Government proposes amendments to Limited Liability Housing Companies Act to facilitate demolition and new build
The Government proposes that limited liability housing companies' decision-making processes concerning demolition and new build be facilitated. The key amendment would enable the general meeting of a housing company to decide on demolition and new build by qualified majority of 4/5 of the votes cast, whereas the current Act requires that such a decision be made by unanimity. The Government submitted the proposal to Parliament today.
The proposed amendments to the Limited Liability Housing Companies Act would provide housing companies with more options in the implementation and financing of large-scale renovation projects. Furthermore, the amendments would secure each shareholder's housing and housing wealth as well as the position of creditors of both the housing company and the shareholders.
- This reform would boost construction of new apartments. The proposed amendments would facilitate land use and housing policy especially in developing urban areas. When compared to traditional renovation, demolition and new build enable new kinds of housing production and a more efficient land use and urban development," says Minister of Justice Antti Häkkänen.
It is proposed that the general meeting of a housing company could decide on demolition and new build by qualified majority of 4/5 of the votes cast in cases where the shareholders would receive apartments in the newly constructed building in accordance with the principle of equality. The amendments would not bring any changes to the right of possession to an owner apartment or to other shareholder rights and obligations. Furthermore, the Government proposes that new provisions on a plan to be drawn up for decision-making, a statement of an independent expert on such a plan, and submission of the plan and the statement to the shareholders and creditors before the general meeting be added to the Act.
A shareholder who does not want to participate in a demolition and new build project would have the right to demand redemption of his or her shares at current price. New provisions on the redemption of minority shares at current price are also proposed. A shareholder possessing more than 90 per cent of the shares and votes in a housing company would have the right of redemption in cases where renovating the buildings would not be feasible neither economically nor from the perspective of usability of the apartments. Furthermore, the general meeting would, by qualified majority of 4/5 of the votes cast, be able to decide on assignment of a building or real estate owned by the housing company and liquidation in such a manner that the company's net assets would be distributed to the shareholders immediately. In such a situation, shareholders would receive funds to acquire a new apartment somewhere else, for example.
In practice, ‘demolition and new build’ refers to a process where housing companies in growth centres demolish or assign their buildings that are in need of major renovation and repair, and new buildings with more apartments and other premises are constructed to replace them.
So far, very few demolition and new build projects have been carried out, because a unanimous decision of shareholders has been required to launch such a project.
According to the proposal, the amended Act would enter into force in the beginning of 2019.
Inquiries:
Jyrki Jauhiainen, Senior Ministerial Adviser, tel. +358 295 150 074, [email protected]
Antti T. Leinonen, Director, tel. +358 2951 50264, [email protected]