transparency, and ensuring that funds are directed toward projects that contribute positively to environmental objectives. By embedding transparency, accountability, and consistency into green loans, these tools are well-positioned to support the growth of green lending practices. 

   Published: 20.1.2025

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   EU sanctions violations in Finland: navigating corporate criminal liability

   It is evident that violations of EU sanctions will continue to be brought before courts also in 2024, as Finnish Customs announced already in October 2023 that it had opened more than 660 preliminary investigations into violations of EU sanctions against Russia since the beginning of Russia’s war of aggression in Ukraine . Approximately 10% of these cases are being investigated as aggravated regulation offences. The expected judgments will provide further clarity on criminal liability associated with violations of EU sanctions. In this blog post, we will explore this criminal liability with a particular focus on preventing the associated risks through due care and diligence in companies’ operations. Regulation offence and its criminal sanctions The Finnish Criminal Code establishes criminal liability for violations of EU sanctions, classifying them as a regulation offence. A regulation offence carries a maximum penalty of four years of imprisonment, and an attempt to commit the offence is also subject to punishment. In practice, any act conflicting with EU sanctions regulations can constitute a regulation offence. Typical cases in Finland involve the transportation of goods subject to export or import restrictions across the border between Finland and Russia or attempts thereof. In Finnish case law, the violations of EU sanctions have often been relatively clear. However, more complex conduct that circumvents the sanctions, such as making payments on behalf of a sanctioned person or otherwise making funds or economic resources available for the benefit of sanctioned persons, may also constitute a regulation offence. Finnish case law places emphasis on the economic benefit sought by the offence in determining the seriousness of a regulation offence. The courts assess factors such as the value of the goods subject to the export or import restrictions. It is worth noting, however, that a regulation offence does not inherently require the pursuit of economic gain, rendering the illegal export or import of a product even with a low economic value punishable if EU sanctions are violated. Furthermore, in determining the seriousness of a regulation offence, consideration will also be given to the societal danger, such as the danger to economic activities, resulting from the crime, the level of premeditation involved and other relevant factors. For instance, specific premeditated actions, such as using two sets of transportation documents to circumvent EU sanctions, are recognised in legal practice. Companies may face criminal sanctions as well If a regulation offence has been committed in their operations, companies may also face corporate criminal liability. The applicable penalty is a corporate fine ranging from 850 to 850,000 euros. In practice, corporate criminal liability can be established in two ways. Firstly, if a member of the management is an accomplice to an offence or allows the offence to occur, corporate criminal liability can be attributed to the company. Secondly, corporate criminal liability can be based on a failure to exercise the due care and diligence necessary for preventing the offence in the company’s operations. The assessment of this includes factors such as: whether the company had up-to-date and adequate procedures and policies whether the responsibilities and tasks within the company were clearly defined whether the monitoring and reporting procedures corresponded to the scope and risks of the company’s operations whether the company’s operations were adequately resourced. Finally, it is essential to note that even if the prosecutor decides not to press charges against the company or if the court later dismisses the charges, the company still faces significant reputational risk due to public scrutiny during the preliminary investigation and, in particular, during a potential trial. Due care and diligence minimise risks Since Russia started the war in Ukraine in February 2022, the EU has imposed 12 packages of economic and individual sanctions against Russia. Although the pace of changes in EU sanctions regulations has slowed down, compliance with sanctions has become an increasingly important aspect of business for companies, especially those engaged in international trade. In the new business environment, company management must ensure that the company implements appropriate procedures and policies that take into account EU sanctions regulations. For instance, companies should screen their business partners for individual and company sanctions and be aware of export bans in sales and import bans in purchases. However, mechanical checks are not sufficient and do not replace a comprehensive overall assessment. In more complex cases, it is advisable to consider whether the contemplated transaction is ‘what it seems ’. Companies need to be vigilant to identify and prevent attempts to circumvent sanctions. The companies’ procedures and policies should be defined in relation to the specific business operations of each company. Risks can vary widely depending on factors such as the scope of business, target markets and products. While, from a Finnish perspective, the EU’s sanctions against Russia may currently be considered the most significant, risks relating to circumventing sanctions and sanctions imposed against other countries should also be assessed. The company’s personnel should be trained according to the requirements of their tasks in order to effectively implement the procedures and integrate the guidelines into daily operations. If there is a suspicion of a possible irregularity in the company’s operations, the company’s management must ensure that the matter is thoroughly investigated. Sufficient information about the events must be gathered to assess the necessary actions appropriately and consistently. It is advisable to carefully document the internal investigation so that the company can prove its due diligence also with respect to management liability. It is often good practice to engage external expertise during the internal investigation – an external advisor can support the investigation work and increase its efficiency and objectivity. At the same time, it is recommended to critically evaluate the effectiveness of internal procedures and guidelines. Procedures and policies should be clear, up-to-date and properly implemented in the company’s operations. The company should also prepare for a potential preliminary investigation. See also: Russian countersanctions restricting exit from the country: Is there room for investment treaty claims?

