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Name: Heikki Marjosola

Date: 8 December 2023

QUESTIONNAIRE ON DELISTING

Finland

PART I. VOLUNTARY DELISTING

A delisting is deemed voluntary if it is initiated by the company or a shareholder.

1. Is voluntary delisting explicitly allowed by national laws or by jurisprudence?

Yes (X) No

Relevant provision:

The Finnish Companies Act (‘FCA’) does not contain explicit provisions on voluntary (or involuntary) delisting.

Delisting is generally governed by the Act on Trading in Financial Instruments (1070/2017, ‘ATFI’) which implements MiFID II requirements. The relevant provision is Chapter 3 section 14 § which states that delisting can be carried out in accordance with the rules governing suspension or removal of financial instruments from trading as set forth in Chapter 3, section 11 of the ATFI. That provision provides that the trading venue may remove the financial instrument from trading also on issuer’s request, but certain conditions must be met.

Section 25 (Supplement B) of the Nasdaq Main Market Rulebook (1), which essentially replicates the ATFI’s requirements, provides that the exchange may at Issuer’s initiative decide that trading in a share is terminated but the decision can be made only when the following conditions, as specified under Supplement B, section 25(i)(a), apply:

- the share or the issuer no longer fulfils the requirements of the Rulebook; or 

- delisting is otherwise necessary based on the issuer’s actions being in contradiction with the legislation or regulations on the operation of the exchange, the Rulebook or with the good practice in securities markets. 

The same section provides that the listing cannot in any case be terminated if it would result in significant harm to investors or to the proper functioning of the financial markets. The exchange may also set additional conditions for the termination of trading.

The decision on delisting of shares is made by the Nasdaq Helsinki Listing Committee.

2. If the answer to 1. is yes, who decides so?

BoD (X) GA Other  

Relevant provision:

The FCA does not regulate explicitly the issue of which company organ decides on delisting. The power therefore falls under the general competence of the Company’s board as defined in Chapter 6, section 2 of the FCA. The general competence includes all powers not explicitly delegated to other company organs in law or in articles of association.

Market rulebook, although not of overriding importance, also presumes the decision is made by the BoD (Nasdaq First North Growth Market rules 6.2.6).

3. What is the quorum requirement for the delisting decision of the competent organ? 

More than half of board members unless articles provide otherwise (Chapter 6, section 3 of the FCA).

4. What is the majority requirement for the delisting decision of the competent organ?

Simple majority unless articles provide otherwise (Chapter 6, section 3 of the FCA).

5. Do (minority) shareholders have statutory veto rights as to a delisting decision?

Yes No (X)

6. Should delisting take place within a specific timeframe after the relevant decision? Is there a specific period of time after the decision in which the delisting should be completed?

Yes No (X)

7. Should the delisting application give a full statement of reasons for the submission of such application? 

Yes No (X)

NOTE: In practice, voluntary delisting requires meeting several conditions (see Q 1).

8. Is it required that a competent authority approves the voluntary delisting?

Yes No (X)

If the answer to 8. is yes, who is the competent authority? 

The Market operator may request the competent authority (the Finnish Financial Supervisory Authority, FIN-FSA) to verify the operator’s decision to delist / not to delist pursuant to issuer’s request to delist its financial instruments (Chapter 3, section 11(6) of the ATFI ). 

In such a case – there is no market practice, to my knowledge – the FIN-FSA would assess the merits of the request. Based on the Act’s wording, the FIN-FSA could only verify or not to verify the market operator’s delisting decision. 

9. In case of a voluntary delisting does the issuer have to make an offer to buy the shares of (dissenting) shareholders? 

Yes No (X)

Voluntary delisting does not per se trigger such obligations. 

As specified above (see Q 1), voluntary delisting is only possible in situations where the share or the issuer no longer fulfils the requirements of the Market Rulebook or the issuer fails to comply with relevant rules or good practice.

For public offers, mandatory bids and standard company law redemption procedures, see answers to Q XX below.

