Estonia Commercial Code - Share and Shareholders

Estonia Companies Act Estonia Companies Act Estonia Companies Act Estonia Companies Act

Chapter 19 SHARE AND SHAREHOLDER  

§ 148. Share

 (1) The minimum nominal value of a share shall be one euro.

 (2) If the nominal value of a share is greater than one euro, the nominal value shall be a multiple of one euro.

 (3) Shares may have the same or different nominal values.

 (4) Each shareholder may have one share. If a shareholder acquires an additional share, the nominal value of the initial share shall increase accordingly. When increasing the nominal value of the existing share, the rights that encumbered the merged shares shall be extended to the share created as a result of the merger.

 (5) A share shall grant the shareholder the right to participate in the management of the private limited company and in the distribution of profit and of remaining assets on dissolution of the private limited company, and other rights prescribed by law or the articles of association.

 (6) A certificate shall not be issued for a share.

 (7) The shares of a private limited company may be entered in the Estonian Central Register of Securities.

§ 149. Transfer of share

 (1) A shareholder may freely transfer a share to another shareholder.

 (2) Upon transfer of a share to a third person, the other shareholders have a right of pre-emption for one month after presentation of the transfer agreement. The seller shall submit the sales contract to the management board of the company that shall promptly notify the other shareholders of entry into the sales contract. The provisions of the Law of Obligations Act concerning the right of pre-emption shall otherwise apply to the right of pre-emption.

 (3) The articles of association may prescribe that the transfer of a share shall be permitted exclusively in case of the fulfilment of an additional condition, primarily that a resolution of the other shareholders, the management board, the supervisory board or another person is required to transfer a share. In this case, the provisions of subsection (2) of this section do not apply to the private limited company. The articles of association may prescribe that the right of pre-emption shall not apply upon the transfer of a share. A transaction performed without the condition specified in the first sentence of this clause shall be null and void. With good reason, the shareholder may demand from the person specified in the first sentence to grant the consent for the transfer of the share.

 (4) A transaction constituting an obligation to transfer a share and a disposition must be notarised. The notary who certifies a disposition for the transfer of a share shall send a notice concerning the transfer of the share in the format established by the Minister of Justice to the registrar of the commercial register within two days after certification of the contract.

 (5) The provisions of subsection (4) of this section do not apply to the transfer of shares entered in the Estonian Central Register of Securities.

§ 150. Notification of transfer

 (1) The transfer of a share is deemed to be effected and a shareholder is deemed to have changed with respect to the private limited company after notification of the transfer of the share and certification of the transfer of the share.

 (2) Transactions between the transferor and the company made before notifying the company of the transfer of the share and related to the relationship between the shareholder and the company shall apply to the transferee of the share.

 (3) The management board of the company shall immediately upon receiving the notice of transfer amend the entries in the list of shareholders arising from the transfer. The above also applies to amending other information in the list of shareholders which has been submitted to the management board.

 (4) [Repealed - RT I 2009, 51, 349 - entry into force 15.11.2009]

 (5) If only one shareholder remains in a private limited company as a result of a transfer of a share or if, in addition to one shareholder, only the private limited company itself has a share in the private limited company, the management board of the private limited company must submit a written notice to this effect to the registrar of the commercial register. Data concerning the single shareholder specified in subsection 182 (1) of this Code shall be set out in the notice. The notice shall be preserved in the business file.

 (6) The provisions of subsection (1) and (3) of this section do not apply to a private limited company the shares of which are entered in the Estonian Central Register of Securities.

§ 151. Pledging of shares

 (1) A share may be pledged unless the articles of association prescribe otherwise.

 (2) A transaction constituting an obligation pledge a share and a disposition must be notarised. The notary who certifies a disposition for the pledge of a share shall send a notice concerning the pledging of the share in the format established by the Minister of Justice to the registrar of the commercial register within two days after certification of the contract.

 (3) Upon pledge of a share, the pledgor shall exercise the rights attaching to the share.

 (4) At the demand of a shareholder, the management board of the private limited company shall enter a notice concerning a pledge in the list of shareholders. Notification of the pledge of a share to a private limited company or entry of a pledge in the list of shareholders does not affect the validity of the pledge.

 (5) Upon transfer of a pledged share, the right of security shall remain valid with respect to the share unless the acquirer of the share proves that the registrar of the commercial register had not been informed of the right of security at the time of the transfer and the acquirer was not aware nor should have been aware of the right of security.