   Published: 6.2.2024

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   Solar and wind power projects affected by amendments to the Act on Expropriation Permits

   The purpose of the amendments is to supplement the implementation of Directive 2011/92/EU on the assessment of the effects of certain public and private projects on the environment (‘EIA Directive’). In the future, an expropriation permit is needed for all power lines and transmission pipelines included in projects requiring an EIA procedure As a result of the amendments, all overhead electrical power lines and all types of transmission pipelines used for transporting gas, oil or chemicals require an expropriation permit if the power line or transmission pipeline is part of a project that is subject to an EIA procedure. This means that an expropriation permit is required, for example, in a situation where the connection lines of wind or solar power farms would not be subject to an EIA procedure as an independent project but are essentially related to a wind or solar power project that falls within the scope of an EIA procedure. Previously, an expropriation permit was required only for power lines and transmission pipelines that were subject to an EIA procedure under Annex I of the EIA Directive, as well as for power lines with the minimum voltage of 110 kilovolts and for cross-border pipelines if an EIA procedure was applied to the project on the basis of a case-specific EIA screening decision. Furthermore, the expropriation permit process was previously not necessary if the implementation of the project was in all respects based on a legally binding land use plan under the Land Use and Building Act (132/1999) and this plan included an assessment on the project’s location and relation to other use of the area. The amendments removed this limitation, and in the future the expropriation permit process will also be applied to projects based on legally binding land use plans. Special requirements for the consideration of an expropriation permit for power lines and pipelines are added to the Act Section 4 of the Act on Expropriation Permits will provide for new special requirements for the consideration of an expropriation permit for a power line or transmission pipeline. These special requirements will supplement existing provisions on the consideration of an expropriation permit. If the requirements provided for in the section are not met, the expropriation permit cannot be granted. The government proposal states this would mainly apply to situations where a different route for the powerline or transmission pipeline would be clearly better. The section states that a power line or a gas pipeline has to be constructed in a technically and financially feasible manner in such a way that the adverse effects on the environment and on the use of the areas remain as small as possible. Construction cannot cause anyone more loss or inconvenience than is necessary. The section also provides for the protection of the Sámi culture: ‘ A project that is located in or impacts the Sámi homeland or Skolt area cannot materially impair the right of the Sámi to maintain and develop their culture and practise traditional livelihoods and the living conditions of the Skolt or the ability to practise the natural sources of livelihood referred to in the Skolt Act (253/1995) within the Skolt area.’ In an area where a regional plan or legally binding local master plan is in force, the construction of a power line or a transmission pipeline cannot hinder the use of the area for the purpose determined in the plan. The local detailed plan must also be taken into account when constructing a power line or a transmission pipeline. The Economy Committee report on the government proposal states that the regulation should not prevent or delay projects that are significant for the clean energy transition if the project would only have minor impacts on the implementation of the local detailed plan. According to the report, the provision makes it possible, for example, to place a power line route irrespective of the land reservation entries and regulations in the local detailed plan, provided that the construction will not prevent the implementation of the essential principles and purpose of the plan. In the future, the expropriation permit decision must include necessary regulations to restrict the significant adverse effects caused by the project The EIA Directive requires that it is possible to issue permit regulations with respect to the environment in projects that fall within the scope of an EIA procedure. After the amendments have entered into force, an expropriation permit decision must include necessary regulations regarding the power line or pipeline routing, project timeline and implementation methods as well as regulations regarding the observation of the effects of the project in order to restrict the significant adverse effects caused by the project. According to the government proposal, it is possible, for example, to make small changes to the power line route, but it is not possible to move the route to a completely different location. The amendments’ impact on clean energy transition projects Due to the amendments, it is possible that the number of cases handled in an expropriation permit process will increase and that the processes last longer if sufficient staff resources are not allocated to them. Moreover, the number of appeals concerning expropriation permits may also increase and the legal issues dealt within the appeals may become more complex. Therefore, project developers should be prepared that the amendments can impact the timelines of individual projects. According to the government proposal, however, the amendments are not expected to delay the construction of electricity transmission lines required for the clean energy transition when considered as a whole. In addition, the future will probably bring new changes to the expropriation permit process as the Parliament also approved a statement in connection with the aforementioned amendments in which it requires the government to draft a reform of the Act on the Redemption of Immovable Property and Special Rights (603/1977) for the Parliament without delay. The purpose of the reform is to strengthen the protection of property with, for example, increasing the amount of the expropriation compensation, as the clean energy transition causes significant land use needs regarding energy infrastructure.

