I wrote an opinion piece for the Helsingin Sanomat newspaper in July 2014 where I said that crowdfunding needs clear ground rules. Now, just under two years later, this is finally happening.

The Finnish government issued its proposal for a crowd funding act on 7 April. Small- and medium-sized companies will have an easier time getting financing with more sources of money available.

Lending money to a company directly without intermediaries offers the potential for good returns with reasonable risk. Buying shares in a start-up allows anyone to help very early stage companies grow. Following the entry into force of the new act, crowdfunding platforms will no longer need an investment service company permit even if the financing instruments being brokered are transferrable securities.

This is a long-awaited act in the field. It clarifies the ambiguous situation that was created when the Finnish Financial Supervisory Authority changed its interpretation of the law in the summer of 2014. Small financial companies, fintech start-ups, have faced the challenge of playing a game with fuzzy rules and difficult to predict referee calls.

Now the rules are being clarified and the referee’s room for interpretation is narrowing. Crowdfunding brokers will no longer have to join the Investors’ Compensation Fund, and the capital requirements relating to investment service legislation have been dropped to a sensible level. A light registration process and equal rules across the industry also improve investor protection. Fly-by-night players can be kicked off the field if need be.

The New Act: Restriction or Opportunity?

The most significant part of the new act is not the result, but the essential—and hopefully increasingly common—shift in the paradigm of the traditional legislative process that it represents.

First and most important of all, the crowdfunding act is the first national legislative project relating to economic competitiveness in which Finland is blazing a trail rather than trailing behind as usual. For once, EU level regulations were not looked at with fear, but were interpreted with courage and objectivity and in accordance with the principle of proportionality. This lead to an economically efficient result without violated the mandatory obligations set by the directives (MiFID).

Second, the legislative process emphasised genuine interaction to an exceptional degree. The actors and interest groups active in the industry were not just heard formally, there was a genuine desire to understand their needs and desires.

Thanks to the high-quality of preparation, the opposing interests of market freedom and investor protection have been balanced in the new legislation. There was also another benefit to the process: the discussions held prior to enactment strengthen the approval of the new act. Under the rule of law, it is not enough that the result is justified, the process also has to be legitimate.

Whether we like it or not, in a market economy, a welfare state can only be maintained by ensuring that the economy is efficient. This new act is a good tool provided that we have the skill and courage to use it properly.

The open-minded approach that the Ministry of Finance took to drafting this legislation is just what the sputtering Finnish economy needs. Legislation doesn’t always have to create restrictions, it can also create opportunities.

Finland Leading the Way

Finland’s trailblazing attitude will likely lead to alliances being formed between small crowdfunding platforms and finance giants over the coming year. These kinds of alliances will turn the small vibrations of better allocation of resources into a pounding base beat, which will help energise all of society.

One can only hope that the parliamentary hearing of the crowdfunding act will also lead to Parliament enacting the fundraising act toppled during the term of the previous government. The arguments presented for opposing the law seem objectively strange—perhaps strong lobbying had something to do with it.

The fact of the matter is that crowdsourcing is something that needs to be harnessed not only in investing, but also in charity. Offering help to those in need should not be something requiring extensive authority processes. The threshold between those in need of aid and those in a position to offer it must be lowered.

New electronic distribution channels and operating models in both investing and charity are an opportunity, not a threat. The need for help is now stronger than ever due to the eroding tax base and migration.

