At a glance
- Due diligence reviews a Finnish target’s ownership, contracts, people, disputes and regulatory position before an acquisition.
- No general law requires every buyer to conduct it. The contract and Sale of Goods Act rules on knowledge and inspection may affect remedies.
- Data-room access alone does not automatically establish knowledge. Record findings and agree their effect on price, warranties and liability.
- A share buyer acquires the company with its liabilities. Mandatory rules, including employment transfer rules, may apply to a business transfer.
- Scope, timing and cost depend on the deal and records. Financial, tax and technical work often needs specialist advisers.
What legal due diligence covers
Legal due diligence is a structured review of a business before an acquisition. It helps you test the seller’s information, identify matters that could affect value or completion, and decide which risks to investigate or address in the sale agreement.
For a Finnish limited liability company (osakeyhtiö, or Oy), scope may include ownership, governance, contracts, employees, intellectual property, permits and disputes. Tailor it to the company, sector and buyer’s plans. It cannot guarantee that every problem will be found.
Is a buyer legally required to investigate?
There is no universal Finnish statutory duty to conduct due diligence before every acquisition. The Sale of Goods Act (355/1987) may provide default rules for a share sale, subject to the agreement and circumstances. Section 3 allows the parties to agree different terms. Under section 20, a buyer cannot rely on a defect they must be assumed to have known about when contracting. If the buyer examined the target, or without a valid reason declined the seller’s invitation to do so, they may also lose the right to rely on defects that the examination should have revealed. This inspection rule has an exception where the seller acted dishonourably or in a manner contrary to good faith.
A data-room upload does not automatically establish that the buyer knew a document’s contents. The effect depends on the facts, presentation and contract. Define disclosures and their effect on warranties in the sale agreement, ask about gaps and retain the answers.
Warranties, specific indemnities, liability caps, thresholds, time limits and escrow are negotiated terms. An indemnity is not automatically unlimited or a full recovery; specify its scope and how other contractual limits apply. Match the response to the finding: a quantified debt may affect price, while a disputed tax position may need a tailored allocation.
What should a buyer review?
Ownership, governance and authority
Review the articles of association, shareholder register, share title records, past transfers, board and shareholder minutes, and any shareholders’ agreement. Confirm the seller owns the shares and can transfer them. Check for redemption or consent clauses under Chapter 3, sections 7 and 8 of the Finnish Companies Act (624/2006), and identify required company, lender, authority or counterparty approvals. Look for guarantees or security given for owners or related companies.
Contracts, customers and suppliers
Review material customer, supplier, lease, financing and outsourcing contracts, including standard terms and informal arrangements. Look for change-of-control, assignment, termination, exclusivity, price and consent clauses. A contract may remain in force after a share sale yet allow termination or renegotiation. Identify customer concentration and essential contracts.
Compare written terms with actual practice. Missing signatures, expired terms, side letters or oral promises can leave price, liability or termination unclear. Check whether consent or a replacement contract is needed before completion.
Employees and management
Review employment contracts, relevant collective agreements, pay and holiday records, incentive plans, disputes and employee claims. Assess key-person retention and documented confidentiality and intellectual property arrangements. A clause’s effect may depend on Finnish employment law and the facts.
An asset or business transfer may qualify as a transfer of business under Chapter 1, section 10 of the Finnish Employment Contracts Act (55/2001) if the business retains its identity or remains similar after the transfer. Rights and obligations arising from employment relationships in force at the transfer then pass to the new employer. The provision also governs liability for employment-related claims that fell due before transfer, with special rules for transfers from a bankruptcy estate. Check its application before agreeing how liabilities are allocated.
Intellectual property, data and technology
Identify the trade marks, domains, software, designs and other essential rights. Verify ownership or licences, especially for work by founders, employees and contractors. Review written agreements and licence terms, including open-source obligations.
For personal data in a data room, establish a lawful basis, minimise information and restrict access. An NDA does not itself provide a GDPR lawful basis. Redaction or a restricted clean room may suit sensitive records.
Disputes, regulation and property
Ask about claims, investigations, insurance notifications and regulator correspondence. Check permits, environmental matters, property and any approvals affected by a change of ownership. The sector determines whether specialist cyber, site or other reviews are needed.
Financial, tax, commercial, environmental and technical reviews are separate workstreams. Use specialist advisers for accounts, tax exposures, code quality and engineering condition.
How findings affect the deal
For each significant finding, assess likelihood, exposure and whether it can be fixed before completion. The agreement may adjust the price, require consent or corrective action as a completion condition, include a specific indemnity, or allocate the risk through warranties and liability limits.
Escrow may hold an agreed amount subject to release terms; it is negotiated, not an automatic recovery right. An earn-out links part of the price to future performance. It is a valuation mechanism, not security for seller liability. Define its calculation, information rights and dispute process.