10. Are there any restrictions due to the principle of maintenance of the share capital?

Yes No (X)

Relevant provision:

The only situation I can think of where such restrictions would be triggered is where delisting would involve the use of company’s restricted capital (minimum 80,000 EUR), eg in a public offer for all the outstanding shared made by the company itself. Chapter 14 of the FCA sets forth the procedure for reducing the share capital, which includes a cumbersome creditor protection mechanism.

Under Finnish law, a limited liability company cannot, as a rule, use its funds to finance the acquisition of its shares by a third party (Chapter 13, section 10 of the FCA),

11. Does a (majority) shareholder or a third person has the right to offer to buy the shares of (dissenting/all) shareholders and relieve the issuer?

Yes No

Relevant provision: 

As specified above (Q 1), voluntary delisting is only possible in situations where the share of the issuer no longer fulfils the requirements of the Market Rulebook or the issuer fails to comply with relevant rules or good practice.

Public offers for shares (both voluntary and mandatory bids) are regulated under Chapter 11 of the SMA.

The FCA provides for a redemption right (‘squeeze out’) for the majority shareholder who owns or controls 90 per cent of the votes and shares. The minority shareholders have a corresponding right to require that their shares are redeemed by such a majority share-holder. Both the majority and minority shareholders therefore have the right, but not the obligation, to demand redemption of minority shares (squeeze-out/sell-out). The rights of squeeze-out/sell-out only apply to shares in the target company, not to other securities issued by the target company. (Chapter 18, section 1 of the FCA)

12. In case of a voluntary delisting does the issuer or a third person have the obligation to publish a prospectus / informational document?

Yes No

Relevant provision:

Where delisting is carried out through the medium of a public offer, an offer document must be published in accordance with Chapter 11, section 11 of the SMA, the Decree of the Ministry of Finance on the content and disclosure of an offer document and exemptions from its content (1022/2012), the FIN-FSA Regulation on Takeover Bids as well as the Helsinki Takeover Code.

13. Is an exit opportunity / mechanism that allows investors to exit their investments (e.g. sell – out right) available for shareholders in case of delisting? What are the relevant provisions (please provide translations)? 

Yes No

Voluntary delisting – ie ‘going private’ at the initiative of the listed company itself in the ordinary course of business – does not per se trigger any exit rights. 

When delisting is a consequence of a merger (‘cold delisting’) exit rights are provided (see Q 19).

Exit rights are also provided when delisting is a consequence of a squeeze out (often invoked in the final stage of a public offer) (see Q 11).

14. Is there any specific provision on downlisting? If not, is downlisting allowed, and how does it take place?

A downlisting occurs when the shares are no longer traded on a regulated market (as defined by Union law) but on an MTF.

Yes No (X)

Neither the law nor Nasdaq Nordic Rulebooks (Main market or MTF) address the issue of downlisting.  

15. Is there any specific provision on market migration (delisting from a regulated market and listing in another)? 

Yes No (X)

Neither the law nor Nasdaq Nordic Rulebooks (Main market or MTF) address the issue of market migration (note: Finland only has one regulated market, ie the Nasdaq Main Market).

16. Is there any specific provision on voluntary delisting in case of increase of listing requirements by both the Law and Stock Exchange?

Yes No (X)

17. Are there different rules on delisting for national and foreign listed companies?  

Yes No (X)

18. Cold delisting is usually described as a transformation of a listed company resulting to its delisting, including especially the merger by absorption of a listed company by an unlisted company. What is defined as cold delisting in your legal order? Is there any specific provision on cold delisting? 

The term appears to be alien to the Finnish legal order, including jurisprudence. 

What has been called cold listing elsewhere denotes the principal route for companies to exit the Nasdaq Helsinki Main List. Only a few isolated cases have been reported since the 1980s of companies exiting First North MTF / Growth Market or its antecedent markets by ‘request of the company’ or due to ‘low liquidity’.

