This content is from: Local Insights


The Act on real estate funds has been ratified to enter into force on March 1 1998. The Act provides a more secure and regulated means for the public to invest in real estate.

Under the Act, the public participates in joint investment in real estate by buying, subscribing to or otherwise acquiring shares in a public limited liability company (a real estate fund) which invests the assets obtained from the public in real estate and securities relating to real estate as well as in other securities.

According to the Act, the minimum share capital of a real estate fund is Fmk20 million (US$3.6 million) which must be reached within 18 months of the establishment of the fund.

The real estate fund is required to establish the following rules governing its investment activities to be approved by the Financial Supervision:

  • to state the fund's investment policies and restrictions concerning the investments;
  • to state the principles by which the value of the shares in the fund is calculated and published; and
  • to state any intention of investing in derivatives, and the type and the extent of the derivatives operations.

Under the Act, a real estate fund must apply for official listing of its shares within one year of the start of its real estate investment business. The purpose of this provision is to facilitate the supervision of the fund and the evaluation of the shares in the fund.

A real estate fund is subject to a general obligation of diligence and expertise in carrying on real estate investment activities.

The Act contains detailed provisions to ensure the good financial standing and credibility of a real estate fund, setting out requirements regarding legitimate investment objects. When investing, the real estate fund must decentralize the risk involved in the investment business. For example, it is required that the amount of investments in Finnish real estate and in securities relating to the real estate must not be less than three-fifths of the assets of the real estate fund. The Act includes provisions for the evaluation of the real estate and securities relating to real estate. A real estate fund is obliged to publish a prospectus when offering the shares in the fund to the public or when applying for the listing of its shares on a stock exchange.

Finally, under the Act, a real estate fund is exempted from asset transfer tax where shares, real estate or shares relating to real estate are given as capital contribution into the fund no later than March 1 1998.

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