Estonia Commercial Code - General Meeting

Chapter 27 MANAGEMENT  

Division 1 General Meeting  

§ 290. Nature of general meeting

 (1) Shareholders shall exercise their rights in a public limited company at the general meeting of shareholders unless otherwise provided by law.

 (2) The general meeting of shareholders is the highest managing body of a public limited company.

§ 2901. Electronic participation in general meeting of listed public limited company

 (1) If the shares of a public limited company have been admitted for trading on a regulated securities market (hereinafter listed public limited company), the articles of association of this public limited company may prescribe that the shareholders may participate in the general meeting and exercise their rights using electronic means without physically attending the general meeting and without appointing a representative if it is possible in a technically secure manner (hereinafter electronic participation). The articles of association may prescribe, inter alia, the following ways of electronic participation:
 1) participation in a general meeting by means of real-time two-way communication throughout the general meeting or in another similar electronic way, which enables the shareholder to watch the general meeting from a remote location, electronically vote throughout the general meeting on each draft of the resolution and address the general meeting at the time determined by the chairman of the meeting;
 2) electronic voting pursuant to § 2981 of this Code.

 (2) Electronic participation shall be governed by subsection 2981 (3) of this Code respectively.

§ 291. Annual general meeting

 (1) An annual general meeting shall be held at least once a year. The general meeting is annual if its agenda includes the approval of the annual report.

 (2) The management board shall call the annual general meeting pursuant to the procedure and at the time prescribed by the articles of association but not later than six months after the end of the financial year. Allowing the term to expire does not affect the validity of the resolutions passed by the meeting.

§ 292. Special general meeting

 (1) The management board shall call a special general meeting in the cases prescribed by the articles of association, and also if:
 1) the net assets of the public limited company are less than one-half of the share capital or less than the amount of share capital specified in § 222 of this Code or other minimum amount of share capital provided by law;
 2) this is demanded by shareholders whose shares represent at least one-tenth of the share capital, and in case of a listed public limited company, by shareholders whose shares represent at least one-twentieth of the share capital; or
 3) this is demanded by the supervisory board or the auditor;
 4) this is clearly in the interests of the public limited company.

 (2) If the management board does not call a general meeting within one month after receipt of a demand from the shareholders, the supervisory board or the auditor or the management board does not call a general meeting with the demanded agenda, the shareholders, the supervisory board or the auditor have the right to call the general meeting themselves.

 (3) A special general meeting shall not be called if the time between becoming aware of the decrease of assets or submission of the demand and the annual general meeting is less than two months.

§ 293. Agenda of general meeting

 (1) If a general meeting is called by the management board or the supervisory board, the agenda of the general meeting shall be determined by the supervisory board. If the general meeting is called by the shareholders or the auditor, they shall determine the agenda of the general meeting.

 (2) The management board or the shareholders whose shares represent at least one-tenth of the share capital, and in case of a listed public limited company, the shareholders whose shares represent at least one-twentieth of the share capital, may demand the inclusion of additional issues on the agenda of the general meeting if the respective demand has been submitted no later than 15 days before the general meeting is held.

 (21) If a special general meeting is called on the demand of the auditor or the shareholders, the auditor or the shareholders, on whose demand the general meeting is called, may demand simultaneously with the submission of an application for calling the general meeting the inclusion of an issue on the agenda of the special general meeting.

 (3) An issue which is initially not on the agenda of a general meeting may be included on the agenda with the consent of at least nine-tenths of the shareholders who participate in the general meeting if their shares represent at least two-thirds of the share capital. The votes represented by the shares of the shareholders participating in the general meeting in a way specified in subsection 2981 (1) and subsection 2982 (1) of this Code shall not be taken into account for the purposes of this subsection as part of the quorum of the general meeting.

 (4) A general meeting may decide on calling the next meeting and settle submissions concerning operational issues related to the agenda or to the procedure for holding the meeting without including such matters in the agenda beforehand, and to discuss other matters at the general meeting without deciding on such matters.

§ 2931. Draft of resolution

 (1) If the general meeting is called by the management board, the management board shall prepare a draft of the resolution in respect to each item on the agenda.

