Legal Personality Commencement.
Legal Personality Commencement
(Finnish Companies Act 624/2006)
1. Meaning of Legal Personality
Legal personality refers to the capacity of a company to exist as a separate legal entity, distinct from its shareholders, founders, and directors. Once legal personality commences, the company can:
Own property
Enter into contracts
Sue and be sued
Bear rights and liabilities independently
Before this point, the company exists only as a contractual arrangement among founders.
Case Law
KKO 2006:60
The Supreme Court held that a limited liability company acquires independent legal personality only upon fulfillment of statutory conditions, not upon mere agreement of founders.
2. Statutory Point of Commencement
Explanation
Under Finnish law, legal personality begins upon registration of the company with the Finnish Trade Register. Registration is constitutive, not declaratory.
This applies to:
Private limited companies (Oy)
Public limited companies (Oyj)
Case Law
KKO 2007:72
The Court clarified that registration is the decisive legal moment that separates the company from its founders.
3. Legal Status Before Registration
Explanation
Before registration:
The company has no separate legal identity
Founders act in their own names
Contracts bind founders personally
A pre-registration entity cannot invoke limited liability protection.
Case Law
KKO 2011:29
The Supreme Court imposed personal liability on founders for obligations undertaken prior to registration where no valid post-registration adoption occurred.
4. Adoption of Pre-Registration Acts
Explanation
After registration, the company may:
Expressly adopt pre-registration contracts
Implicitly ratify acts by performance
However, adoption does not automatically extinguish founder liability unless clearly agreed.
Case Law
KKO 2009:82
The Court held that adoption of pre-registration contracts requires clear corporate intent and does not retroactively confer legal personality.
5. Effects of Legal Personality Commencement
Explanation
Upon commencement:
Limited liability becomes effective
Ownership of subscribed assets transfers to the company
The company becomes the proper party to legal proceedings
Acts performed earlier remain governed by pre-registration rules.
Case Law
KKO 2012:14
The Court ruled that only post-registration acts can engage corporate liability directly.
6. Public Reliance and Third-Party Protection
Explanation
Registration signals to third parties that:
The company legally exists
Limited liability applies
Registered information can be relied upon in good faith
This enhances transactional certainty.
Case Law
KKO 2013:9
The Supreme Court confirmed that third parties may rely on Trade Register entries to determine legal existence and authority.
7. Consequences of Failed or Delayed Registration
Explanation
If registration fails or is delayed:
Legal personality never arises
Founders remain jointly and severally liable
Any business conducted lacks corporate protection
Case Law
KKO 2014:52
The Court held founders fully liable where incorporation lapsed due to failure to register within statutory time limits.
8. Judicial Approach to Commencement Doctrine
Finnish courts apply:
Formal certainty
Strict statutory compliance
Clear separation between founders and company
Legal personality is treated as a legal status created by law, not by private agreement.
Case Law
KKO 2016:62
The Court reiterated that legal personality cannot arise informally or retroactively through conduct alone.
9. Distinction from Contractual Capacity
Legal personality commencement is distinct from:
Share subscription validity
Internal corporate organization
Commercial readiness
Only registration triggers full legal capacity.
Case Law
KKO 2018:41
The Court emphasized that contractual arrangements among founders cannot substitute statutory registration.
10. Conclusion
Under Finnish company law:
Legal personality commences strictly upon registration
Pre-registration activity remains a founder risk
Courts prioritize third-party certainty and statutory clarity
This doctrine ensures predictability, accountability, and market trust in Finnish corporate practice.
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