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   Sustainable Procurement: Legislative requirements and practical challenges

   But what are the legal sustainability requirements for procurement? What needs to be taken into account when planning and implementing sustainable procurements? If we only look at procurement legislation, it is up to the contracting entity to set the sustainability criteria. This is something that the current Procurement Directives have received criticism for – discretion is not deemed to steer procurements in a more sustainable direction sufficiently enough. At the same time, there are also dozens of product and sector-specific EU regulations setting sustainability and environmental requirements for public procurement. The fragmented nature of regulation poses challenges for contracting entities. For example, pursuant to the Battery Regulation (EU) 2023/1542, contracting entities must take account of the environmental impacts of batteries over their life cycle with a view to ensuring that such impacts are kept to a minimum. The Net-Zero Industry Act (Regulation (EU) 2024/1735) requires contracting entities, among other things, to apply minimum mandatory requirements regarding environmental sustainability in public procurement. The precise content of these requirements will be specified in due course through the Commission’s implementing regulations. In addition, the Deforestation Regulation (EU) 2023/2011, in its current form, requires those who breach the Regulation to be excluded from public procurement for up to 12 months. The government proposal HE 77/2025 currently before Parliament designates the Finnish Food Authority as the Finnish authority to decide on this sanction. Once the Act enters into force, contracting entities will be able to include in the call for tenders a requirement for tenderers to explicitly state whether they are subject to such an exclusion decision. As the vast majority of substantive regulation comes from the EU, keeping track of regulatory requirements, such as those outlined in the examples above, can feel particularly arduous. Knowledge of procurement law and the market is not enough when it comes to sustainable procurement; contracting entities need to be increasingly aware of requirements that vary according to the subject of the procurement. Research shows that competition in public procurement in Finland is weak, and legal requirements may further reduce supply. The reform of the Public Procurement Act encourages market consultation as a means to increase competition. In sustainability work, thorough procurement planning is particularly important. The contracting entity needs to identify the applicable sector-specific regulation and the associated sustainability requirements in advance. A thorough market dialogue should be conducted to assess whether the market can meet these requirements – whether as mandatory minimum requirements, comparison criteria or perhaps as a condition to be fulfilled during the contract period. Entities can also divide the procurement into lots or establish a dynamic procurement system to account for suppliers’ different capabilities to meet sustainability requirements. 

   Published: 2.12.2025

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   The IPO window is open – How to identify the right time for listing?