 (2) If the general meeting is called by the shareholders, the supervisory board or an auditor, they shall prepare a draft of the resolution in respect to each item on the agenda. The drafts of the resolutions shall be submitted to the management board prior to the notification about calling the general meeting. The drafts of the resolutions may be additionally included in the notice on calling the general meeting.

 (3) In case of using the rights specified in subsection 293 (2) or (21) of this Code, the shareholders or the auditor shall simultaneously with the demand on the modification of the agenda submit to the public limited company a draft of the resolution or substantiation regarding each additional issue.

 (4) The shareholders whose shares represent at least one-tenth of the share capital, and in case of a listed public limited company, the shareholders whose shares represent at least one-twentieth of the share capital may submit to the public limited company a draft of the resolution in respect to each item on the agenda. The right specified in the previous sentence may not be used later than three days before holding a general meeting.

 (5) The public limited company shall make the drafts of the resolutions and substantiations prepared by the management board and submitted by the shareholders, the supervisory board or an auditor available to the shareholders in the location determined by the public limited company. Failure to make the drafts of the resolutions specified in subsection (2) of this section available shall not constitute a material violation of the procedure of calling a general meeting.

 (6) In the case specified in subsections (3) and (4) of this section, the public limited company shall make the submitted drafts of the resolutions and substantiations together with the drafts of the resolutions prepared by the management board in respect to additional items on the agenda available to the shareholders immediately after the submission thereof to the public limited company if these are submitted to the public limited company after the notification about holding the general meeting.

§ 294. Notice calling general meeting

 (1) The management board shall send a notice of the general meeting to all shareholders. The notice shall be sent to the address entered in the share register by registered mail. If the public limited company has more than 50 shareholders, notices need not be sent to the shareholders, however a notice of the general meeting shall be published in at least one daily national newspaper. A listed public limited company shall publish the notice calling the general meeting also in a way that provides the opportunity to quickly access the notice using for this purpose the means of information, in case of which the efficient transmission of the information to the public in the entire European Union can be presumed.

 (11) The notice specified in subsection (1) of this section may also be forwarded by sending an unregistered letter, fax or by electronic means provided that a notice concerning the obligation to immediately send acknowledgement of receipt of the document is appended to the notice. A notice sent by unregistered letter, fax or electronic mail is deemed to have been delivered if the recipient sends the management board acknowledgement of receipt of the document in writing, by fax or electronic mail at the recipient's discretion.

 (2) [Repealed - RT I 2000, 57, 373 - entry into force 01.01.2001]

 (3) Notice of an annual general meeting shall be given at least three weeks in advance unless the articles of association prescribe a longer term. Notice of a special general meeting shall be given at least one week in advance unless the articles of association prescribe a longer term. The first sentence of this subsection shall be applied to the advance notice of a special general meeting of a listed public limited company.

 (31) If a public limited company is aware or should be aware that the address of a shareholder differs from the address entered in the share register, the notice shall also be sent to that address. The notice shall be sent in such manner that, under normal conditions of delivery, it would reach the addressee at least by the due date specified in subsection (3) of this section.

 (4) A notice calling a general meeting shall set out:
 1) the business name and registered office of the public limited company;
 2) the time and place of the general meeting;
 3) a notation with regard to whether the meeting is annual or special;
 4) the agenda of the general meeting;
 5) the explanation of the fact as at what date the set of shareholders entitled to take part in a general meeting shall be determined;
 6) the information regarding the procedure and term for exercising the rights specified in § 287, subsections 293 (2) and (21) and subsection 2931 (4) of this Code;
 7) if the public limited company provides an opportunity for electronic participation in a general meeting or voting electronically or by mail, the information regarding the procedure and term for electronic participation or voting electronically or by mail;
 8) if the agenda of a general meeting includes the approval of the annual report, amendments to the articles of association or consent to a contract, the place where it is possible to examine the annual report, the sworn auditor's report, the profit distribution proposal, the draft of the articles of association or the contract or draft thereof and the procedure for the examination of these documents;
 9) the place where it is possible to examine the drafts of the resolutions submitted by the management board, the supervisory board, the shareholders or an auditor and the substantiations submitted by the shareholders in respect to the items on the agenda and the procedure for the examination of these documents;
 10) the place where it is possible to examine other documents submitted to the general meeting pursuant to law and the procedure for the examination of these documents;
 11) in case of a listed public limited company, the homepage address of the public limited company where the information specified in § 2941 of this Code shall be published;
 12) in case of a listed public limited company, the information regarding the participation in a general meeting by proxy, including the information on the blanks, which have to be used when voting on the basis of authorisation if the use of such blanks is necessary pursuant to law, the articles of association or the resolution of the supervisory board or the management board, and the information regarding the notification procedure of the public limited company of the appointment of a representative and revocation of the authorisation pursuant to subsection 297 (41) of this Code;
 13) other important circumstances related to the general meeting.

