The Finnish Mankala principle

A number of Finnish energy producers many of those significant are organised as limited liability companies the objective of which is not making or maximising profit but producing energy for their shareholders at cost price. The shareholders of these electricity producing limited liability companies are very often utilities and/or other power users. This briefing is intended to present some but not all legal rules and the uncertainty relating to the same that might be relevant to lenders considering financing a Finnish company operating on the Mankala model.

When an energy producer sells the energy it produces to its shareholders at cost price and those shareholders commit to cover for the costs of the company the producer does not gain taxable profit and the shareholders do not receive veiled dividend for tax purposes. This special cost-price model is known in Finland...