   Despite the favourable market, companies remain cautious in making the decision to go public. The strategic benefits achievable through listing, such as new capital for supporting growth, improved access to capital, strengthening market position and visibility, as well as the option to effectively utilise share-based incentive schemes, are central for many companies in achieving growth. At the moment, the main concern does not appear to be whether to list, but rather when to do so. In this blog, we examine three key factors for successful IPO timing: market conditions, industry-specific characteristics, and the internal capabilities of a company. Stock markets and macroeconomics as drivers behind the opening IPO window Developments in recent years have shown that listing activity is highly dependent on macroeconomic trends and the state of the stock market, both in Finland and globally. Geopolitical risks in particular have increased market volatility, which has been reflected in stock price fluctuations and uncertain economic outlooks. Consequently, the valuation levels of listed companies remained low for an extended period, especially in Finland, and fluctuated greatly. This reduced the attractiveness of listing and made it difficult to sell and price shares. Although stock market fluctuations and geopolitical events are among the most difficult factors to predict in terms of IPO timing, it is a good idea to rely on strong signals of investor demand when determining the optimal timing. Key indicators include the subscription volumes, trading volumes and pricing of recent listings, price behaviour of listed shares post-listing, as well as the quality and geographical distribution of investors. The IPO window may open quickly when market conditions shift to a more favourable direction. A small number of successful listings can be enough to encourage several listing candidates to proceed with their plans simultaneously. As the so-called bull market accelerates, investors may even begin to view IPOs as a sure-fire way to make a quick profit. This phenomenon was last witnessed in 2021, when one IPO after another was oversubscribed as subscription rates accelerated. In Finland, conditions for IPOs began to improve at the beginning of this year, resulting in two new IPOs in spring 2025. The window for IPOs opened properly in autumn 2025 following Trump’s ‘Liberation Day’, and as of now there are good grounds to assume that the conditions for IPOs will remain favourable also in 2026. There are, at least for the time being, no significant known political events that are likely to cause market volatility before the US midterm elections in November 2026. Regardless of market conditions, it is advisable for a company planning a listing to begin preparations well in advance, at least 1–2 years before the intended listing date. The IPO market is dynamic and its outlook is constantly changing due to factors such as the global political climate and changes in interest rates. A suitable opportunity to go public may therefore arise at short notice. Companies that can quickly advance their well-prepared listing process are best positioned to capitalise on a favourable market turnaround. Industry: trendiness or fundamentals? When considering the timing of its listing, a company should assess both its industry’s sensitivity to economic fluctuations as well as the current phase of the economic cycle. In addition, it is advisable to evaluate the industry’s current attractiveness as an investment target, i.e. the effects of prevailing trends on demand and valuation. Internationally, investors have recently favoured growth-stage companies, particularly in the defence technology, fintech and health technology sectors. In these industries, the innovativeness, scalability and prospects of the business model are decisive. Companies that take advantage of current industry trends, such as artificial intelligence, have emerged as leaders. Potential issuers should also pay attention to the issuance calendar, i.e. market congestion in relation to investor liquidity. It is relevant to consider whether other companies in the same industry are going public at the same time, as this could lead to oversupply in relation to investor demand. It might also be more difficult to secure the top advisors when the market is hot. Certain industries emerge as more popular than others at different times. Despite this, over the past year Finland has seen successful IPOs from companies in fairly traditional industries. Economic uncertainty and stock market fluctuations highlight the importance of strong fundaments. In challenging market conditions, investors tend to place even greater emphasis on demonstrated business profitability and predictable turnover rather than speculative narratives. Additionally, large-scale investments by AI companies have driven some investors