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Negative equity in a Finnish Oy: fix it with an SVOP investment

Karma Accounts · Published 2 November 2026

When a Finnish limited company's (Oy) equity turns negative, its board must without delay notify the Trade Register of the loss of share capital (osakepääoman menettäminen), under the Limited Liability Companies Act (osakeyhtiölaki, OYL) 20:23. In a one-owner company the usual fix is an investment in the reserve for invested unrestricted equity (the SVOP fund): the owner pays in money, or converts a loan they gave the company, and gets no new shares. Equity rises by the full amount, the company has no taxable income, and once equity is above half of share capital the entry can be removed.

It often happens after a loss-making year, for example in a restaurant (restaurant accounting).

How to tell whether equity is negative

Start with total equity on the balance sheet: share capital, the SVOP fund and other reserves, and profits or losses from earlier years and the current one. For the PRH test the board adds (OYL 20:23):

• capital loans under chapter 12 of the Act,
• the accumulated depreciation difference (poistoero) and voluntary reserves,
• the excess of an asset's probable sale price over its book value, if material and not temporary.

The additions call for special caution and a reasoned explanation in the board's report or the notes. An ordinary loan from the owner does not count.

The duty is not tied to the year end: it applies whenever the board finds equity negative, and the board must see that the bookkeeping and finances are properly supervised (OYL 6:2). Read the monthly figures, and act while equity is still above zero.

Why it matters

• PRH notice. The board files without delay in the YTJ e-service. A board member or the managing director signs; no attachments; fee 55 euros. The entry is public.
• Removal is a separate notice. The entry stays until the company files to remove it, which needs equity above half of share capital (above zero if share capital is 0 euros).
• Duty of care. Management must act with due care to promote the company's interests (OYL 1:8), and a board member who breaks the Act can be liable for the damage caused (OYL 22:1).

A change is proposed. Under government bill HE 126/2026 the board would have to file without undue delay and at the latest within two months, no notice would be needed if equity stops being negative within that time, and the entry could be removed once equity is no longer negative. The intended start is 1 July 2027. Until an amendment is enacted and in force, the current rule applies.

The routes compared

For a one-owner Oy, SVOP is usually the simplest: no new shares, no registration and no loan terms. A capital loan suits better when you want the money back with interest, and accept that it can be repaid only when free equity and all capital loans exceed the balance sheet loss.

Step by step

1. Decide the amount. Cover the negative equity, plus more than half of share capital, plus a margin for losses until the balance sheet you will file for the removal.
2. Agree in writing. An SVOP investment without new shares is an agreement between the investor and the company, which the board represents (OYL 6:25). A board member may not handle their own agreement with the company (OYL 6:4), so if the owner is the only board member, the company's side is a written shareholders' decision (OYL 5:1, 5:2), dated, numbered and signed like general meeting minutes. The owner also signs the investment agreement. State the amount, the date, the SVOP fund and any loan converted.
3. Pay in, or convert. Under the Tax Administration's guidance a shareholder's receivable from the company, such as a loan, can be converted into an SVOP investment; the agreement replaces a payment. (A shareholder loan runs the other way, from the company to the owner.)
4. Book it. Give each investment its own sub-account, as the SVOP fund article explains.

1. Mind the year end. Under the Accounting Board's statement KILA 2118/2025, an investment agreed but still unpaid at the balance sheet date may be shown in the SVOP fund only if the money reached the company before the financial statements were signed; otherwise it may not be booked to equity. The statements are due within four months of the year end (Accounting Act 3:6). Agree before the year ends and pay before signing, and the adopted statements show the investment.
2. Remove the PRH entry. File in YTJ with a balance sheet showing equity above half of share capital and a statement of any 20:23 additions (for a capital loan, a mention in the equity calculation is enough), audited if the company must have an auditor. Fee 55 euros. The SVOP investment itself is not registered: the Act's registration rules cover share issues and share capital increases, and the investment shows in the financial statements.
3. Cover losses, if you wish. The shareholders can later move SVOP money against accumulated losses, usually at the annual general meeting with the decision on the result (OYL 5:3). Total equity, the PRH test and distributable funds stay the same, but the SVOP fund shrinks, and no more can be paid out of it than it holds (KILA 2059/2024). Leave it alone if you may want your investment back as a capital return.

