The sale of a company and the transfer of business
Transfer of Business and Employee Rights in Finland
A transfer of business occurs when a company, organization, or part of its operations is handed over to a new employer, and the transferred business remains substantially the same after the change. This can include a full company transfer or a partial transfer of a specific functional unit.
Under Finnish employment law, all existing employment relationships transfer automatically to the new employer as they are, without interruption. This means that the employees retain their current terms and conditions of employment, including seniority and benefits.
According to legal practice, a transfer of business is considered to have taken place when:
There is a contractual relationship between the transferor and transferee
The subject of the transfer is an operational unit that forms a functional entity
The operations continue immediately and in a similar form under the new employer
This rule applies regardless of the legal form of the transfer — whether it’s a sale of business, merger, or outsourcing arrangement.
Correctly identifying and managing a business transfer is crucial to avoid legal disputes and ensure compliance with employee rights.
Transfer of business Finland – Business transfer and employment relationships – Employer change employment law – TUPE Finland (Transfer of Undertakings Protection of Employment) – Employment transfer in mergers and acquisitions
Planning a business transfer or acquisition in Finland?
Annia advises employers on employment law compliance in business transfers, ensuring a smooth and legally sound transition for both the company and its employees.
Ownership Changes, Share Deals and Business Sales – Understanding the Legal Distinctions
It’s important to distinguish between a transfer of business (which affects employment relationships) and a change in company ownership, which does not. For example, when purchasing the entire share capital of a limited liability company (Oy), the transaction concerns ownership of the company, not the direct transfer of its business operations. The employer remains the same legal entity, and employment relationships continue unchanged.
Various ownership arrangements, such as generational changes, business sales, or corporate restructuring, fall under changes in ownership. In family-owned businesses, generational change is often executed through agreements between relatives and has specific tax implications that differ from commercial sales.
There is a clear legal difference between a:
Share deal – where shares in the company are sold; the company and its business assets remain intact
Asset or business deal – where the actual business operations and assets are sold; in this case, the seller is the company itself, not the individual owner
In a business sale, proceeds from the sale go to the company. This distinction has important tax, contractual, and liability implications. For entrepreneurs operating under a general or limited partnership, it may be beneficial to first convert the business into a limited liability company, and then proceed with the transaction. Asset sales are often easier, clearer, and more cost-effective to structure through a limited liability company.
Considering a business sale, share deal, or generational change? Annia helps entrepreneurs and business owners navigate ownership transitions, ensuring tax efficiency, legal clarity, and smooth execution.