to more traditional and stable companies that offer high dividend yields. Credible equity story is built on internal readiness In addition to market conditions and industry-specific factors, the opportune moment for an IPO largely depends on the company’s internal readiness not only for the IPO itself but also for life as a listed company. Even in an attractive listing market, the company should first consider some key aspects. Operating as a listed company requires the company to be able to meet regulatory corporate governance and risk management process requirements. It is essential to ensure that the board of directors and management team possess the right combination of experience and skills to manage a listed company and maintain investor relations. In addition, the company must ensure that the organisation and resources of its financial administration and accounting functions are appropriate for a publicly listed company. A company to be listed on the main list of the Helsinki Stock Exchange must prepare its financial statements in accordance with the International Financial Reporting Standards (IFRS), while a company to be listed on First North Finland may follow the lighter national FAS accounting standards. The requirements of a listed company generally benefit the company’s processes, but in the case of smaller or early-stage companies, they may constitute an unnecessary expense in relation to the scale of operations. A crucial part of the listing process itself is to create an interesting and credible equity story that emphasises the company’s development and full potential. Investors expect the company to have a clear strategy and a good track record of implementing it. Investment bankers play a key role in building the equity story, as it must be aligned with the company’s financial figures. Relevant benchmarks for success include, for example: a distinctive business model, the size of the potential market, a well-considered and focused strategy, a credible description of the company’s prospects, a logical and clear description of the use of funds potentially raised in the IPO and of the dividend policy a committed management team that is prepared to run a listed company, a favourable ESG profile, attractive prospects in a growing industry, and a strong cash flow. A company that articulates its goals in a clear and credible manner and exceeds the industry average with respect to these benchmarks is in a stronger position to attract potential investors. If a company is still struggling to find its direction, a premature listing and the negative price development that often follows will leave the company’s management with less room to manoeuvre and restrict business development. Listing offers an excellent opportunity to increase company recognition. A company should therefore start to build media visibility from a perspective that supports its business well before commencing formal listing preparations. The marketing campaign for the listing itself should be designed to capture the attention of private investors in particular. The Financial Supervisory Authority no longer requires companies to submit marketing materials for advance review, which may simplify campaign planning. Another thing to note is that a company looking to be listed needs to bring its financial reporting and disclosure practices up to the standard required of listed companies. Transparent and regular disclosures can result in previously undisclosed shortcomings coming to light. Therefore, a company considering listing must be prepared for a thorough public scrutiny of its operations, devote resources to identifying reputation risks and risks related to the company’s operations and mitigate such risks where possible, and be adequately prepared for challenging communication scenarios. Listing decision – start preparing today As discussed above, determining the right time for a listing is rarely straightforward. Ultimately, it is a matter of deciding to take action on matters that will enable the listing. While listing is not the right strategic decision for all companies at all stages, in recent years we have seen numerous examples of successful listings where growth-oriented companies, regardless of their industry or length of operating history, initiated a new phase of strategy implementation and ownership base development through listing. The best-timed IPOs combine market conditions with strong internal readiness and positioning. A successful IPO is built long before the stock exchange bell rings – it is rarely too early to begin familiarising oneself with the matter and considering the requirements for listing. Aiming for a listing is often beneficial, even if it does not ultimately materialise. In a listing process, the company’s operations are critically examined by several independent advisors, which is bound to help the company develop.

