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The legal framework analysis aims to provide general knowledge of the national cooperative legislation and of its main characteristics and contents, with particular regard to those aspects of regulation regarding the identity of cooperatives and its distinction from other types of business organisations, notably the for-profit shareholder corporation.

It aims to evaluate whether the national legislation in place supports or hampers the development of cooperatives, and is therefore “cooperative friendly” or not, and the degree to which it may be considered so, also in comparison to the legislation in force in other countries of the ICA region, or at the supranational level.

In addition, the research aims to provide recommendations for eventual renewal of the legal frameworks in place in order to understand what changes in the current legislation would be necessary to improve its degree of “cooperative friendliness”, which is to say, to make the legislation more favourable to cooperatives, also in consideration of their specific identity. This webpage presents a snapshot of the legal framework analysis results for Finland. Prior to the completion of the research on key figures, the statistics available above are sourced from The Power of Cooperation – Cooperatives Europe Key Figures (2015).

 

 

Cooperatives are regulated by a special law in Finland, namely the Law on Cooperatives. The Law on Cooperative Banks and Other Credit Institutions in the Form of Cooperatives, pertains to some organisational features specific to these financial institutions. They concern mainly prudential mechanisms. In addition, there is a special Law on housing stock companies. These companies are to a certain extent comparable to housing cooperatives in other countries. The following laws are those relevant to cooperatives: 

 

Main laws relevant to cooperatives in Finland

 

Law on Cooperatives - Osuuskuntalaki, 14.6.2013/421

Law on Cooperative Banks and Other Credit Institutions in the Form of Cooperatives - Laki osuuspankeista ja muista osuuskuntamuotoisista luottolaitoksista, 28.12.2001/1504

Law on housing stock companies - Asunto-osakeythiölaki, 22.12.2009/1599

Law on European Cooperatives - Eurooppaosuuskuntalaki, 19.10.2006/906

 

There is no specific, explicit or implicit, reference as such in the Act to the ICA principles (cooperative principles), as laid down in the 1995 ICA Statement on the cooperative identity (ICA Statement).

 


 

 

Cooperative Friendliness

From the perspective of ICA member organisations, the cooperative friendliness of the national legislation can be considered to be significantly so, with the Act providing sufficient opportunities for the development of cooperatives. On the basis of its flexibility and comprehensiveness, in the opinion of the contributing member organisations, Finnish national legislation could serve as an example of legislation regulating cooperatives in other countries.

 

Key recommendations for improvement

The research identified four main points of improvement. Firstly, further consideration as to whether it is adequate to allow for the formation of one-person cooperatives. Secondly, it could be beneficial to evaluate the impact of the financing possibilities, for example financial instruments which are typical of stock companies, on the cooperative principles, as a basis for further legislative action. Thirdly, in Finland, the understanding of what cooperatives are, the lack of which is commonly shared in many countries, might not be facilitated by using language which belongs to the world of capital-centered companies, but rather might be facilitated by using terminology which expresses the cooperative difference. Finally, unrestricted divisibility of the reserve fund is also questionable, in light of the third principle of the International Cooperative Alliance, Member Economic Participation.

 

Conclusions

Cooperative law in Finland may be considered to have a sufficient framework, and it can be stated that legislative changes are not presently needed. A more complete picture of the Finnish cooperative law requires further work on bylaw autonomy, as well as exploring other areas such as competition law or labour law, or accounting standards. The case of Finland, with its wide bylaw autonomy under the Act, has taken the 4th ICA cooperative principle of autonomy to its maximum. This demonstrates how important it would be to conduct further research into the way the cooperatives put the cooperative principles into legally recognised practice through their bylaws, in order to see how cooperatives might translate these principles into practice.

 

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