19. Does the merger of a listed company with a non-listed company lead to delisting? Is an exit opportunity available for shareholders? What are the relevant provisions? (please provide translations)

Yes (X) No

Relevant provision:

In a merger, the assets and liabilities of the target company are transferred to the acquiring company in exchange for a merger consideration which as a rule consists of shares in the acquiring company. The merger consideration, paid to the shareholders of the target company, may also be in the form of cash, other assets, and commitments if there is justified reason for this (Chapter 16, section 1 of the CA).

There is no regulation (including soft law) about when and how the delisting takes place in the context of a merger of a listed company with a non-listed company. The delisting procedure is governed by the principles-based conditions and procedures as detailed in ATFI and Nasdaq rulebook (see the answer to Q 1) (2). The issue is therefore decided on a case-by-case basis, usually following a request by the issuer to the Nasdaq Helsinki Listing Committee. The main issue to be considered is whether the issuer fulfils the listing requirements, and whether delisting would give rise to investor protection issues (see Q 1).

In a reverse merger, where a non-listed company acquires or absorbs a listed company, the merger will not necessarily lead to delisting of the existing shares.

In a merger, the interests of shareholders of the merging company are protected under Chapter 16 of the FCA which includes the right of a shareholder voting against the merger to demand the redemption of their shares (Chapter 16, section 13 of the FCA). The general principles of Chapter 1 of the FCA also apply which means, inter alia, that the board of directors of the merging company has a duty to ensure that the merger consideration is in the best interests of the company and its shareholders.

In Finland, a merger has offered an increasingly popular way to acquire control in and delist a target company particularly in situations where the offeror in a public takeover bid has failed to acquire more than 90 per cent of the shares and votes in the target company (see the next Question). This is primarily because under the FCA the absorbing company (the offeror) can vote its shares in the target, including those it has acquired as a result of the preceding takeover bid. This means that 2/3 qualified majority will be enough to complete the merger. (Chapter 16, section 9 of the FCA)

The second reason for the increasing popularity is that the prior to the 2022 reform of the Helsinki Takeover Code neither the Takeover Code nor the Finnish Securities Markets Act (746/2012, ‘SMA’) SMA applied to mergers. As the 2022 Helsinki Takeover Code explains, under the FCA the acquiring company has no obligation corresponding to Chapter 11, section 7 of the SMA to afford the shareholders of the merging company equivalent treatment. The rules on consideration also differed in the case of mergers and takeovers.  The 2022 Takeover Code covers merger transactions (3). 

20. Does the successful completion of a mandatory bid give the right to delisting? If yes, are there any preconditions?

Yes No (X)

Relevant provision:

In Finland the mandatory bid thresholds are 30 per cent and 50 per cent as set forth under Chapter 11, section 19 of the SMA.

Finnish law does not recognize a ‘right’ to delisting in any situation (see the answer to Q 1).

A successfully completed mandatory bid will nevertheless result in delisting where the bidder receives more than 90 per cent of the votes and shares in the target company and redeems the remaining shares at a fair price following the squeeze-out procedure as defined under Chapter 18, section, 1 of the FCA. In the case of disagreement, the fair price will be determined in a statutory arbitration procedure (see Chapter 16, section 13 of the FCA) (see also Q 13).

There is no regulation (including soft law) about when and how the delisting takes place. The delisting procedure – also in the context of takeover bids – is governed by the principles-based conditions and procedures as detailed in ATFI and Nasdaq rulebook (see the answer to Q 1).  The issue is therefore decided on a case-by-case basis usually following a request by the issuer to the Nasdaq Helsinki Listing Committee. The main issue to be considered is whether the issuer fulfils the listing requirements, and whether delisting would give rise to investor protection issues (see the answer to Q 1) (4).

The launch of a public takeover bid will result in the exchange giving the target company’s shares an ‘observation status’. The purpose of this is to signal the market that there are special circumstances to which investors should pay attention (Nasdaq Main Market Rules, section 4.1.1).

