Osakeyhtiö

An Osakeyhtiö (Oy) is the Finnish term for a limited liability company. It is the most common and widely used corporate structure in Finland. When you establish an Oy, you are creating a separate legal entity distinct from its owners (shareholders). This means the company itself can enter into contracts, incur debt, and be held legally responsible for its actions.

The primary defining feature of an Oy is limited liability. The financial risk of the shareholders is generally limited to the amount of capital they have invested in the company's shares. Personal assets of the shareholders are typically protected from business debts and liabilities, provided that the company is managed according to the law.

This business structure is suitable for a wide range of enterprises, from single-person consultancies to large-scale manufacturing operations. It is often chosen by entrepreneurs who plan to grow their business, seek external funding, or want to minimize their personal financial risk. An Oy also conveys a professional image to clients, partners, and financial institutions, as its operations are regulated by the Limited Liability Companies Act.

Setting up an Oy requires specific steps. You need to draft a Memorandum of Association and Articles of Association. A minimum share capital is no longer legally required for a standard private Oy, although injecting some initial capital is usually necessary for practical operations. The company must be registered with the Finnish Trade Register (Kaupparekisteri), maintained by the Finnish Patent and Registration Office (PRH).

An Oy must have a Board of Directors, which is responsible for the company's administration and the appropriate organization of its operations. Depending on the size and structure, the company may also appoint a Managing Director to handle day-to-day management. An Oy is subject to double-entry bookkeeping and, depending on its size, may require a statutory audit. The company pays corporate income tax on its profits, and shareholders pay tax on any dividends distributed to them.