 (41) The notice calling the general meeting need not specify the procedure for exercising the rights specified in clause (4) 6) of this section if this procedure can be examined under the procedure specified in subsection (43) of this section on the homepage of the public limited company, and the notice contains the reference to this opportunity and the homepage address of the public limited company.

 (42) If the documents specified in clauses (4) 8)-10) of this section have been made available to the shareholders on the homepage of the public limited company and the notice calling the general meeting contains the reference to this opportunity and the homepage address, the public limited company need not provide an opportunity to examine the documents in any other way.

 (43) It shall be possible to examine the documents specified in clauses (4) 8)-10) of this section at least as of the notification of the general meeting until the date of holding the general meeting unless otherwise provided by law.

 (5) Concerning each item on the agenda, the supervisory board shall present its proposal which shall be entered in the notice calling the general meeting. Failure to include the proposal in the notice shall not constitute a material violation of the procedure of calling the general meeting.

 (6) If following the notification about calling the annual general meeting the agenda is amended on the demand of the management board or the shareholders, the notice of the amendments to the agenda shall be given prior to holding the annual general meeting under the same procedure as calling the general meeting. The notice of the amendments to the agenda before holding the general meeting shall be given at least one week in advance unless the articles of association prescribe a longer term.]

 (7) The costs of sending or publishing the notice calling the general meeting shall be borne by the public limited company.

§ 2941. Publication of information related to general meeting on homepage of listed public limited company

 (1) A listed public limited company shall publish the following on its homepage:
 1) the notice calling the general meeting;
 2) the documents specified in clauses 294 (4) 8)-10) of this Code;
 3) the total number of shares and voting rights related to shares, and, if the public limited company has several classes of shares, the total number of shares and voting rights related to shares in the cross-section of the classes of shares on the day of sending or publishing the notice calling the general meeting;
 4) the blanks specified in clause 294 (4) 12) and subsection 2982 (3) of this Code, excluding the case when the public limited company has send these together with the notice calling the general meeting to all the shareholders.

 (2) If the blanks specified in clause (1) 4) of this section cannot be published on the homepage of the public limited company due to technical reasons, the public limited company shall specify on its homepage under what procedure the shareholders have the opportunity to receive the blanks on paper. In such case, the public limited company shall immediately send the blanks by mail to each shareholder who has requested it. The costs of sending the blanks shall be borne by the public limited company.

 (3) The information and documents specified in subsections (1) and (2) of this section shall be available to the shareholders on the homepage of the public limited company for three weeks prior to holding the general meeting and on the day of holding the general meeting unless a longer term is prescribed by law. If the notice on calling the general meeting is provided pursuant to subsection 1711 (3) of the Securities Market Act less than three weeks in advance, the term specified in the previous sentence shall be reduced respectively.

§ 295. Place of general meeting

  A general meeting shall be held at the registered office of the public limited company unless the articles of association prescribe otherwise.

§ 296. Violation of procedure for calling general meeting

  If the requirements of law or of the articles of association for calling a general meeting are materially violated, the general meeting shall not have the right to adopt resolutions except if all the shareholders participate in or all the shareholders are represented at the general meeting. Resolutions adopted at such meeting are void unless the shareholders with respect to whom the procedure for calling the meeting was violated approve of the resolutions.

§ 297. Procedure of general meeting

 (1) A general meeting may adopt resolutions if shareholders who own over one-half of the votes represented by shares participate in the general meeting unless the articles of association prescribe a greater participation requirement.

 (2) If the shareholders specified in subsection (1) of this section do not participate in the general meeting, the management board shall, within three weeks but not earlier than after seven days, call another meeting with the same agenda. The new general meeting is competent to adopt resolutions regardless of the votes represented at the meeting.