   Published: 25.11.2025

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   Stricter penalties under new sanctions violation regulation – corporate fines of up to EUR 40 million

   The new regulation is based on Directive (EU) 2024/1226 on sanctions violations, which aims to ensure that violating sanctions is criminalised in all Member States and that the related penalties meet a common minimum standard. Finland transposed the obligations under the Directive through amendments to the Criminal Code, resulting in a significant increase in the penalties that can be imposed for violating sanctions. New offences: sanctions offence, aggravated sanctions offence, negligent sanctions offence and sanctions violation Prior to the amendment, sanctions violations were punishable as regulation offences, but this is no longer the case. The amendment added four new offences into chapter 46 of the Finnish Criminal Code: sanctions offence, aggravated sanctions offence, negligent sanctions offence and sanctions violation .  A sanctions offence is an act in violation of imposed sanctions. This includes, among other things, making funds or economic resources available for the benefit of a sanctioned person and violating import and export embargoes imposed under sanctions regimes. A sanctions offence is considered aggravated if, in the violation of sanctions, considerable economic benefit is sought, the offence concerns considerably valuable assets, military equipment or dual-use items, or the offence is committed in a particularly premeditated manner. The offence must also be assessed as aggravated when considered as a whole. A negligent sanctions offence is committed when the violation of sanctions is committed through gross negligence and concerns military equipment or dual-use items. This is a new provision that tightens the regulation – previously, criminal liability for sanctions violations required intent. A sanctions violation is a less severe form of a sanctions offence. It covers acts involving assets of minor value and acts that are otherwise of minor importance.  The new offences also apply to the circumvention of sanctions. For example, delivering goods with the knowledge that the goods will eventually end up in a country subject to sanctions may become punishable under the new regulation on sanctions violations. Increased penalties highlight the importance of complying with sanctions in business operations As a result of the amendment, a company that breaches or circumvents sanctions may be issued a corporate fine with a maximum amount that derogates from a typical corporate fine: 5% of the company’s turnover. Regardless of the turnover, the maximum monetary amount of the corporate fine is no less than EUR 850,000 and no more than EUR 40 million. The minimum amount is EUR 850, which means that, depending on the size of the company’s turnover, the fine can range from EUR 850 to EUR 40 million. Increasing the maximum amount of corporate fines for sanctions violations is a significant change from the previous provision, under which corporate fines ranged from EUR 850 to EUR 850,000. This stricter maximum amount emphasises the responsibility of companies for their actions and guides them towards preventive measures in complying with sanctions legislation. A challenge in its own right is the ambiguity of sanctions regulation, resulting in a heightened importance of risk assessments in business decisions. For natural persons, the maximum penalty for violating sanctions can be imprisonment, which is why company management must oversee and monitor sanctions compliance with particular care. The continuous expansion of sanctions regulation, the specification of the elements of a criminal offence and the new maximum corporate fine emphasise that compliance with sanctions is more than just an administrative obligation. Companies need to make sure that their internal processes, guidelines, screening mechanisms, and staff competence meet regulatory requirements proactively, comprehensively, and consistently. Increased focus on up-to-date and comprehensive compliance and sanctions processes It is more important than ever for companies to stay up to date on sanctions developments and ensure compliance with sanctions regulation, which is enforced by criminal investigation authorities – the police and Customs. Companies need to ensure that their compliance and sanctions processes and guidelines are up to date and comprehensive, and train their staff so that everyone has the sanctions knowledge required for their role. Sanctions processes are particularly important for companies engaged in international trade. If a sanctions violation is taken to a criminal investigation, one of the aspects the authorities will assess is the effectiveness and adequacy of the company’s compliance processes. The currency and effectiveness of these processes have a significant impact on how the authorities assess the intentionality of a possible violation – inadequate processes may indicate negligence or even wilful misconduct. Effective and adequate compliance processes also play a key role in assessing the criminal liability of a company and its management. Effective internal screening systems and a clear allocation of responsibilities can protect not only the company itself but also its management from personal liability, whereas missing or inadequate processes can lead to liability for management if sanctions are violated. This is why compliance processes must not only be sufficiently comprehensive, but companies must also follow them and update them regularly. Reform of sanctions violation regulation emphasises risk identification If there is a suspicion of a possible irregularity in the company’s internal guidelines or processes, or of a sanctions breach, the matter must be thoroughly investigated. Companies should have a low threshold for initiating internal investigations, as assessing the necessary actions in a consistent manner requires gathering sufficient information about the events. Under certain conditions, a company may become liable also if its products end up in sanctioned countries through its customer or partner networks. This means that companies must seek to ensure, up to a certain point, that sanctions are complied with in their own supply chains and endeavour to ensure that they themselves do not become suspected of sanctions circumvention, for example, in matters involving their customer or partner networks. As part of risk management, it is worth assessing whether an internal investigation should be entrusted to an external expert. It is important to document the internal investigation carefully so that the company can demonstrate that it has acted diligently. The EU’s 19th sanctions package enters into force In late October, the EU adopted the 19th package of sanctions against Russia, which entered into force on 24 October 2025. The new EU sanctions specifically target the energy sector, and its measures include the ban on imports of Russian liquefied natural gas (LNG) as of 1 January 2027 for long‑term contracts and 25 April 2026 for short-term contracts. The sanctions package also seeks to further restrict the operations of Russia’s shadow fleet. Litasco Middle East DMCC, a Russian oil operator, was added to the sanctions list, and transaction bans on Rosneft and Gazprom Neft were tightened. The package also expanded the product coverage of goods subject to export bans. As regards export restrictions, it is worth noting that the export ban on Belarus was also extended. The EU was not the only one to introduce new sanctions in October – the US and the UK also implemented additional measures. For example, both countries added the Russian oil companies Lukoil and Rosneft to their sanctions lists. These listings also impact companies directly or indirectly owned by Lukoil and Rosneft.

   Published: 7.11.2025

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   AIFMD II – implications for alternative investment fund managers in Finland

   Member States must transpose the amendments under AIFMD II into national law by 16 April 2026. To this end, the Finnish Government recently proposed amendments to both the Finnish Act on Alternative Investment Fund Managers and the Finnish Act on Common Funds (Government Proposal HE 139/2025). These amendments are similar in content in many respects, although some of them apply only to alternative investment fund managers (AIFMs) and some only to certain types of alternative investment funds. It’s high time for AIFMs to start preparing for the new requirements under AIFMD II. While the reform can be considered limited, the changes could nonetheless have a significant impact on the activities of some funds. To read more on the subject, visit our Finnish blog .

