The Supreme Court ruled on group contributions and minority shareholders’ rights

28.01.2016

The Supreme Court has issued two important precedent rulings (KKO:2015:104 and KKO:2015:105) concerning group contributions and their corporate acceptability in the light of minority shareholders’ rights, especially the minority’s right to dividend as set forth in chapter 13, section 7 of the Finnish Limited Liability Companies Act. According to said section, the main rule is that at least half of the profits of the financial period, less the amounts not to be distributed under the Articles of Association, shall be distributed as dividend, if a demand to this effect is made by shareholders with at least one tenth of all shares.

The rulings provide additional clarification to the execution of minority rights. In particular, minority shareholders in a parent company should be aware of and take into consideration that group contributions to unprofitable subsidiaries in the group may affect the profit of the parent company and consequently the minority’s right to dividend. Moreover, if the minority is dissatisfied with its divided, it must challenge both the company’s profit distribution decision and the underlying financial statement – challenging the profit distribution decision alone is not enough.

For more information about the rulings, please contact the undersigned. A more detailed summary of the cases is also available in Finnish

For further information, please contact:

• Ismo Hentula
• M: +358 40 8338 002
• E: ismo.hentula@procope.fi

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