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Working group wishes to clarify bondholder representatives' operating rights

Ministry of Finance
Publication date 1.7.2016 12.17
Press release

Expert working group proposes light regulation of the activities of bondholder representatives. Aims of new legislation would include enhancing legal certainty and improving the functioning of bond markets.

A bondholder representative is a company that represents investors in dealings with issuers, i.e. companies that are seeking finance. The company can be, for instance, an investment service provider or a company set up for this particular purpose.

The working group proposes a limited framework act on bondholder representatives in order to clarify the operating rights of these representatives. Under the proposals, representatives' rights would include among others the right to

  • institute proceedings on behalf of bondholders against an issuer or other actors
  • exercise the right of action in judicial proceedings on behalf of bondholders
  • apply for an issuer to be declared bankrupt
  • represent bondholders and exercise the right of action on their behalf in issuer bankruptcy
  • manage collateral given for bonds.

Currently, a representative's powers, rights and obligations are largely based on the terms and conditions of the bond issue or other bond agreement related to the bond issue. Legal uncertainty has been associated with these, and this uncertainty will be rectified with the proposed regulations.

Greater range of financing opportunities for companies

An effective bondholder representative arrangement will

  • reduce transaction costs
  • improve bondholders' access to information on issuers and on the status of their investments
  • improve the communication between issuers and bondholders
  • accelerate the making of key decisions in the event of any problems related to the issuer.

Minister of Finance Petteri Orpo considers the project an important step in developing a greater range of opportunities in the financial market.

"Our aim is to create better functioning bond markets in Finland, so that small and medium-sized companies have more alternatives for financing. This project and the proposal in the spring for a Crowdfunding Act have the same goal: we want to improve the financing for new innovations, increase the commercialisation of innovations and, through this, boost employment, too," says Minister Orpo.

The working group concluded that an effective bondholder representative arrangement will also increase the interest of foreign investors in Finnish companies.

Investor protection will improve

The working group did not detect any significant deficiencies in investor protection in the current regulations. Many of the changes put forward in the proposal will, however, improve investor protection and enhance legal certainty.

The working group gave special attention to the opportunities for increasing the participation of retail investors in bond markets. Using a representative can reduce the legal risks and costs of bond management.

Consultation round begins

On 1 July, the Ministry of Finance began a consultation round on the working group's proposals for a Government proposal. The consultation period will end on 9 September.

The working group has been granted an extension until 2 January. The working group will finalise the bill during the latter part of its term of office on the basis of the consultation comments. It will also focus on assessing other possible development measures for the bond markets.

An act on bondholder representatives will constitute part of the action taken in the Government's key projects.

Press release on the establishment of the working group (26 February 2015)


Aki Kallio, Ministerial Adviser, general secretary of working group, tel. +358 2955 30477, aki.kallio(at)

Jarno Tepora, Professor of Civil Law (emeritus), chairman of working group, jarno.tepora(at)

Mikko Kortelainen, Special Adviser to the Minister of Finance, tel. +358 50 301 8334, mikko.kortelainen(at)

Financial markets Petteri Orpo