20/10/2022

Antti Vepsä’s article on the capital system of investment companies published in the yearbook Oikeustiede – Jurisprudentia

C&S fund expert Antti Vepsä’s peer-reviewed article on the capital system of variable-capital investment companies has been published in the latest yearbook Oikeustiede – Jurisprudentia LV:2022 by the Finnish Lawyers’ Association. In his article, Mr Vepsä offers an analysis on what kind of capital system would be functional in variable-capital investment funds established as companies, i.e. variable-capital investment companies.

“The limited liability company is not a very suitable corporate form for fund formation. In addition to direct regulatory barriers, there are many other reasons for this. One of the most essential reasons concerns the capital system of the limited liability company. It is not sufficiently flexible for the needs of fund management activities”, Mr Vepsä says.

That is why the capital system of a fund established as a limited liability company, i.e. an investment company, cannot be the same as in current limited liability companies. Investment companies must account for the particular boundary conditions of fund management activities, which require the capital system to be especially adaptable to the needs of the investment funds business. These boundary conditions include the ongoing possibility to increase and decrease share capital and to distribute dividends flexibly.

The general consensus is that the challenges of the capital system of limited liability companies can be solved with special regulation on variable-capital investment companies, which Finland does not currently have. Such investment companies are globally used as the legal structure of funds, and they are particularly common in other parts of Europe. The funds industry stakeholders consider the preparation of regulation on investment companies an important reform area for the regulation of collective investment schemes in Finland.

As a senior associate, Mr Vepsä specialises in advising our clients on the structuring, promotion and management of alternative investment funds, UCITS funds and other types of collective investment schemes. In his career, he has been involved in establishing dozens of UCITS funds and alternative investment funds as well as fund investments. With a versatile and extensive background in funds, Mr Vepsä is able to provide the business-oriented advice he is well known for. He is currently writing a doctoral dissertation on the regulation of variable-capital investment funds established as companies at the University of Tampere. He actively takes part in academic debate in his field and is one of the leading researchers in Finland. This is the second article Mr Vepsä has published this year.