The stage of the transaction matters. Before entering a binding purchase commitment, a buyer is generally free to decide not to proceed, subject to any binding obligations and potential liability arising from the conduct of negotiations. After a binding agreement is signed, an adverse finding does not automatically create a right to withdraw. Check the agreed due diligence condition, completion conditions and termination rights, together with any remedies under applicable law. Neither an exit right nor a claim for negotiation costs follows automatically from the presence or absence of a due diligence clause.
Share purchase or business transfer?
In a share purchase, the company remains the same legal person with its assets, contracts, employees and liabilities, including undiscovered liabilities. Review its history as well as its current position.
In a business or asset transfer, the parties identify what is intended to transfer, subject to mandatory rules. Employment transfer rules may apply, and consents or permits may be needed. Assess the structure against the actual business and law.
Competition and foreign investment checks
Finnish merger control generally applies where the parties’ combined Finnish turnover exceeds EUR 100 million and at least two parties each have Finnish turnover above EUR 10 million. Notify the Finnish Competition and Consumer Authority before completion and observe the standstill obligation. Check group turnover early; EU merger control may also be relevant.
Foreign buyers should also assess screening under Finland’s Act on the Screening of Foreign Corporate Acquisitions. Whether approval is needed depends on the buyer, target and transaction. See the Ministry’s acquisitions guidance.
A practical document checklist
- Articles of association, shareholder register, share title records and past transfer documents.
- Board and shareholder minutes, powers of attorney, group structure and shareholders’ agreement.
- Material customer, supplier, financing, lease, insurance and outsourcing contracts.
- Employment contracts, collective terms, payroll and holiday records, incentive plans and claims.
- Intellectual property schedules, employee and contractor agreements, software and other licences.
- Permits, regulatory correspondence, disputes, investigations, insurance claims and property records.
- Data protection records, security incidents and the proposed data room access arrangements.
The checklist is a starting point. Tailor it to the business and follow up on gaps rather than treating a complete-looking folder as proof that the underlying position is sound.
Preparing as a seller
Sellers can prepare by assembling records, reconciling ownership documents, locating signed contracts and identifying missing approvals or unresolved claims. Explain unusual transactions, correct genuine errors where possible and give consistent answers. Agree confidentiality obligations and restricted data-room access before sharing sensitive information.
My company law services include legal support for Finnish company matters. The scope, fee and timetable are agreed before work begins.
Time and cost
There is no fixed timetable or fee for every review. Cost and duration depend on the entities, records, issues, access to management and specialists required. Agree the scope and reporting format, and allow time to investigate gaps and negotiate the sale agreement.
Frequently asked questions
Is legal due diligence compulsory in Finland?
There is no general Finnish law requiring every buyer to complete a specified due diligence process. The Sale of Goods Act may provide default rules for a share sale, subject to the agreement and circumstances. Contract terms, disclosures and what the buyer knew or should have discovered on an inspection may affect the parties’ position.
Does uploading a document to the data room mean the buyer knew about it?
Not automatically. The legal effect depends on the circumstances and the sale agreement, including how disclosures are defined. Important findings should be identified, questions answered and the agreed allocation recorded clearly in the contract.
Can I withdraw if due diligence finds a problem?
Before a binding purchase commitment, you are generally free not to proceed, subject to any binding obligations and the conduct of negotiations. After signing a binding agreement, a finding does not automatically give you an exit right. Review the letter of intent, sale agreement, agreed conditions and applicable law before deciding what to do.
How long does due diligence take?
There is no universal timetable. The scope, quality and volume of records, speed of responses, complexity of the business and need for specialist reviews all affect duration. Agree a realistic timetable with the transaction team once the scope is clear.
What is the difference between a share purchase and a business transfer?
In a share purchase, the company remains in place and retains its assets and liabilities. In a business transfer, the parties identify which assets and liabilities move, subject to mandatory rules such as employment transfer law. The appropriate structure depends on the transaction and should be assessed with legal and tax advisers.
Sources
- Sale of Goods Act (355/1987), Finlex (in Finnish) – sections 3 and 20.
- Finnish Companies Act (624/2006), Finlex (in Finnish) – Chapter 3, sections 7–8, on redemption and consent clauses.
- Finnish Employment Contracts Act (55/2001), Finlex (in Finnish) – Chapter 1, section 10, on transfer of business.
- Supreme Court decision KKO 2009:45, Finlex (in Finnish) – paragraph 2, on freedom to withdraw from negotiations and potential pre-contractual liability.
- Finnish Competition and Consumer Authority: Merger control – notification thresholds, procedure and standstill obligation.
- Ministry of Economic Affairs and Employment: Acquisitions – screening of foreign corporate acquisitions.
- General Data Protection Regulation (EU) 2016/679 – lawful processing and data protection principles.
Information checked: 15 October 2026. This guide provides general information and is not a substitute for advice on your specific situation.