 (3) A list of shareholders who participate in the general meeting which shall set out the names of the shareholders who participate in the general meeting, the number of votes attaching to their shares, the way of participation in the general meeting and the names of the representatives of shareholders shall be prepared at a general meeting. If a shareholder has voted prior to the general meeting electronically or by mail, the list shall also specify the voting date. The list shall be signed by the chairman of the meeting and the recording secretary, and by each shareholder physically attending the general meeting or the shareholder's representative.

 (4) A shareholder in person or a representative of a shareholder, the availability of whose right of representation shall be certified by a written document, may participate in a general meeting unless otherwise provided by law. The participation of a representative shall not deprive the shareholder of the right to participate in the general meeting.

 (41) A listed public limited company shall provide a shareholder with an opportunity to notify the public limited company about the appointment of a representative and the withdrawal by the principal of the authorisation in a secure manner that ensures the identification of shareholders in a format which can be reproduced in writing. The articles of association may establish a precise procedure of the notification about the appointment of a representative and the withdrawal of the authorisation. The second and third sentence of subsection 2981 (3) of this Code shall apply respectively.

 (5) Unless a shorter term is provided by the articles of association, the set of shareholders entitled to take part in a general meeting shall be determined as at seven days before the date of holding the general meeting. The set of shareholders entitled to take part in a general meeting of a listed public limited company shall be determined as at seven days before the date of holding the general meeting, unless the articles of association prescribe that the set of shareholders entitled to take part in the general meeting shall be determined on the day of the general meeting prior to the beginning of the general meeting.

 (6) The costs of organising a general meeting of shareholders shall be borne by the public limited company. If a general meeting is called on the demand of shareholders or if shareholders themselves call the meeting, or the meeting is called by a resolution of a general meeting which receives at least two thirds of the votes represented at the general meeting, the shareholders who called the meeting or requested the calling of the meeting may be required to cover the costs of the general meeting unless otherwise provided by law.

§ 298. Competence of general meeting

 (1) A general meeting is competent to:
 1) amend the articles of association;
 2) increase and reduce share capital;
 3) issue convertible bonds;
 4) elect and remove members of the supervisory board;
 5) elect an auditor;
 6) designate a special audit;
 7) approve the annual report and distribute profit;
 8) decide on dissolution, merger, division or transformation of the public limited company;
 9) decide on conclusion and terms and conditions of transactions with the members of the supervisory board, decide on the conduct of legal disputes with the members of the management board or supervisory board, and appointment of the representative of the public limited company in such transactions and disputes;
 10) decide on other matters placed in the competence of the general meeting by law.

 (2) A general meeting may adopt resolutions on other matters related to the activities of the public limited company on the demand of the management board or supervisory board. The shareholders shall be solidarily liable in the same manner as members of the management board or supervisory board for damage caused by resolutions adopted under such conditions.

§ 2981. Electronic voting

 (1) The articles of association of a public limited company may prescribe that the shareholders may vote on the draft resolutions prepared in respect to the items on the agenda of a general meeting using electronic means prior to the general meeting or during the general meeting if it is possible in a technically secure manner.

 (2) The shareholder who voted electronically shall be deemed to have taken part in the general meeting and the votes represented by the shareholder's shares shall be accounted as part of the quorum of the general meeting unless otherwise provided by law. If only draft resolutions that were not disclosed before a general meeting are voted on during the general meeting, in respect to which the shareholder did not submit any votes, the shareholder shall not be deemed to have taken part in the general meeting.

 (3) The articles of association prescribe the precise procedure of the organisation of the electronic voting. The articles of association may prescribe that the procedure of the electronic voting shall be determined by the management board. The procedure determined by the articles of association or the management board shall ensure the identification of the shareholders and the security and reliability of the electronic voting and be proportionate for the achievement of the above objectives.

 (4) Electronic voting shall take place in electronic format. In case of a listed public limited company, the electronic voting shall be conducted in a format which can be reproduced in writing. The articles of association may prescribe the moment of time until which it is possible to vote electronically prior to the general meeting or during the general meeting.