   Published: 7.11.2025

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   Is your IP safe? Eight real-life tips to avoid costly mistakes

   Issues with IP rights often come to light in connection with business transactions – such as M&A deals or financing rounds – when lawyers conduct due diligence reviews. At that point, the milk is often already spilled. At worst, these issues can derail an acquisition or block financing. Problems that emerge during DD are naturally hardest on company owners and management, but they can be frustrating for the lawyers conducting the review as well. After all, many of these issues are entirely preventable with proper handling from the start. In this article, we will share eight practical tips to help your company take better care of its IP rights. They are based on issues we regularly encounter during DD reviews. Could today be the day to make sure that a future transaction or financing round doesn’t fall through due to insufficiently managed IP rights? 1. Find out what IP rights your company has To protect your company’s intangible assets, you first need to know what you actually own. Companies are generally well aware of their registered IP rights – after all, they have registration certificates and pay fees for them. There are, however, two common problem areas. First, companies don’t always realise they have other intangible assets that could be registered but aren’t, leading to missing trademarks or unprotected inventions and designs. Second, companies often have an incomplete picture of their unregistered IP rights, i.e. copyrights, related rights and trade secrets. It’s difficult to protect something you don’t know you have. 2. Agree on the transfer of IP rights Every time someone develops something for your company, make sure you have it in writing that the related IP rights transfer to the company. This applies to everyone – employees, owners and founders, managers and board members, consultants and freelancers, subcontractors and partners, as well as interns and students. Without a clear contract, the developer may retain the rights, which can make it difficult or impossible to commercialise what’s been created. 3. Don’t forget alteration and onward transfer rights When agreeing on the transfer of IP rights to the company, it’s important to make sure that the transfer is sufficiently comprehensive in terms of time, geography and content. A small but crucial detail is that when transferring copyright, you must separately agree that the company as the transferee also has the right to alter the work and transfer the copyright to others. Without this express provision, the company isn’t permitted to do either. 4. Use open source wisely If your company uses open source in its products, find out exactly what licensing terms apply to the components you’re using. Without clarifying the licence requirements upfront, you may inadvertently end up using so-called copyleft licences in your software products. In the worst case, careless use of copyleft licences can lead to an obligation to disclose the source code of the company’s proprietary products containing copyleft-licensed components to anyone who requests it. 5. Make sure compensation matters are in order When agreeing on compensation for the transfer of IP rights, ensure the agreement is sufficiently comprehensive. It’s generally advisable to agree that the developer’s compensation includes payment for the IP rights transfer as well. Don’t forget about mandatory legal requirements, though. For example, the Act on the Right in Employee Inventions requires employers to pay reasonable compensation to employees – and in some cases, members of management – for their inventions, and this obligation cannot be waived by agreement. 6. Register your trademarks Some people mistakenly believe that exclusive rights to a trademark can be obtained simply through establishing the trademark. However, this is only possible in Finland and requires substantial evidence, which is why, in practice, trademarks should always be registered. When registering trademarks, make sure to register all the trademarks your company uses and ensure that the registrations cover the relevant territories and categories of goods and services. 7. Protect your trade secrets Make sure that your company has identified its trade secrets and established documented practices to protect them. It’s essential to protect trade secrets both contractually, for example through non-disclosure, employment and consultancy agreements, and operationally, through adequate data security, access control and other protective measures. Failing to properly identify or protect trade secrets can expose your company to disputes and, in the worst case, result in the complete loss of legal protection for some trade secrets. 8. Ask an expert when needed The issues outlined above can seriously hinder your company’s operations or even bring them to a standstill. The simplest way to avoid problems is to review the necessary safeguards with an expert well in advance of any transaction, dispute or other important juncture in your company’s operations. Our goal is to have your company pass a potential DD review with flying colours.

   Published: 17.10.2025

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   Defence sector investments and acquisitions – key facts about the Finnish FDI regulation