   Published: 2.2.2024

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   Investments in the green transition require courage and cooperation

   Something unique has been developing in Finland in the past few years: we have a large number of companies that have leveraged scientific research and high-level technical expertise to search for solutions to the energy transition and green transition.  The companies have been in an experimental phase and built pilot facilities and factories.  Right now, they are ready to commercialise their operations and start production in an industrial scale, but the transition to larger markets requires considerable investments. Individual projects may need hundreds of millions of euros, and in order to get the funding, the companies have to look to domestic investors, the state as well as international investors. So far the companies have managed to raise overall funding for their start-up phase operations by leveraging public funding as national and international development financiers have supported the companies’ innovations. The state’s private equity investing is streamlined and concentrated during the term of this Government. Despite the changes, it would be important for the Government to keep the energy transition and green transition on its list of priorities and to be willing to invest in scaling innovations. Finland has every chance of attracting international investments and to become a leader in new energy solutions. The energy transition concerns and benefits many industries, and we are already close to being self-sufficient in electricity production. The security of electricity supply is at a high level, and the average price is moderate. In addition, the permitting process for green transition projects is being streamlined and the Government aims for a one-stop shop permitting system. It is time to roll up our sleeves and to take Finnish energy solutions and green transition projects to the next level. Companies should be raising funding prominently in the international investment market as well. Attracting international funding can, however, require catalysis from the state, and these opportunities should now be seized efficiently and prudently.

   Published: 31.1.2024

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   Bankruptcies in the construction industry are increasing – how to prepare for the contractor’s bankruptcy?