 (6) The provisions of subsections (2), (4) and (5) of this section do not apply to the pledging of shares entered in the Estonian Central Register of Securities.

§ 152. Share division

 (1) A shareholder may transfer a part of the shareholder’s share.

 (2) The provisions of § 148 of this Code apply to the partial transfer of a share.

 (3) The provisions of § 148, subsection 149 (4) and § 150 of this Code shall be observed in share division.

 (4) The rights encumbering a share shall remain effective upon the division of the share. If the continuation of the effect of the rights in the existing form is impossible, the rights encumbering the share shall remain effective upon the division of the share according to a notarised agreement between the parties concerned.

§ 153. Share transfer to successor

 (1) Upon the death of a shareholder, the share shall transfer to his or her successors unless the law or the articles of association prescribe otherwise.

 (2) A prohibition or restriction on transfer of a share to a successor in the articles of association shall not be valid unless the articles of association prescribe a term and procedure for payment of appropriate compensation to the successor.

 (3) The articles of association may prescribe that the consent specified in § 152 of this Code shall not be required for division of a share between the successors of a shareholder.

§ 154. Equality of shareholders

 (1) The shareholders shall be treated equally under equal circumstances.

 (2) A shareholder shall not be required to pay a contribution exceeding the nominal value and premium of the share without the consent thereof.

§ 155. Amount of contribution

 (1) A shareholder is required to make a contribution corresponding to the nominal value of the shareholder’s share.

 (2) The articles of association may prescribe the right of the private limited company to issue shares for a price exceeding their nominal value (premium). In this case, the shareholder is also required to pay the premium. A premium is adjusted in the cases prescribed by the applied accounting practices. A premium may be used:
 1) to cover a loss of the private limited company if such loss cannot be covered by undistributed profit from previous periods, legal reserve prescribed in the articles of association or other reserves prescribed in the articles of association;
 2) to increase share capital by a bonus issue.

§ 156. Consequences of delay of contribution

 (1) A shareholder who fails to pay for the shareholder’s share or for the increase of the nominal value of the shareholder’s share on time is required to pay a fine on delay in the amount provided by law to the private limited company unless otherwise provided by the articles of association. The above does not preclude or restrict the right to file a claim for compensation of damages exceeding the amount of the fine for delay.

 (2) The management board shall send a notice to a shareholder who delays in payment demanding payment by the term specified in the letter, indicating that the shareholder will lose the shareholder’s share if payment is not made. The term for payment shall be at least one month after the notice is sent.

 (3) If the shareholder does not pay the deficient sum during the term specified in the notice, the shareholder shall lose the shareholder’s share or the increase of the shareholder’s share, and the private limited company has the right to transfer the share to other shareholders or third persons. A sum paid by the shareholder or a part thereof which does not exceed one-fifth of the nominal value shall not be refunded to the shareholder.

 (4) If the shareholder who acquired the share in the case specified in subsection (3) of this section fails to pay for the share or the increase of the nominal value of the share in due time, the person who lost the share or the increase of the nominal value of the share shall be solidarily liable to the private limited company for the outstanding contribution to the private limited company.

 (5) If in the case specified in subsection (3) of this section the private limited company fails to transfer the share to the other shareholders or third persons, the other shareholders shall be solidarily liable for the deficient contribution. In the mutual relations among the shareholders, the shareholders shall be liable according to the nominal values of their shares.

§ 157. Payment of dividends

 (1) Dividends may be paid to the shareholders from net profit or from undistributed profit from previous years from which losses from previous years have been deducted, on the basis of the approved annual report.

 (2) A shareholder shall be paid a share of profit (dividend) in proportion to the nominal value of the shareholder’s share unless the articles of association prescribe otherwise.

 (3) Payments shall not be made to shareholders if the net assets of the private limited company, as apparent from the annual report approved at the end of the previous financial year of the private limited company, are less than or would be less than the total of share capital and reserves which pursuant to law or the articles of association shall not be paid out to shareholders.

 (4) A shareholder has the right to demand payment of a dividend prescribed by a resolution of the shareholders.

 (5) The dividend shall be paid in money. With the consent of the shareholder, the dividend may also be paid in other assets.

§ 158. Return of illegal dividend

 (1) If a shareholder receives a dividend which the shareholder does not have a right to receive, the shareholder shall return the dividend which is received without basis.

 (2) If upon receipt of the dividend, the shareholder did not know nor should have known that it was paid to the shareholder without basis, return of the dividend may be demanded only if it is necessary for satisfying the claims of the creditors of the private limited company.