   Foreign corporate acquisitions are screened in 24 EU Member States, but the scope of screening and application thresholds vary by country. Transactions in the defence sector are strongly linked to national security and geopolitical interests, and in addition to foreign investments, in some countries FDI regulation also covers intra-group and domestic transactions. Foreign investments in the Finnish defence sector may require prior approval by the Ministry of Economic Affairs and Employment, and minority investments (at least a 10% stake or a corresponding influence) are also subject to screening. Failure to file an application or a delay in doing so may lead to fines or even the cancellation of the transaction. The effective execution of a transaction requires careful planning and assessment of the FDI process to ensure that the planned transaction proceeds smoothly with minimal risks. This will be further emphasised with the upcoming regulatory changes. In Finland, there is no statutory time limit for the FDI process for defence industry companies, which means that the process may have a significant impact on the transaction’s completion schedule. EU and NATO countries are ramping up their defence budgets amidst geopolitical uncertainty, and the defence industry is experiencing strong growth. Investments in defence sector companies are on the rise, and at the same time, investments in defence and security-related companies are under increasing scrutiny across Europe. The discussions around data centre projects are a good example of politicians’ interest in foreign players: on the one hand, Finland welcomes foreign investments, but on the other, foreign-policy and geopolitical risks are assessed more carefully. The Finnish defence industry and cybersecurity know-how as well as Finland’s central location as a NATO country may increase interest in defence sector investments in Finland and boost the number of foreign investors. Correspondingly, Finnish companies in the defence sector may seek growth through expanding internationally, for example through acquisitions and joint ventures. Finland and other EU countries actively screen foreign investments in order to ensure national defence and security. Finland has a long history of screening acquisitions in the defence sector, and the current Act on the Screening of Foreign Corporate Acquisitions ( the FDI Act ) has been in force since 2012. It was amended in 2020 as a result of the EU Foreign Direct Investment (FDI) Screening Regulation ((EU) 2019/452), and further amendments are expected in the coming years. FDI screening in the defence sector in Finland When it comes to acquisitions and investments, it is good to keep in mind that foreign investments in certain defence sector companies are subject to screening under the FDI Act. Transactions that fall under the scope of the FDI Act require prior approval from the Ministry of Economic Affairs and Employment (MEAE). In other sectors, such as the security sector, only investments from outside the EU/EFTA are subject to screening under the FDI Act. Traditional defence sector companies that serve military national defence can be attractive investment targets, as can companies specialised in dual-use technologies that offer solutions for both the civilian and military sectors. Solutions related to AI, cybersecurity, satellite communications and security of energy supply may attract an increasing amount of foreign investments in the future, and correspondingly, the screening of these sectors is tightening. This reflects the expansion of the security concept from traditional defence to technology and security of supply. FDI regulation and its impact on foreign investors and Finnish defence companies planning to expand internationally When planning investments or acquisitions in the defence sector, it is important to keep in mind that EU countries have varying approaches to companies that have relevance in national defence and national security. FDI regulation can therefore affect the growth of companies such as technology-intensive businesses even within the single internal market if the authorities take a strict stance on foreign investments. At the same time, foreign capital injections and consolidation could stimulate technological development and enable significant business growth, thereby ensuring EU security. Balancing these interests plays a key part in FDI processes as well. 24 EU countries currently screen foreign corporate acquisitions, but they approach the matter with great variation – there are big differences even between the Nordic countries. For example, in some countries, the screening is focused on transactions by foreign investors in the defence industry, while in others it also includes transactions between domestic companies or within the same group. Finland has a positive attitude towards foreign investments, but the investor’s domicile and owners also play a role in the assessment, especially in the defence sector. The MEAE has the power to prohibit the implementation of an investment if it is necessary due to a key national interest, and the power to impose conditions on the implementation. Other Nordic authorities have similar powers, and such conditions