21. Are there specific rules on delisting from an MTF? 

Requirements for voluntary delisting appear lighter under the Nasdaq First North Growth Market Rules Supplement C section 2.6. However, based on ATFI, the rules are identical in the case of delisting from an MTF (Chapter 5, section 11 of ATFI) so there should be no difference in practice. 

Said supplement (section 2.6) also requires that in the case of a voluntary removal the Issuer shall have at least one Authorized Public Auditor (KHT) or Authorized Public Audit firm (KHT audit firm) appointed as auditor by the shareholders’ meeting.

PART II. OBLIGATORY DELISTING

A delisting is deemed compulsory/obligatory, if it is initiated by a supervisory authority or a market operator without consent of the company.

22. What are the prerequisites for compulsory delisting by the competent national supervisory authority?

According to Chapter 3, section 12 of the ATFI, the FIN-FSA may order a stock exchange to remove a financial instrument from trading in the event of a material breach of trading rules or disclosure obligations deriving from the SMA, the provisions and regulations issued under the SMA, or the MiFIR, the MAR or Commission regulations or decisions issued on the basis of MiFIR, MAR, or MiFID, or the rules of the stock exchange. The FIN-FSA may also order a stock exchange to remove a financial instrument from trading if there is another compelling reason for doing so.

The same provision provides, however, that such order cannot be issued if the order would significantly harm investors or impair the orderly functioning of the market. The FIN-FSA must also, prior to making the decision, hear the stock exchange unless the urgency of the matter or another special reason otherwise requires.

23. Which body has been designated as the competent authority, in particular regarding the power to require the removal of a financial instrument from trading pursuant to art. 69(2)(n) MiFID II?

The FIN-FSA acts as the competent authority (eg Government Bill 151/2017 vp, p 79.)

24. What are the rules of the market that can justify a compulsory delisting imposed by market (art. 52 MiFID II)?

According to the Nasdaq Main Market Rulebook (Supplement B, section 25) the exchange may decide that trading in a listed share is terminated if the share or the issuer no longer fulfils the requirements of the Rulebook or it is otherwise necessary based on the actions being in contradiction with the legislation or regulations on the operation of the Exchange, the Rulebook or with the good practice. The listing cannot be terminated if termination would result in significant harm to investors or to the proper function of the financial markets. The exchange may set conditions for the termination of trading.

The exchange may also, at issuer’s initiative and with the requirements mentioned in the above, decide that trading in a share is terminated. The exchange may however set conditions for the termination of trading (see Q 1).

In addition, certain substantial changes in the issuer as detailed under section 2.16 of the Nasdaq Helsinki Main Market Rules, can trigger an examination by the Listing Committee that is comparable to that conducted for a new issuer applying to be admitted to trading. Substantial changes mean changes following which the issuer could be regarded as effectively being an entirely new company (section 2.16.1).

Such evaluation is carried out by the Exchange on an overall basis. Examples include, but are not limited to:

• Changes in the ownership structure, management or assets.

• The existing business is sold and, in connection therewith, a new business is acquired.

• The turnover of the acquired business, or its assets, significantly exceeds the turnover, or the asset value, of the Issuer.

• The market value of the acquired assets significantly exceeds the market value of the Issuer.

• The control of the Issuer is transferred from the old management and the majority of the Board of Directors changes as a result of a transaction.

The rules also require that in conjunction with such substantial changes the Exchange is contacted in advance so that considerations regarding the continued trading of the Issuer’s Shares may be administered as efficiently as possible (section 2.16.2).

25. Have any of the voluntary or obligatory delisting requirements above changed materially since 2010 (e.g., due to a legal decision or amendment of the regulations)?

Since the entry into force of MiFID II the delisting requirements of the Nasdaq Helsinki rulebooks have been materially based on the MiFID II provisions on removal and suspension of trading in financial instruments, as transposed into Finnish SMA.

PART III. GENERAL QUESTIONS (if not already answered)

26. How are dissenting shareholders protected in voluntary delisting? 

Exit rights and other rights are provided eg in the case of takeovers, squeeze outs (Q 13), mergers (see Q 19) and which result in delisting (‘cold delisting’, broadly defined).

