Estonia Commercial Code - Foundation

Chapter 25 FOUNDATION

Division 1 Foundation without Share Subscription

§ 242. Founder

 (1) A public limited company may be founded by one or several persons.

 (2) A founder may be a natural person or a legal person.

§ 243. Memorandum of association

 (1) In order to found a public limited company, the founders shall conclude a memorandum of association.

 (2) The memorandum of association shall set out:
 1) the business name, registered office and address of the public limited company being founded;
 2) the names and residences or registered offices of the founders;
 3) the proposed amount of share capital;
 4) the number of shares and the division of shares among the founders, and, in case of shares with nominal value, the nominal value thereof, and, upon issue of more than one class of shares, their denotation and the rights attaching to the shares;
 5) the amount to be paid for shares and the procedure, time and place of payment;
 6) if a share is paid for by a non-monetary contribution, the item of the non-monetary contribution and its valuation method;
 7) information on the members of the management board and supervisory board, and the auditor;
 8) information on procurators, if appointed;
 9) the projected costs of foundation and the procedure for payment thereof.

 (3) By conclusion of the memorandum of association, the founders shall also approve the articles of association of the public limited company as an annex to the memorandum of association.

 (4) The memorandum of association and the articles of association approved thereby shall be notarised and signed by all founders. A representative of a founder may sign the memorandum of association if the authorisation document granted to the representative is notarised. Articles of association shall be amended after entry in the commercial register pursuant to the procedure provided for in § 300 of this Code and shall not require amendment of the memorandum of association.

 (5) If the public limited company has one founder, the memorandum of association shall be substituted by a notarised foundation resolution signed by the founder.

§ 244. Articles of association

 (1) The articles of association of a public limited company shall set out:
 1) the business name and registered office of the Company;
 2) the amount of share capital which may be specified as a specific amount or as a minimum and maximum capital such that the minimum capital shall be at least one-quarter of the maximum capital;
 3) in case of shares with nominal value, the nominal values of the shares;
 31) in case of shares without nominal value, the number of the shares, which may be specified as certain number or minimum and maximum number;

 (4) [Repealed - RT I 2000, 57, 373 - entry into force 01.01.2001]
 5) upon issue of more than one class of shares, the denotation of the different classes of the shares and the rights attaching to the shares, and, in case of the shares with nominal value, the nominal value of each class of the shares;
 6) the procedure for calling the general meeting and for adoption of resolutions;
 7) the number of members in the management board and supervisory board, which may be expressed as a specific number or a maximum and minimum number, and if necessary, also the specifications for the right of representation of the members of the management board;
 8) [Omitted - RT I 1996, 40, 773 - entry into force 08.06.1996]
 9) if a share is paid for by a non-monetary contribution, the valuation method of the non-monetary contribution;
 10) the amount of legal reserve;
 11) other obligatory terms and conditions provided by law.

 (2) The articles of association may also prescribe other terms and conditions which are not in conflict with the law. If a provision of the articles of association is in conflict with a provision of law, the provision of law shall apply.

 (3) All founders shall sign the articles of association approved by the memorandum of association. Articles of association which are amended after entry in the commercial register shall be signed by at least one member of the management board or, if the members of the management board are only authorised to represent the public limited company jointly, by all the members of the management board authorised to represent the public limited company jointly.

§ 245. Disallowance of preferences

  The founders shall not reserve any rights for themselves which do not arise from the shares.

§ 246. Payment for share

 (1) A contribution may be monetary or non-monetary. A share shall be paid for in money unless the articles of association prescribe payment by a non-monetary contribution.

 (2) The shareholders shall pay for shares in full before submission of a petition for entry of the public limited company in the commercial register unless the memorandum of association prescribes an earlier due date. Upon a delay of payment, the provisions of § 275 of this Code shall apply.

 (3) The sum to be paid for a share shall not be set off against salary, fees or other such payments by a public limited company being founded or against other claims against a private limited company being founded.

§ 247. Payment of monetary contribution

  Upon foundation, the founders shall open a bank account in the name of the public limited company being founded into which monetary contributions shall be paid.

§ 248. Non-monetary contribution

 (1) A non-monetary contribution may be any thing which is monetarily appraisable and transferable to the public limited company or a proprietary right which may be the object of a claim.

 (2) A non-monetary contribution shall not be service or work provided to the public limited company or the activities of the founders in the foundation of the public limited company.

 (3) A shareholder shall give notice of the rights of third persons with regard to a non-monetary contribution.