have been imposed in a number of cases. The latest example is a Chinese operator’s project, which was prohibited in Sweden after a lengthy investigation. As a result of the authority decision, the operator cannot go ahead with the planned battery anode material production site. Minority investments and the ownership structure of a listed company may also trigger the need for an FDI process With respect to investors, it should be noted that even a minority investment by a foreign investor may require an FDI process. In many EU countries, Finland included, the acquisition of as little as a 10% stake or a corresponding actual influence (e.g. board seats or veto rights under the shareholders’ agreement) in a defence sector company requires authority approval. This means that private equity investments, including minority investments, may be subject to screening. Companies focusing on defence technology or dual-use products in particular should take FDI requirements into account at an early stage in the negotiations and carefully assess the need for an FDI process in advance. This applies both to situations in which a Finnish defence sector company is raising capital (including minority investments) from abroad and expanding to other countries through acquisitions. Failure to file a notification or a delay in doing so can lead to significant consequences, including fines – not only in Finland, but also in other jurisdictions. It is also important to note that the authorities can intervene in the transaction afterwards and, in the worst-case scenario, order the transaction to be cancelled. Foreign acquisition screening may delay investments It is characteristic of the Finnish FDI process with respect to investments in the defence sector that there is no statutory time limit for the FDI process. This may cause delays to the implementation of the investment. In 2024, the average handling time was 58 days. This means that when the investor or buyer is a foreign entity, investments in the Finnish defence industry can be delayed due to the FDI process. For growth companies in particular, the possible extension of the process can be a critical bottleneck, as the need for financing is often acute and the growth expectations are linked to available capital. Therefore, it is important for growth companies as well to assess their business operations and potential investors from an FDI perspective early on and plan their next steps accordingly. Upcoming changes in the coming years In Finland, a reform of the FDI Act is being prepared with the goal of expanding screening. Earlier this year, the MEAE published an assessment memorandum with 15 development areas to be reviewed nationally and in light of the updates to the EU FDI Screening Regulation. The list of potential amendments includes the following: Expanding foreign acquisition screening to include critical technologies (AI, semiconductors, quantum technologies etc.) and greenfield investments in critical infrastructure in particular. Extending mandatory screening beyond defence sector transactions to transactions in critical infrastructure, such as energy, transport and cybersecurity. Reviewing the current filing thresholds (acquisition of at least 10%, 33.3% or 50% of a company) to potentially introduce additional thresholds. It would be ideal if, when preparing the amendments to the FDI Act, the legislators would also set a clear time limit for the length of the FDI process. This would clarify the completion timeline of foreign investments and provide predictability for both foreign investors and the companies involved in the transactions. The upcoming changes to the Finnish FDI Act and the update to the EU FDI Screening Regulation show that the regulatory framework is constantly evolving, and being up to date is more important than ever before. It is also worth noting that the European Commission has recommended that EU countries should preliminarily screen outbound investments into non-EU countries with respect to strategically important and high-risk technologies (AI, semiconductors and quantum technologies). The goal of this preliminary screening is to determine whether the exit of such technologies from the EU should be regulated and screened more closely in case it could jeopardise the security of the EU. This could happen, for example, if the technology falls into the wrong hands in the event the technology would be used in countries where the boundaries between civil and military activities are blurred and the technology or know-how could be used in military activities. This screening could also have an effect on acquisitions and joint ventures of Finnish companies abroad. Careful preparation is crucial, and geopolitical impacts require extensive expertise Defence sector transactions require much more than just typical assessment of the business of the company. They are increasingly linked to national security, technological dependency and strategic interests. While it may be difficult to predict how things will develop, it is clear that defence sector transactions will require increasingly diverse expertise and careful preparation. The upcoming regulatory changes could complicate investments, especially from non-EU investors.