Tax

• The company. Amounts received as share capital or other capital investment are not taxable income (Business Income Tax Act, EVL 6 § 1 mom 2 k).
• The owner. A cash investment is added to the acquisition cost of your shares, spread evenly over them, without changing how long you have held them. A converted loan is also a capital investment, but the guidance does not say what it adds to the acquisition cost if the company could not have repaid it in full; check before relying on the full amount.
• Tax losses survive. Confirmed losses are lost if, during or after the loss year, more than half of the shares change owner other than by inheritance or will, unless the Tax Administration grants an exemption (Income Tax Act, TVL 122 §). An SVOP investment without new shares changes no shares (tax loss carryforward).
• Taking it back later needs a distribution decision, distributable funds and solvency. For tax it is a dividend unless the conditions for a disposal are met, among them that your own investment is returned within ten years: see the SVOP fund article.

Worked example: a restaurant Oy after a bad year

A one-owner restaurant company: share capital 2 500 euros, calendar financial year, no auditor. The owner has lent it 12 000 euros on ordinary terms.

The 2026 books are closed on Friday 12 February 2027, and the board files the loss notice on Monday 15 February. Converting the loan alone would leave −18 400 + 12 000 = −6 400, so on Monday 1 March the owner signs a shareholder's decision and an agreement converting the loan and investing 10 000 euros of new money, paid on Wednesday 3 March. The 22 000 euros leaves equity at 3 600, which is 2 350 above the 1 250 needed for removal.

• Wednesday 31 March: an interim balance sheet. January to March lost 1 200 euros, so equity is 2 400, above half of share capital (1 250).
• Wednesday 14 April: the removal notice, with that balance sheet. PRH fees in total 110 euros.
• By Friday 30 April: the 2026 financial statements are signed. They still show −18 400, because the investment was agreed in 2027.
• Thursday 20 May: the annual general meeting adopts them, within the six months (financial statement deadlines).

A later meeting, say in spring 2028, could use SVOP to cover the 20 900 euros of losses up to 2026: the fund would fall to 1 100 euros, total equity unchanged. The company keeps its tax losses. Had the owner agreed the investment while the monthly figures still showed positive equity, and paid before the 2026 statements were signed, no notice would have been needed.

Common mistakes

• Waiting for the year end when the monthly figures already show negative equity.
• Booking the owner's money as a loan when an SVOP investment was meant, with nothing in writing.
• Agreeing an investment at the year end and paying it after the statements are signed.
• Too thin a margin, or never filing the removal: the entry stays until the company files.

Frequently asked questions

What happens if a Finnish Oy has negative equity?

The board must notify the Trade Register of the loss of share capital without delay, and the public entry stays until the company has it removed. Equity is restored with an SVOP investment, a capital loan, a share issue or profits.

Can I convert my loan to my company into SVOP?

Yes, by a written agreement. Equity rises and debt falls by the same amount, and no cash moves.

How do I remove the loss of share capital entry?

File in YTJ with a balance sheet showing equity above half of share capital and a statement of any additions, audited if the company must have an auditor. The fee is 55 euros.

Is an SVOP investment taxable?

No. It is not income for the company, and for you a cash investment is part of the acquisition cost of your shares.

About Karma Accounts

We keep the books for small Oys, restaurants among them, watch the equity in the monthly figures and prepare the investment entries and the balance sheet for the PRH removal. See limited company accounting or request a quote.

Sources

• Finlex: Limited Liability Companies Act 624/2006, chapters 1, 5, 6, 8, 12, 20 and 22 (in Finnish)
• Finlex: government bill HE 126/2026 (in Finnish)
• Finlex: Accounting Act 1336/1997, chapter 3 sections 6 and 7 (in Finnish)
• Accounting Board: statement 2118/2025 on presenting an SVOP investment (in Finnish)
• Accounting Board: statement 2059/2024, published by Edilex (in Finnish)
• PRH: loss of share capital (in Finnish)
• PRH: Trade Register information services (in Finnish)
• Tax Administration: distributions from the unrestricted equity fund, VH/7443/00.01.00/2024 (in Finnish)
• Tax Administration: taxation of disposals of securities, VH/6094/00.01.00/2022 (in Finnish)
• Finlex: Business Income Tax Act 360/1968, section 6 (in Finnish)
• Finlex: Income Tax Act 1535/1992, section 122 (in Finnish)

Please note: this is general information about Finnish rules, not advice for your own situation, and the rules change. Ask us before you act on it.

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