 (4) If, at the time of entry in the commercial register of a public limited company or increase of share capital, the value of a non-monetary contribution is lower than the nominal value or book value and the premium of the share received out of the contribution, the public limited company may demand payment by a shareholder of the contribution in money to the extent to which the value of the contribution was lower than the nominal value or book value and the premium. The limitation period of the claim is five years after the entry in the commercial register of a public limited company or increase of share capital.

§ 249. Valuation of non-monetary contribution

 (1) The valuation method of a non-monetary contribution shall be prescribed in the articles of association. If generally recognised experts are available for valuation of the item of a non-monetary claim, valuation by such experts of the item shall be arranged.

 (2) The usual value of a thing or right shall be taken as the basis for the valuation of a non-monetary contribution.

 (3) An auditor shall audit the valuation of a non-monetary contribution and shall present an opinion on whether the contribution meets the requirements specified in § 248 of this Code. A sworn auditor's report shall contain a description of a non-monetary contribution and shall set out the method which was used upon valuation of the non-monetary contribution and whether the value of the non-monetary contribution covers the nominal value and the premium of the share paid for by the non-monetary contribution.

 (4) The valuators and the auditor who audits the valuation shall be solidarily liable for any damage caused by an inaccurate valuation of the non-monetary contribution.

§ 2491. Securities as item of non-monetary contribution

 (1) If the securities specified in subsection 2 (1) of the Securities Market Act which have been admitted for trading on a regulated securities market within the meaning of the Securities Market Act, except for holding units of investment funds and derivative contracts, are used as an item of non-monetary contribution, the valuation of the non-monetary contribution need not be audited by an auditor, provided that the securities which are the item of non-monetary contribution have been valuated based on the weighted average price which has been used for trading on one or several regulated securities markets during three months prior to the date of making the non-monetary contribution.

 (2) If a non-monetary contribution is made in the manner provided in subsection (1) of this section, the management board shall publish a notice concerning the making of such contribution in the official publication Ametlikud Teadaanded within one month after making the non-monetary contribution and before submitting an application for entry of the public limited company in the commercial register. Instead of publication in Avalikud Teadaanded, the notice may be submitted to the commercial register together with the application for entry of the public limited company in the commercial register within one month after making the contribution. The notice shall contain the following information:
 1) number of the shares to be issued out of the non-monetary contribution and, in case of shares with nominal value, the nominal value of the shares;
 2) item of non-monetary contribution, a description thereof and the name of the person who made the contribution;
 3) value of the non-monetary contribution, method of valuation and data of the valuator;
 4) a confirmation that the value of the non-monetary contribution equals to the issue price of the shares paid for by the non-monetary contribution, and that after valuation of the contribution, no new and significant circumstances have arisen.

 (3) In the case of increase of the share capital, the notice specified in subsection (2) shall be submitted to the commercial register.

 (4) If a non-monetary contribution is made in the manner provided in subsection (1) of this section in the course of increasing the share capital pursuant to § 349 of this Code, the notice specified in subsection (2) of this section shall be submitted to the commercial register before the date of making the non-monetary contribution. The notice shall set forth the date of adopting the resolution to increase the share capital.

 (5) If a notice concerning the making of a non-monetary contribution is submitted in the manner provided in subsection (4) of this section, the management board shall submit, within one month after making the non-monetary contribution, a notice concerning the making of the non-monetary contribution to the commercial register confirming that after the submission of the notice specified in subsection (4) of this section, no new and significant circumstances have arisen. The notice shall be submitted before or simultaneously with the application for entry of the increase of the share capital in the commercial register.

 (6) If the notice specified in subsection (2) or (5) has not been submitted or published in conformance to the requirements, the non-monetary contribution shall be valuated pursuant to the procedure provided in § 249 of this Code.

 (7) If extraordinary circumstances which would significantly change the value of the securities on the date of making the contribution have affected the price specified in subsection (1), the management board shall organise valuation of the securities to which § 249 of this Code shall apply.

§ 250. Petition for entry in commercial register

 (1) In order to enter a public limited company in the commercial register, the management board shall submit a petition which shall set out the information specified in § 251 of this Code and shall be signed by all members of the management board. The following shall be appended to the petition:
 1) the memorandum of association;
 2) the articles of association;
 3) a bank notice concerning the payment of share capital;
 4) upon payment of a non-monetary contribution, the agreement for transfer of the contribution to the public limited company, the documents certifying the value of the contribution, except in the case specified in § 2491 of this Code;
 41) reference to the date of publication of Ametlikud Teadaanded containing the notice specified in the first sentence of subsection 2491 (2) of this Code, if the non-monetary contribution was made in the manner specified in subsection 2491 (1) of this Code before entry of the private limited company in the commercial register;
 5) the names and personal identification codes of the members of the supervisory board and the names and personal identification codes of the auditors;
 51) information on the planned activity;

 (6)
 7) data on the telecommunications of the public limited company (telephone and fax numbers, e-mail and Internet home page address, etc.);
 71) a notice from the registrar of the Estonian Central Register of Securities concerning registration of the shares;
 8) other documents provided by law.