Latest references

We have advised S-Bank Plc in four bond transactions totalling EUR 1.45 billion that provided financing for S-Bank’s acquisition of Svenska Handelsbanken AB’s Finnish private customer, asset management and investment services operations. In 2023, we advised S-Bank in supplementing their earlier bond programme and in the issuance of two new bonds. S-Bank’s first covered bond, valued at EUR 500 million, was issued in September 2023. In addition to general corporate purposes, the purpose of the issue was to finance the acquisition of Svenska Handelsbanken AB’s Finnish private customer, asset management and investment services operations. Further, a EUR 150 million senior preferred MREL eligible bond was issued in November 2023 and the purpose of the issue was to meet the minimum requirement for own funds and eligible liabilities (MREL) and to finance the bank’s activities. In 2024, we have advised S-Bank Plc in the update of a EUR 3 billion bond programme. Under the programme, S-Bank may issue senior preferred MREL eligible notes, covered bonds and additional tier 1 capital notes. In February of 2024, we advised S-Bank in its issuance of a EUR 300 million senior preferred MREL eligible bond and on the tender offer of its EUR 220 million senior preferred MREL eligible bond maturing in 2025. The tender offer required the prior permission of the Finnish Financial Stability Authority based on Commission Delegated Regulation 2023/827 on technical standards for the reduction of own funds and eligible liabilities prior authorisation. The Stability Authority granted S-Bank a permission for repurchases of the notes. Based on the permission, S-Bank replaced the notes with own funds or eligible liabilities instruments of equal or higher quality at terms that are sustainable for the income capacity of S-Bank. The final tender offer results were announced in February 2024. In April 2024, we further advised S-Bank in supplementing their base prospectus and issue of their second covered bond of EUR 500 million. The covered bond’s maturity date is 16 April 2030.
Case published 30.7.2024
We act as the lead legal counsel in the groundbreaking case of Multitude SE’s (Multitude) proposed relocation from Finland to Switzerland. The first phase of the relocation, involving the transfer of Multitude’s registered office from Finland to Malta pursuant to SE Regulation, was successfully completed on 30 June 2024. In this connection, Multitude’s shares were removed from the Finnish book-entry system and the issuer central securities depository of the shares changed from Euroclear Finland Oy to the CSD operated by the Malta Stock Exchange. In practice, all of Multitude’s shares are now held through Clearstream. In Malta, the company is anticipated to be converted into a public limited liability company under Maltese law, following which it will seek redomiciliation from Malta to Switzerland. Given that Finnish legislation does not allow for direct relocation to a non-European Economic Area country such as Switzerland while preserving the company’s legal personality, the process necessitated a multi-jurisdictional strategy as outlined above. Our mandate encompasses advising Multitude on all aspects governed by Finnish law concerning the proposed relocation and coordinating the work of local legal counsel and various other advisors involved in the project. The process also involved a written procedure to amend Multitude’s existing subordinated capital notes and senior bonds to facilitate the relocation as well as placement of EUR 80 million senior guaranteed notes by a newly established Multitude Capital Oyj. ”The transfer to Malta marks a significant step in Multitude’s journey. This pioneering and complex process has been successfully implemented with the invaluable support of our own team and advisors. Castrén & Snellman has masterfully orchestrated the entire project, ensuring seamless coordination across multiple jurisdictions. We look forward to achieving our next step with the further relocation to Switzerland”, says Jorma Jokela, Multitude’s CEO. Multitude is a fully regulated growth platform for financial technology, employing over 700 individuals across 25 countries. Its shares are listed on the regulated market (Prime Standard) of the Frankfurt Stock Exchange.
Case published 1.7.2024
We acted as legal advisor to OP Finland Infrastructure LP in its investment in ESL Shipping Ltd, a Finnish shipping company. Varma Mutual Pension Insurance Company co-invested in the company. The investment was made against new shares in ESL Shipping, and  the EUR 45 million co-investment  corresponds to a  21.43 % holding in the company. The aim of the investment is to accelerate ESL Shipping’s green transition. ESL Shipping Ltd is a Finnish shipping company. Its main shareholder is Aspo Plc. OP Finland Infrastructure is a fund investing in Finnish infrastructure. The fund is managed by OP Financial Group. Varma Mutual Pension Insurance Company is a Finnish pension insurance company. In September 2023 the value of its investment portfolio amounted to EUR 57.5 billion. 
Case published 26.4.2024
We are acting as the legal advisor to Purmo Group Plc in Project Grand Bidco (UK) Limited’s voluntary public cash tender offer for all the issued and outstanding shares in Purmo Group. The tender offer values Purmo Group’s total equity at approximately EUR 392 million. Project Grand Bidco (UK) Limited is a special purpose vehicle incorporated and existing under the laws of England and Wales that will be indirectly owned by a consortium formed for purposes of the tender offer of certain affiliated funds of Apollo Global Management, Inc. and its subsidiaries, and Rettig Oy Ab. The consortium intends to support the development of Purmo Group with industrial expertise, and the planned tender offer is expected to accelerate the implementation of Purmo Group’s growth strategy. Purmo Group’s class C shares are listed on the official list of Nasdaq Helsinki. Purmo Group is at the centre of the global sustainability journey by offering full solutions and sustainable ways of heating and cooling homes to mitigate global warming. Purmo Group provides complete heating and cooling solutions to residential and non-residential buildings, including underfloor heating and cooling systems, a broad range of radiators, heat pumps, flow control and hydronic distribution systems, as well as smart products. The completion of the tender offer is subject to the satisfaction or waiver by the offeror of certain customary conditions on or prior to the offeror’s announcement of the final results of the tender offer. The tender offer is currently expected to be completed at the end of the second quarter or at the beginning of the third quarter of 2024.
Case published 26.4.2024