   Published: 9.7.2025

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   Administrative Court ruling: the Profit Tax Act targeting electricity companies is in conflict with EU law

   The Helsinki Administrative Court ruled that the key provisions of the act imposing a temporary profit tax on electricity companies were unenforceable, as they must be deemed to be in conflict with EU law. The decision can be seen as a landmark precedent that emphasises the diligence required of legislators also in situations where an act is intended to be a temporary measure to address needs during times of crisis. The Administrative Court’s decision is not yet final. The Court assessed an urgently prepared act that faced criticism for non-compliance already during legislative drafting The Profit Tax Act (363/2023) entered into force in March 2023 following a rushed consultation and preparation process. It was applied as a temporary – and partly retroactive – provision to companies in the electricity and fossil fuel sectors, introducing an additional profit tax on their electricity businesses for the 2023 tax year. The Profit Tax Act is based on Council Regulation (EU) 2022/1854, which was adopted on 6 October 2022 as an exceptional emergency intervention during the energy crisis following Russia’s war of aggression. The Regulation required Member States to collect market revenues exceeding a ‘revenue cap’ of EUR 180/MWh from certain electricity producers. The primary objective of the Regulation was to redistribute exceptionally high electricity market revenues to consumers and mitigate the harmful effects of increased electricity prices. The intention behind the EU-level regulation was to respond to the energy crisis with coordinated measures that applied to all Member States, thus avoiding measures taken by individual Member States that could further burden EU industry and consumers. The Regulation was implemented into Finnish legislation by the Profit Tax Act. During legislative drafting, national legislators deemed that the Regulation left Member States enough leeway to implement the emergency measures in ways other than a model based directly on the market revenue cap of EUR 180/MWh laid down in the Regulation. The Profit Tax Act provides for a 30% profit tax, which is levied on companies in addition to the annual income tax on the profit of the company’s electricity business that exceeds a 10% profit threshold calculated on the basis of the imputed return on equity for the previous financial year. The Helsinki Administrative Court deemed that the national legislator did not have the authority to replace the mandatory market revenue cap laid down in Regulation (EU) 2022/1854 with a tax mechanism that is fundamentally different in structure. The Administrative Court ruled that since the amount and calculation of the profit tax differ from the revenue cap mechanism laid down in the Regulation in terms of both content and application period, the provisions in question cannot be deemed compatible with the Regulation. Major discrepancies between the Regulation and the Act The provisions of the national Profit Tax Act differ significantly from the EU Regulation. These differences include the following: Profit basis vs revenue cap: In Finland, the profit tax was based on the profit of the electricity business and the equity of the previous financial year, whereas the Regulation was based on a specific market revenue cap of EUR 180/MWh. Period of application: The Profit Tax Act applied to the entire tax year 2023, even though the Regulation only applied from 1 December 2022 to 30 June 2023. The nature of the tax: The profit tax was not deemed to target only surplus profits. The tax mechanism could also extend to regular market revenue of companies, such as the revenue of electricity providers that had already hedged the price risk of their power generation in the long term. The Regulation’s precedence obliges the non-application of national law EU regulations are directly applicable in all Member States. While they may leave some national leeway, national courts are obliged to hold inapplicable any national provisions that conflict with EU law. The Administrative Court deemed that the Profit Tax Act deviates significantly from the objectives of the Regulation and exceeds the scope of national discretion. According to the Administrative Court, the Finnish Profit Tax Act cannot be interpreted in a way that is consistent with the Regulation , and the key provisions concerning tax determination must therefore be held inapplicable. Landmark precedent on the relationship between EU and national law The Administrative Court’s decision forms a significant precedent on the relationship between EU law and national tax legislation. The decision renders the Profit Tax Act practically irrelevant, since the Administrative Court ruled that the provisions on the amount and calculation of the tax must be disregarded. To our knowledge, no Finnish national law has been found to be contrary to EU law to the same extent and therefore unenforceable. According to the Administrative Court’s decision, the Regulation’s objective was to address only exceptionally high electricity market revenues, whereas regulation under the Profit Tax Act was based on a completely different model. Already during the legislative drafting process, the Constitutional Law Committee and the Economic Affairs Committee noted that the national Profit Tax Act law deviated significantly from the mechanisms and objectives of the Regulation. The Finance Committee stated in its comment that the Regulation was exceptionally loosely drafted, leaving the national legislator with some discretion to deviate from the Regulation’s main implementation method. The Administrative Court’s decision highlights the importance of careful legislative work and emphasises how crucial it is to ensure that EU law – particularly directly enforceable EU regulations – is correctly implemented into national legislation. Careful legislative work is especially important in tax legislation, to ensure that the tax collection criteria meet the requirements under EU law. The decision is not yet final, as the Tax Recipients’ Legal Services Unit may request leave to appeal the decision from the Supreme Administrative Court. If the case is taken to the Supreme Administrative Court, it is possible that the Court will request a preliminary ruling from the Court of Justice of the European Union. At this stage, the Administrative Court did not find it necessary to request a preliminary ruling. Our experts are happy to help if you wish to discuss electricity sector taxation or the practical ramifications of this decision in more detail.

   Published: 25.6.2025