   The contractor’s bankruptcy affects the employer and subcontracting chain significantly It is typical for the construction industry that contractual obligations are assigned to subcontractors further down the contract chains. This phenomenon is also evident in industry statistics concerning bankruptcies. With long contract chains, the main contractor’s bankruptcy can easily lead to several liquidity problems in the subcontracting chain, and its spillover effect can even extend to other operators in the industry. When the contractor undergoes insolvency proceedings, the situation is also difficult for the employer. If the contractor is declared bankrupt, the works may at worst cease immediately, in which case the construction will not be finished or the warranty repairs completed. Securities during the construction and warranty period provide a certain level of security, but they are cold comfort if the works end at an early stage or there are a lot of defects. It is essential that the employer continuously observes the situation on site, for example, by discussing with the contractor’s representatives or actors in the subcontracting chain. Following credit information registers is also important. Impacts of a bankruptcy on the continuation of a project At the beginning of bankruptcy, the estate administrator takes possession of the bankrupt company’s assets on behalf of the creditors. In accordance with the Bankruptcy Act, the bankruptcy estate has the right to commit to a contract that the debtor has entered into but not performed, typically also to construction contracts. However, the estate will only commit to contracts with a positive cash flow and easily available workforce, so in practice, the estate can rarely continue construction after the beginning of bankruptcy. Can the employer minimise losses? In case the contractor becomes bankrupt, it is important for the employer that the agreed payments reflect the completion rate as accurately as possible. One central legal remedy in the event of the contractor’s insolvency is withholding payments. The payment to be withheld can correspond, for example, to the liquidated damages or the amount of work necessary to repair defects. In any case, it is important for the employer that the project can be completed without additional costs and delays. Back-loaded payments or withholding large amounts of payment, which may seem advantageous for the employer, may lead to the opposite outcome. In contrast, depending on the situation, it may be justified to try and support the contractor in difficulty so that the works can be completed without interruption. In the event of the contractor’s insolvency, it is also a good idea to investigate potential arrangements to ensure that the subcontractors’ works can progress. This is the case in particular when the subcontractors are carrying out the most important remaining works and the main contractor’s decreased solvency threatens to jeopardise the project’s progress. However, amending contract terms afterwards is always associated with risks, so any arrangements that support the contractor or that relate to the subcontractors must be planned and agreed carefully from the perspective of both contract and insolvency law. If the contractor's bankruptcy is evident, it is usually necessary to start looking for an alternative contractor before the bankruptcy proceedings are commenced to avoid additional costs and delays. Even though an improving outlook is not yet in sight for the construction industry, it is only a matter of time before the economic cycle picks up.

   Published: 18.1.2024

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   Reform of the act on openness – scope to be extended to contracting entities in more detail

   According to the committee’s proposal, the Act would be called julkisuuslaki ( the Act on Openness) going forward, meaning that the current short version of the name would become the official name of the Act. The committee proposes that the Act’s scope be extended so that it covers the performance of public duties more widely, even when this performance does not involve exercise of official authority. Going forward, the Act would also apply to a corporation or subsidiary controlled by a public corporation or a state enterprise to the extent that it engages in activities other than those carried out on the market in a competitive situation. The committee report is currently being circulated for comments, and any comments are due to the Ministry of Justice by 16 February 2024. The changes proposed by the committee would also affect public procurement. Below are some key highlights of the committee’s proposals. More contracting entities within the scope of the Act on Openness Currently, contracting entities only apply the Act on Openness in full if they are also public authorities. If this is not the case, contracting entities are only bound by the Act’s provisions concerning disclosure to the parties and the duty of non-disclosure. Openness and transparency are important aspects of public procurement as public procurements involve a significant use of public funds. If the committee’s proposals entered into force, extending the scope of application of the Act on Openness to corporations and foundations controlled by public corporations with respect to their non-competitive activities, a large number of the contracting entities that currently apply only the provisions on disclosure to the parties would have to apply the Act on Openness in its entirety.  One of the committee’s justifications for extending the scope is that many procurements are made by incorporated contracting entities. According to the report, around 70% of public procurements are carried out by the municipal sector, and subsidiaries of local authority corporations, for example, have a major say in how public funds are spent. A transparent procurement procedure is effective in preventing corruption, among other things. In addition, the committee proposes that private entities performing a public duty would apply the Act on Openness to this duty even when they do not exercise official authority. In future, it is likely that many institutions subject to public law, in-house entities and central purchasing bodies under the Act on Public Procurement would fall within the scope of the Act on Openness, either because their activities are other than those carried out on the market in a competitive situation or because they perform a public duty. Extending the scope of application carries less significance for the utilities sector, as the activities in this sector typically involve engaging in activities carried out on the market. While the Act on Openness is referred to in several other acts, the committee report does not include any proposals to amend such reference provisions. It would therefore be important that the reference provisions included in acts such as the Act on Public Procurements and the Act on Public Procurement in the Utilities Sector are revised in the course of further preparation so that the position of the various contracting entities under the Act on Openness is as clear as possible. No major changes to the publicity of procurement documents The committee’s proposals do not result in any major changes to the publicity of procurement documents. Procurement documents would become public at the latest when the procurement contract is concluded, unless the contracting entity decides to provide information on the documents earlier. Tenderers would continue to have the right to access other tenders after the procurement decision, with the exception of trade secrets. The total price used to compare tenders cannot be deemed a trade secret. The report does not contain any proposals to amend the secrecy provisions included in section 24 of the Act on Openness, which means that tenderers cannot expect to receive more information on the tenders submitted by their competitors than they currently do. Potentially slower responses to document requests A request for information made to a contracting entity must be considered and the relevant documents provided without delay, in any event within 14 days from receiving the request. While the committee does not propose any changes to this deadline, it does propose that the two-week period should not include the time spent on the consultation process. Pursuant to the proposal, the Act on Openness would still not have a time limit for making an appealable decision. For public procurement, the proposal could prove problematic. In order to ensure the protection of trade secrets, the contracting entity often needs to consult the tenderer whose tender information has been requested. However, the time limit for seeking review is only 14 days. In order to obtain the requested documents in good time before the expiry of the period for assessing the exercise of legal remedies, it is already necessary to submit a request for information immediately after the procurement decision is made. The reform may lead to more complaints having to be made with incomplete information for the sake of caution.