There are no specific rules protecting dissenting shareholders in the hypothetical case of a company deciding to go private in the ordinary course of business (see Q 18). Such scenarios would be governed by the general principles of Chapter 1 of the FCA, including director’s fiduciary duties. In addition, the Exchange – and as a last resort the FIN-FSA – must ensure on a case-by-case basis that the delisting does not result in significant harm to investors (see Q 1 and 22).

27. What are the sanctions in case of a breach of the delisting rules? 

There are no specific sanctions and the relevant rules on delisting set no specific obligations to the company. The acts governing takeovers (SMA; the Helsinki Takeover Code), squeeze outs, mergers and other such restructuring (FCA) have their own sanctioning regimes; I assume these are not of interest here. 

28. Is there a special duty of loyalty (for the board or, if applicable, the shareholders) imposing further restrictions in connection with a delisting? 

No.

29. How are shareholders protected in obligatory delisting?

As noted above, delisting cannot be carried out by the exchange or be ordered by the FIN-FSA if it would significantly harm investors (see Q 1). 

The delisting decision by the exchange may also be appealed to the FIN-FSA under Chapter 3, section 14 of the ATFI. Each shareholder as well as a registered association acting for the supervision of the interests of investors has a right to refer the delisting decision to be reviewed by the FIN-FSA within 30 days from the decision.

Decisions of the FIN-FSA, including a decision of the FIN-FSA to order an exchange to delist a share, may be appealed to the administrative court of Helsinki (Chapter 11, section 2 of the ATFI).

The usual remedies provided under the FCA and the national tort liability regime would apply in the hypothetical case in which the mandatory delisting would be a result of a breach of director’s duties (Chapter 1 of the FCA).

30. Have shareholders successfully challenged delisting decisions in the past? If Yes, could you provide any names of cases?

There is no record of such challenges to the FIN-FSA or the Administrative Court.

31. How is the issuer protected in (obligatory) delisting?

An issuer has the right to refer the delisting decision of the Exchange, as well as a decision of the stock exchange made on the application by the issuer not to remove a security from stock exchange listing, to be reviewed by the FIN-FSA within 30 days from the decision (Chapter 3, section 14 of the ATFI).

Decisions of the FIN-FSA, including a decision of the FIN-FSA to order an exchange to delist a share, may be appealed to administrative court of Helsinki (Chapter 11, section 2 of the ATFI).

32. How does insolvency and restructuring of a listed company affects delisting? Specifically: a) Does the initiation of formal insolvency (liquidation) procedures automatically trigger mandatory delisting? b) Does the initiation of formal restructuring / reorganization procedures automatically trigger mandatory delisting? c) If the above scenarios do not automatically trigger mandatory delisting, what else are the implications? d) Please give empirical information (if available) on the treatment of insolvent listed firms by trading venues in your jurisdiction e) What are the relevant provisions (please provide translations)?

a) No.

b) No.

c) The delisting procedure is governed by the principles-based conditions and procedures as detailed in ATFI and Nasdaq rulebook (see the answer to Q 1). The issue is therefore decided on a case-by-case basis, usually following a request for removal of shared from trading as filed by the issuer / administrator to the Nasdaq Helsinki.

Interestingly, rules on delisting as a consequence of insolvency are much more detailed in Stockholm (see Nasdaq Main Market Rulebook – Supplement D – Nasdaq Stockholm) and in Copenhagen (Nasdaq Copenhagen – Supplement A effective 1 October 2021).