 (3) A claim for return of the payment specified in subsection (1) of this section may also be submitted by a creditor of the private limited company if the assets of the private limited company are not sufficient to satisfy the claims of the creditor. In the course of bankruptcy proceedings of a private limited company, only a trustee in bankruptcy may file a claim on behalf of the private limited company.

 (4) An agreement which derogates from the provisions of subsections (1)–(3) of this section shall only be valid with respect to the creditors and trustees in bankruptcy of a private limited company if such agreement was entered into in the course of liquidation proceedings of the private limited company. Set-off of claims is prohibited.

 (5) The claims specified in subsections (1)–(3) of this section expire after five years of payment of the dividends.

 (6) The members of the management board and supervisory board who caused the payment of the illegal dividend shall be liable for the return of the payment solidarily with the shareholder who received such dividend.

§ 159. Prohibited loans

 (1) A private limited company shall not grant a loan:
 1) to one of its shareholders whose share represents more than 5 per cent of the share capital;
 2) to a shareholder or member of its parent undertaking, whose share represents more than 5 per cent of the share capital of the parent undertaking;
 3) to a person to acquire a share of the private limited company;
 4) to a member of its management board or supervisory board or its procurator.

 (2) A subsidiary may grant a loan to its parent undertaking or a parent undertaking to a shareholder or a member who forms the same group as the subsidiary if this does not harm the financial status of the private limited company or the interests of creditors. A subsidiary shall not grant a loan for acquiring a share of the private limited company to the persons specified in the first sentence of this subsection.

 (3) A private limited company shall also not guarantee a loan taken by the persons specified in subsection (1) of this section. The prohibition does not apply to guaranteeing a loan taken by the parent undertaking or guaranteeing a loan taken by a shareholder or member of the parent undertaking that forms the same group as the subsidiary if this does not harm the financial status of the private limited company or the interests of creditors. A private limited company shall not guarantee a loan taken for acquisition of a share of the private limited company.

 (4) Transactions in violation of the provisions of subsections (1) and (2) of this section are void. Violation of the provisions of subsection (3) of this section does not result in the nullity of the transaction but the person whose loan was secured must compensate for the damage caused to the private limited company by the provision of the security.

 (5) The provisions of subsections (1)–(4) of this section correspondingly apply to credit agreements and other economically equivalent transactions.

§ 160. Legal reserve

 (1) Legal reserve shall be formed from annual net profit transfers and other transfers entered in the legal reserve pursuant to law or the articles of association.

 (2) If the articles of association prescribe the formation of the legal reserve, it shall not be less than one-tenth of the share capital.

 (3) During each financial year, at least one-twentieth of the net profit shall be entered in the legal reserve. When the legal reserve reaches the amount prescribed in the articles of association, the increase of the legal reserve on the account of net profit shall be terminated.

§ 161. Use of legal reserve

 (1) Upon a resolution of the shareholders, legal reserve may be used to cover a loss if it is not possible to cover the loss from available shareholders’ equity of the private limited company (from undistributed profits from previous periods and legal reserve prescribed by the articles of association), or may be used to increase share capital.

 (2) Payments shall not be made to shareholders from legal reserve.

§ 162. Acquisition or taking as security of own shares

 (1) A private limited company shall not acquire or take as security its own shares unless otherwise provided by law.

 (2) The acquisition or taking as security of its own shares by the private limited company shall be permitted if:
 1) this occurs within five years after adoption of a resolution of the shareholders which specifies the terms and conditions and term for the acquisition or taking as security of shares and the minimum and maximum amounts to be paid for the shares;
 11) the nominal value of the share belonging to the private limited company does not exceed one tenth of the share capital, and
 2) acquisition of the share does not cause the net assets to become less than the total of share capital and reserves which pursuant to law or the articles of association shall not be paid out to shareholders.

 (3) The private limited company may acquire its own share without the restrictions provided for in subsection (2) of this section if the share is acquired by succession.

 (4) The private limited company’s own share shall not grant the private limited company any rights of a shareholder.

 (5) A private limited company shall not itself or through a third person acting in its own name but at the expense of the private limited company acquire its own shares upon foundation of the private limited company or an increase of share capital.

 (6) A company shall not acquire a share of its parent undertaking which is a private limited company upon an increase of the share capital of such parent undertaking.

 (61) A private limited company shall neither acquire nor take as security its own share, the contribution for which has not been completely paid.

 (7) A transaction constituting an obligation which is in conflict with the provisions of subsections (1), (2), (5), (6) or (61) of this section is void. The above does not affect the validity of the acquisition of a share or taking of a share as security.