   Published: 9.1.2024

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   Towards the new

   Our resolution and ability to stay cool under pressure are put to the test once again. Now is the time to decide how to shape Finnish society and economy so that we may leave them to future generations in a better condition. We must be able to renew and invest in the future, not least because it is good security policy. While we cannot be overly optimistic about the coming year, it would be a mistake to succumb to pessimism. Inflation is slowing down, and economists predict that the general interest rates will start to decline. This will hopefully unlock and encourage investments. Furthermore, decreasing costs and increasing profitability and appetite for investments will boost the major energy transition. December marks the end to Castrén & Snellman’s 135th anniversary, which has been a welcome respite amid the world’s turbulence. We, too, at C&S are tasked with finding ways to increase efficiency and to provide smarter and more sustainable solutions to our clients. AI and its many applications are important tools in achieving this. Finland has a long history of overcoming challenges, and I have no doubt it can do so once again. Creating growth and productivity is down to all of us. We at Castrén & Snellman wish to be involved in shaping our society and to do our part by helping our clients succeed in the changing world. I’d like to thank our clients, stakeholders and employees for the past year and wish you courage and success for 2024!

   Published: 22.12.2023

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    Loan Market Association published a term sheet model for sustainability linked loans

    The recently published term sheet model reflects the contents of the model provisions published by the LMA in May. It also promotes the standardisation of documents used in the market and streamlines the drafting practices and the negotiation process between the parties, offering the parties to a loan transaction an effective and useful framework for the negotiation process. The published model can be considered very user-friendly as it separates sustainability-related special requirements into their own part. It is noteworthy that the term sheet model does not include special conditions precedent concerning loan sustainability, nor are there any such conditions in the earlier published model provisions. The lack of conditions precedent can be deemed to provide the parties room to negotiate these conditions on a case-by-case basis. In addition, it should be noted that if the sustainability classification of a loan is removed, it is not possible to re-classify the loan as sustainability-linked at a later stage. The term sheet model presents, among other things, four Key Performance Indicators, which demonstrates that several performance indications are necessary to make sure that a product is sustainable. The model also includes a mechanism that can be used to either increase or decrease the margin in accordance with the number of Sustainability Performance Targets achieved. The mechanism is flexible as it makes it possible to not adjust or increase the margin if fewer than two Sustainability Performance Targets are achieved. If the loan’s classification as a sustainable loan is removed, adjusting the margin will cease instead of increasing the margin to the highest possible alternative. The purpose is to ensure that the financial effects of the loan remain the same as they would have been if the loan had not been sustainability-linked in the first place. The increasing significance of sustainability aspects in transactions and the demand for sustainable investment opportunities have led to the current guidelines and models being supplemented in all areas of sustainable financing. As the publication of the term sheet model shows, the debt financing market is no exception. The term sheet model and the earlier published model provisions offer essential guidelines for market participants and make it possible to offer reliable sustainability-linked loan products.

    Published: 15.12.2023