1. Post

   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

3. Post

   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