§ 163. Transfer of own share

 (1) If a private limited company acquires or takes as security its own shares based on subsection 162 (3) of this Code, and the total of the nominal values thereof, including the sum total of the nominal values of the own shares belonging to or taken as security by the private limited company is higher than 1/10 of the share capital, then the shares acquired or taken as security in such manner which exceed the 1/10 shall be transferred or taking them as security shall be terminated within three years after the transfer or taking as security.

 (2) If a private limited company acquires or takes as security its own shares illegally, the shares shall be transferred or the taking as security shall be terminated within one year after the acquisition or taking as security.

 (3) If the shares are not transferred or the taking as security is not terminated during the term specified in subsections (1) and (2) of this section, the shares shall be cancelled and the share capital shall be reduced accordingly.

§ 164. Mutual acquisition or taking as security of shares

  A subsidiary may acquire or take as security shares of its parent undertaking under the same terms and conditions as its own shares. If a subsidiary acquires or takes as security shares of its parent undertaking, it shall be deemed, for the purposes of this Code, that the parent undertaking has acquired or taken as security such shares.

§ 165. Jointly held share

 (1) If a share is held by several persons jointly, these persons may only exercise the rights attaching to the share jointly. The above does not apply to a private limited company if the private limited company has not been notified of the joint ownership of the share. A person who holds a share jointly has the right to demand to be entered in the list of shareholders.

 (2) If a share is held by several persons jointly, these persons shall be solidarily liable for performance of the obligations attaching to the share.
 3) If the shareholders have not appointed a common representative for performance of the rights arising from the share, a transaction concluded by the private limited company with respect to the joint owners is deemed to be valid even if such act was performed with respect to only one shareholder.

§ 166. Right of shareholder to information

 (1) The shareholders have the right to receive information from the management board on the activities of the private limited company and to examine the documents of the private limited company.

 (2) The management board may refuse to give information or to present documents if there is a basis to presume that this may cause significant damage to the interests of the private limited company.

 (3) If the management board refuses to give information or refuses to allow documents to be examined, the shareholder may demand that the legality of the shareholder's demand be decided by the meeting of shareholders or to submit, within two weeks after receiving the refusal of the management board or, within four weeks after submission of the request if the management board has not responded to the request, a petition to a court in a proceeding on petition in order to obligate the management board to give information or to allow documents to be examined.

§ 167. Exclusion of a shareholder

 (1) Based on an action of a private limited company, a court may exclude a shareholder from the private limited company if the shareholder fails, without good reason, to perform the shareholder’s obligations to a material extent or in any other way significantly damages the interests of the private limited company, or does not perform obligations or terminate damage regardless of a written caution from the private limited company.

 (2) An action for exclusion of a shareholder may be filed on behalf of the private limited company by shareholders whose shares represent more than one-half of the share capital unless the articles of association prescribe a greater representation requirement.

 (3) Upon exclusion of a shareholder, the shareholder’s share shall be sold by public auction or in another way determined by the court. Money received from the sale, from which reasonable expenses related to the sale have been deducted, shall be returned to the shareholder.

§ 1671. Liability for damaging public limited company by influencing activity of public limited company

 (1) A person who, by misusing his or her influence, influences a member of the management board or supervisory board to act contrary to the interests of the public limited company, is liable to compensate any damage incurred thereby to the public limited company.

 (2) In the event specified in subsection (1) of this section, a member of the management board or supervisory board who violated his or her obligations shall be solidarily liable with the person who influenced him or her unless he or she proves that he or she has performed his or her obligations with due diligence.

 (3) In the case specified in subsection (1) of this section, the persons who derived gains from such damage shall also be held liable solidarily with the person who misused his or her influence.

 (4) The limitation period for the claims specified in subsections (1)–(3) of this section is five years

 (5) A claim for payment of compensation to a private limited company for damage specified in subsection (1)-(3) of this section may also be submitted by an creditor of the private limited company if the assets of the private limited company are not sufficient to satisfy the claims of the creditor. In the case of declaration of bankruptcy of a private limited company, only a trustee in bankruptcy may file a claim on behalf of the private limited company.

 (6) A creditor or trustee in bankruptcy has the right to file the claim specified in subsection (5) of this section also if the public limited company has waived the claim or has entered into a contract of compromise with such member or resulting from an agreement, has limited the claim or filing thereof in another manner or reduced the limitation period.

Estonia Companies Act Estonia Companies Act Estonia Companies Act

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