Each limited liability company must have articles of association. They are the company’s internal regulations, which bind the company, its administrative bodies, management and auditors. The articles of association must be complied with in the same manner as binding law or the decisions of authorities.
The formulation of the articles of association is of great importance from the point of view of the company’s activities. Articles of association that are not suitable for the company’s purposes may decrease the benefits, which the shareholders can obtain from the company. It is recommendable to pay due attention to the contents of the articles of association already during the company's founding phase, because the amendments thereof always require at least two-thirds (a qualified majority) of the votes and of the shares represented at the general meeting of shareholders. In certain cases, the amendments may require that the shareholders decide upon them unanimously.
The articles of association must always include provisions regarding the company name, the municipality in Finland where it has its registered office and the field of activity:
1. Company name
The company name of a private limited liability company must include the words “limited liability company” or the abbreviation “limited / Ltd”. If the company intends to use its company name in two or more languages, the names in other languages must be stated in the articles of association.
Limited liability companies may have auxiliary company names for running a certain part of their operations.
2. A Finnish municipality as the company’s place of business
A company may practice its activities in several places and also abroad, but its registered place of business can only be in one Finnish municipality. The company’s registered place of business is of significance, as the general meetings of shareholders generally need to be held in the municipality of the place of business and any legal actions against the company need to be brought to the court of the municipality in question, unless otherwise provided in the articles of association (forum domicilii).
3. The company's field of activity
The term "field of activity" refers to the fields in which the company carries on its business activity. Any activity, which may be pursued legally in the form of a limited liability company, can constitute the company’s field of activity. A company can have several fields of activity, but they must all be registered.
In addition to mandatory provisions, the shareholders may also quite freely include other provisions in the articles of association. The other provisions may not, however, contradict the mandatory principles provided by the Limited Liability Companies Act. These voluntary provisions may concern e.g. following matters:
nominal value of shares and the amount of shares;
financial period of the company;
appointment of the managing director;
members of the board of directors, auditors and deputy auditors, or the minimum or maximum amount of such;
provisions concerning the right to represent the company (authorization to sign for the company);
provisions concerning the distribution of funds to the shareholders and the shareholders’ privilege to new shares in a share issue;
the manner of calling the general meeting and the matters addressed in it;
nomination of the chairman of the general meeting or election of a director of the board;
description of different share classes (e.g. shares carrying voting rights and non-voting shares);
provisions concerning a redemption clause or a consent clause restricting the transferability of shares;
determination of the majority required for resolutions adopted by the general meeting above the ordinary;
an arbitration clause, which binds the company, the shareholders, the board, the supervisory board, a member of the board and a member of the supervisory board, the managing director and the auditor with the same effect as an arbitration agreement.