 (5) The articles of association or a resolution of the management board or the supervisory board may prescribe that the general meeting shall be transmitted in full or in part in real time via the Internet, using two-way communication or any other technically secure manner. Watching the transmission shall not be considered participation in the general meeting for the purposes of this Code unless otherwise provided by law.

§ 2982. Voting by mail

 (1) The articles of association of a public limited company may prescribe that the shareholder may vote on the draft resolutions prepared in respect to the items on the agenda of a general meeting by submitting his or her vote to the public limited company prior to the general meeting by mail in writing.

 (2) The shareholder who voted by mail shall be deemed to have taken part in the general meeting and the votes represented by the shares owned by the shareholder shall be accounted as part of the quorum of the general meeting unless otherwise provided by law. If only draft resolutions that were not disclosed before a general meeting are voted on during the general meeting, in respect to which the shareholder did not submit any votes, the shareholder shall not be deemed to have taken part in the general meeting.

 (3) A blank shall be used for voting by mail, which shall be delivered to the shareholder pursuant to clause 2941 (1) 4) of this Code. The articles of association may prescribe more detailed requirements towards the blank, which is necessary for voting by mail.

 (4) The articles of association shall prescribe the precise procedure for voting by mail, inter alia, the term, by which the votes may be sent by mail, and the procedure for changing or cancelling the votes sent by mail and the term before holding the general meeting. The procedure determined by the articles of association shall ensure the identification of the shareholders and the security and reliability of voting by mail and be proportionate for the achievement of the above objectives.

§ 299. Resolution of general meeting

 (1) A resolution of a general meeting shall be adopted if over one-half of the votes represented at the general meeting are in favour unless the law or the articles of association prescribe a greater majority requirement. In the cases provided by law or prescribed by the articles of association, the support of the owners of special classes of shares, to the extent prescribed by law or the articles of association, shall also be required for the adoption of a resolution.

 (2) In the election of a person at a general meeting, the candidate who receives more votes than the others shall be deemed to be elected. Upon an equal division of votes, lots shall be drawn unless the articles of association prescribe otherwise.

 (3) The list of shareholders referred to in subsection 297 (3) of this Code shall serve as the basis for the calculation of votes.

§ 300. Resolution on amendment of articles of association

 (1) A resolution on amendment of the articles of association shall be adopted if at least two-thirds of the votes represented at a general meeting are in favour unless the articles of association prescribe a greater majority requirement. If a public limited company has several classes of shares, a resolution on amendment of the articles of association shall be adopted if, in addition to the provisions of the first sentence, at least two-thirds of the votes represented at the general meeting of each class of share are in favour unless the articles of association prescribe a greater majority requirement.

 (2) A resolution on amendment of the articles of association shall enter into force as of the making of a corresponding entry in the commercial register. The resolution of the general meeting on amendment of the articles of association, the minutes of the general meeting and the new text of the articles of association shall be appended to the petition submitted to the commercial register. In case of introducing a share without nominal value or with nominal value, the notice from the registrar of the Estonian Central Register of Securities regarding the fact that the public limited company has notified the registrar about the introduction of the share without nominal value or with nominal value shall also be enclosed to the petition filed with the commercial register in addition to the documents specified in the previous sentence. In case of introducing a share without nominal value, the petition shall also indicate the number of shares.

§ 301. Decrease of assets

  If the net assets of a public limited company are less than one-half of the share capital, or less than the amount of share capital specified in § 222 of this Code or another minimum amount of share capital provided by law, the general meeting shall decide on:
 1) a reduction or increase of share capital on the condition that the net assets would thereby form at least one-half of the share capital and at least the share capital specified in § 222 of this Code or other minimum share capital provided by law; or
 11) the implementation of other measures as a result of which the net assets of the public limited company would form at least one-half of the share capital specified in § 222 of this Code or other minimum share capital provided by law;
 2) dissolution, merger, division or transformation of the public limited company; or
 3) submission of a bankruptcy petition.

§ 3011. Nullity of resolution of general meeting

 (1) The resolution of the general meeting of shareholders is void if:
 1) it violates a provision of law established for the protection of the creditors of the public limited company or due to other public interest;
 2) if it is contrary to good morals;
 3) the minutes of the general meeting which passed the resolution has not been notarised in the case prescribed by law;
 4) the procedure for calling a meeting was materially violated upon calling of the general meeting which passed the resolution.