Generally, insolvency and restructuring prompt delisting under the applicable market rules because such changes would result in the company no longer fulfilling the listing requirements. The exact effect, however, depends on applicable rules and details of restructuring.

d) There have been in total 50 bankruptcies of listed companies since late 1960s. These are:

Villayhtymä Oy (1969)

Mancon Oy (2 February 1990)

Nobiscum Oy (13 November 1992)

Alcom Oy (1 July 1998)

Apollo Oy (1 July 1998)

Reach-U Holding Oyj (27 February 2002) – Pre-list

Stromsdal Oyj (10 December 2008)

Evia Oyj (1 July 2009)

Elcoteq (7 November 2011)

Tiimari (30 September 2013)

Takoma Oyj (5 April 2017)

Ahtium Oyj (14 March 2018)

FIT Biotech (8 March 2019) – First North –yhtiö

e) there are no legal provisions directly concerning the treatment on insolvent listed companies by trading venues.

33. Do relevant courts have the power to examine the delisting reasοns on the merits?  

Yes. See answers to Q 24 and 25.

34. What are the legal consequences of delisting: a) on shares, b) on shareholders, c) on the issuer?

The most relevant legal consequences have been discussed above. I emphasize again that ‘regular delisting’ or ‘going private’ are not phenomena relevant to Finland and what has been called ‘cold listing’, broadly defined to include takeovers as well, is effectively the only route for companies to exit the Nasdaq Helsinki Main List (apart from bankruptcy). In Finland the right to delist is circumscribed. The ATFI provides, as mentioned above, that the exchange may at issuer’s initiative decide that trading in a share is terminated, but the exchange may also set conditions for the termination. A negative decision may be appealed to the FIN-FSA by the issuer (but not by a shareholder). There is no market practice testing these rules. This means that the legal effects on a, b and c are very much in line with the legal effects of takeovers, mergers and insolvencies

In broad terms, the legal consequences are:

a) In a hypothetical case where delisting would be carried out eg due to low liquidity (ie the company would not meet listing requirements) or due to breach of legal requirements (see Q 1), the shares would no longer be traded on a public market and this would mean significantly reduced liquidity (especially since in Finland there are no liquid markets for unlisted companies). The share could also be transformed from book-entry securities (as registered in the Finnish CSD pursuant to the CSD Regulation) to normal uncertificated shares.

b) Exit opportunities significantly worse; protection only via the FCA as investor protection measures of eg the SMA of the Helsinki Takeover Code would no longer apply

c) The usual drawbacks of an unlisted company compared to listed company; Lower regulatory burden; in the case of shares been deregistered from the Finnish CSD the board would be in charge of maintaining the share register.

35. Are there any statistical data on delisting in your Country? If yes, please provide further details. Are there any statistical data, or evidence, on downlisting in your Country? If yes, please provide further details. Are there any statistical data, or evidence, on delisting from an MTF in your Country? If yes, please provide further details.

The present MTF (First North Helsinki) has been in operation since 2012 and various pre-lists existed before that.

In total eight companies have delisted from First North since 2012 up until 2022. Of these two were due to company’s ‘own request’; one due to bankruptcy; three due to public offer; and two due to mergers.

No evidence on downlisting.

36. More specifically, how many cases of voluntary delisting and / or obligatory delisting by the competent national supervisory authority have there been since MiFID I entered into force in 2007? Please also provide the main reasons for mandatory delistings, if available.

Based on data provided by Nasdaq Helsinki (updated until 20 December 2022) 65 companies have been delisted from Nasdaq Helsinki since 2007 (including all market segments). 

Of these 13 have been due to bankruptcy and two due to ‘company’s own request’ (eg lack of liquidity). The rest are primarily due to mergers and acquisitions, including takeovers.

There have been no cases of mandatory delisting based on a decision of the FIN-FSA.

__________________________

(1) Nasdaq, Nordic Main Market Rulebook for Issuers of Shares Harmonized part effective 1 February 2021.

(2) Rules are much more detailed in Stockholm (see Nasdaq Main Market Rulebook – Supplement D – Nasdaq Stockholm) and in Copenhagen (Nasdaq Copenhagen – Supplement A effective 1 October 2021)

(3) See www.cgfinland.fi/en/takeover-code/

(4) Rules are more detailed in the applicable Stockholm main market rulebook (see Nasdaq Main Market Rulebook – Supplement D – Nasdaq Stockholm).