Manager-run partnership funds are not subsidiaries, KILA rules

Funds run by a group company under an outsourcing arrangement are not automatically that group's subsidiaries, even where the group's companies act as the funds' general partners and the top parent holds the manager role.Kirjanpitolautakunta The Accounting Board (Kirjanpitolautakunta) has now ruled that six kommandiittiyhtiö-structured alternative investment funds did not have to be consolidated into the ultimate parent's consolidated financial statementsKirjanpitolautakunta, because neither the manager nor the general partners exercised de facto control (tosiasiallinen määräysvalta) within the meaning of Chapter 1, section 5(1)(3) of the Accounting ActKirjanpitolautakunta (Kirjanpitolaki, KPL, 1336/1997).

The case concerned a group that had treated itself as a small group (pienkonserni), consolidating its limited-company subsidiaries but leaving six limited-partnership funds outside the consolidation. The group's limited companies served as the funds' general partners (vastuunalainen yhtiömies), and — after the ultimate parent obtained registration as an alternative investment fund manager (vaihtoehtorahaston hoitaja) — the general partners had outsourced their AIFM functions and decision-making to that parent. The applicant itself took the view that the contractual control exercised through this arrangement created a consolidation duty.

The Board disagreed, applying a substance-over-form assessment. Three considerations carried the decision. First, purpose and limits of the manager's power: the manager makes the funds' investment and administrative decisions and investors take no part in daily management, so its decision-making power is extensive — but it is exercised inside the boundaries set by the Act on Alternative Investment Fund Managers (Laki vaihtoehtorahastojen hoitajista, AIFML, 162/2014), the fund rules (rahaston säännöt, including the partnership and management agreements) and the pre-disclosed investment policy, for the benefit of the investorsKirjanpitolautakunta. The manager must act in the funds' and investors' interests, treat investors equally and manage conflicts of interest, and in the funds at issue even a material change of investment strategy required approval from the Financial Supervisory Authority and the investors — the manager could not alter it unilaterally.

Second, the economic interest: the funds' assets were raised from investors and revert to them when the fund winds up, and nothing in the application showed the manager or the general partners to have made a significant own capital investment or otherwise borne the principal economic risk of the funds' investmentsKirjanpitolautakunta.

Third, the fee arrangements did not depart materially from market practiceKirjanpitolautakunta; the management and any performance fees alone did not indicate control exercised for the manager's own account.

Taken together, the Board found that the decision-making power amounted to a fund-management mandate performed on the investors' behalf, not control exercised for the manager's own accountKirjanpitolautakunta. The funds are therefore not subsidiaries of the ultimate parentKirjanpitolautakunta, and their financial statements are not to be consolidated into its konsernitilinpäätösKirjanpitolautakunta. The Board expressly limits the opinion to the application of the Accounting Act in the circumstances described.

Groups with manager-run fund structures should reassess any consolidation position that rests on contractual or outsourced decision-making alone: the test is whether the power is exercised for the group's own account, judged on the fund's purpose, the applicable regulation, the parties' rights and obligations, and where the economic risks and rewards lieKirjanpitolautakunta.

Legal basis: Kirjanpitolaki (1336/1997) 1:5.1 and 6:3; Laki vaihtoehtorahastojen hoitajista (162/2014) 2:1–2:3; Kirjanpitolautakunta opinion 2152 of 23 September 2026.