 (2) Transfer of a non-monetary contribution to the public limited company shall be certified by the members of the management board by their signatures. If the non-monetary contribution is an immovable or a movable subject to registration, an extract from the land register or the register in which the movable is registered shall be appended to the petition.

 (3) Any other petition submitted to the commercial register shall be signed by a member of the management board. A petition for entry in the commercial register of a new member of the management board shall be signed by the new member of the management board. The new member shall confirm his or her right to act as a board member in the petition. If the members of the management board only have the right to represent the private limited company jointly, all the members of the management board entitled to represent the private limited company jointly shall sign the petition submitted to the register.

 (4) A public limited company shall not be entered in the commercial register if the petition for entry in the commercial register is submitted after one year has passed since the conclusion of the memorandum of association or passing of the foundation resolution.

§ 251. Information to be entered in commercial register

  The following shall be entered in the commercial register:
 1) the business name of the public limited company;
 2) the registered office and address of the public limited company;
 3) the amount of share capital;
 31) number of shares without nominal value;
 4) the date of approval of the articles of association;
 5) the names and personal identification codes of the members of the management board;
 6) the members of the management board entitled to represent the public limited company differently than provided for in subsection 307 (1) of this Code;
 7) the beginning and end of the financial year;
 8) other information provided by law.

§ 252. Liability of founders and members of management board and supervisory board upon foundation of public limited companies

 (1) The founders of a public limited company, the members of the management board and supervisory board shall be solidarily liable for damage caused to the public limited company by submission of inaccurate or incomplete information, incorrect valuation of contribution or foundation expenses, or breach of other obligations upon the foundation of the public limited company, unless a founder or a member of the management board or supervisory board proves that he or she was not aware nor should have been aware of the circumstances which caused the damage.

 (2) In addition to shareholders, the persons on whose account the public limited company was founded are also liable on the basis provided in subsection (1) of this section. A person is not released from liability regardless of whether or not he or she was aware of circumstances if a shareholder acting on the shareholder's behalf was or should have been aware of such circumstances.

 (3) An agreement which derogates from the provisions of subsections (1) and (2) of this section shall only be valid with respect to the creditors of a public limited company if such agreement was entered into in the course of liquidation proceedings.

 (4) The claims provided by subsections (1) and (2) of this section expire after five years of the entry of a public limited company in the commercial register and, in the case the act which constituted the basis for the causing of damage was committed later, five years after the commission of such act.

§ 253. Transactions concluded before entry in commercial register

 (1) Persons who conclude a transaction in the name of a public limited company being founded before entry of the public limited company in the commercial register shall be solidarily liable for performance of the obligations arising from the transaction.

 (2) The obligations specified in subsection (1) of this section shall transfer to the public limited company as of entry of the public limited company in the commercial register if the person who concluded the transaction had the right to conclude the transaction.

 (3) If a person does not have the right to conclude a transaction, the obligations arising from the transaction shall transfer to the public limited company if the general meeting approves the transaction.

 (4) If the assets of the public limited company are not sufficient to satisfy a claim of a creditor of the public limited company, the founders shall be personally and solidarily liable to the creditor of the public limited company for performance of the obligations of the public limited company to the extent that the assets of the public limited company are decreased due to the obligations incurred for the public limited company before entry of the public limited company in the commercial register. The limitation period for such claim shall be five years from entry of the public limited company in the commercial register.

§ 254. 

§ 255. Validity of contract

 (1) Within two years after entry of a public limited company in the commercial register, the public limited company may acquire an asset with a value exceeding one-tenth of the share capital from a shareholder or a person with an economic interest equivalent to that of the shareholder on the basis of a contract only by a resolution of the general meeting. The above does not apply for acquisition of assets on exchanges or in the course of everyday business activities.

 (2) The asset shall be valuated pursuant to the procedure provided for in § 249 of this Code.

 (3) The management board shall, immediately after an auditor has audited the valuation of the asset specified in subsection (1) of this section, submit the contract for transfer of the asset, the documents in proof of the value of the asset and an opinion signed by the auditor on valuation of the asset to the commercial register.

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