An Investment Guarantee can be used by a Finnish investor to insure foreign investments against political risks. Investments eligible for cover include:
- subscription for equity in cash or in kind and dividends
- shareholder loan
- non-shareholder loan
- guarantee issued by an investor as security for a bank loan.
Political risks covered by the guarantee
- restrictions imposed by authorities of the host country on the conversion and transfer of currency
- nationalisation or expropriation of the investment or other comparable measures taken by authorities of the host country
- destruction of the investment company’s property or business interruption due to war, insurrection, revolution or a comparable event.
Terms and conditions of the Investment Guarantee
The investment shall promote economic development in the host country and in Finland. The host country shall be eligible for guarantee cover. The investment can be made in a new or existing company.
The investor must be domiciled in Finland and must have adequate resources for implementing the investment. The investor can also be a foreign company controlled by a Finnish company.
The coverage is normally 95%. The coverage for Investment Guarantees provided to cover bank loans is 100%. Granting a guarantee to cover commercial risks always requires special grounds. The guarantee is granted for a period of three to twenty years.
The guarantee premium is charged annually beforehand and is calculated on the total sum of the guaranteed equity investment and dividends. The guarantee premium for a loan investment is calculated on the principal of the credit. The creditworthiness of the host country and the risks covered affect the premium to be charged. A handling fee for handling the guarantee application and for any charges that are made to the guarantee are charged.