 (2) A resolution is also void in other cases provided by law.

 (3) Nullity of a resolution may be relied upon in court proceedings by filing an action or objection.

 (4) Nullity of a resolution cannot be relied upon if an entry has been made in the commercial register based on the resolution and two years have passed from the date making the entry.

 (5) Subsections 302 (5) and (6) correspondingly apply to a court proceeding for establishment of the nullity of a resolution.

§ 302. Invalidation of resolution of general meeting

 (1) Based on an action filed against a public limited company, a court may revoke a resolution of the general meeting of shareholders which is in conflict with the law or the articles of association. The limitation period for the claim is three years after the date of adopting the resolution of the general meeting.

 (2) Revocation of a resolution cannot be demanded if the general meeting has approved the resolution by a new resolution and the new resolution has not been contested within the term specified in the same subsection or the action has not been satisfied.

 (3) Revocation of a resolution of shareholders may be demanded by the management board or supervisory board if, by enforcing the resolution, an offence or misdemeanour would be committed or if enforcement of the resolution would clearly result in an obligation to compensate for damage, and by a shareholder who did not participate in the general meeting. A shareholder who participated in the general meeting may demand the revocation of the resolution only if the shareholder's objection to the resolution has been entered in the minutes of the general meeting. The shareholder participating in the general meeting in the way specified in subsection 2981 (1) or subsection 2982 (1) of this Code may demand revocation of a resolution also without entering the objection in the minutes.

 (4) If an action has been filed with a court then the court shall not hear the action before the term for contestation of the resolution has expired. Different actions filed in order to revoke the same resolution shall be joined and heard in one proceeding.

 (5) A court judgment for revocation of a resolution of the general meeting applies to all shareholders and members of the management board and supervisory board regardless of whether or not they participated in the court proceeding.

 (6) In an entry has been made in the commercial register based on a revoked resolution, the court shall send a copy of the judgment to the registrar of the commercial register for amendment of the entry.

§ 303. Restriction on right to vote

 (1) A shareholder shall not vote if release of the shareholder from obligations or liabilities, conclusion of a transaction between the shareholder and the public limited company, or conduct of a legal dispute with the shareholder or appointment of a representative of the public limited company in such legal dispute or transaction, or issues related to the monitoring or evaluation of the activities of a shareholder or representative thereof in the capacity of a member of the management board or supervisory board, is being decided. The votes of such shareholder shall not be taken into account in the determination of representation.

 (2) The provisions of subsection (1) of this section do not apply if a public limited company has only one shareholder or if, in addition to such shareholder, only the public limited company itself is a shareholder. In such case all transactions between the public limited company and the sole shareholder shall be formalised in writing or, a document signed by the shareholder which sets out the main terms and conditions of a transaction shall be promptly prepared.

§ 304. Minutes of general meeting

 (1) Minutes shall be taken of a general meeting. The minutes shall set out:
 1) the business name and registered office of the public limited company;
 2) the time and place of the meeting;
 3) the names of the chair and secretary of the meeting;
 4) the agenda of the meeting;
 5) the resolutions adopted at the meeting together with the voting results, inter alia, the number of shares that gave the votes, the proportion of the share capital of the shares represented by votes, the total number of votes, the number of votes given in favour of and against each resolution and the number of abstained votes;
 6) on the demand of a shareholder who maintains a dissenting opinion with regard to a resolution of the meeting, the content of the shareholder’s dissenting opinion;
 7) material circumstances at the general meeting.

 (2) Written proposals and petitions submitted to the general meeting and the list of shareholders who participate in the meeting shall be appended to the minutes. The documents certifying the right of representation of the representatives or transcripts thereof shall be appended to the minutes of the general meeting. The minutes shall be signed by the chairman and the recording secretary of the meeting. A dissenting opinion shall be signed by the person who presents the opinion if this person is physically present at the general meeting.

 (3) The minutes shall be made accessible to the shareholders after seven days after the end of the general meeting at the registered office of a public limited company or the homepage of a public limited company. If the public limited company publishes the minutes exclusively on its homepage, the notice calling the general meeting shall contain reference to this fact and the homepage address. A listed public limited company shall publish the minutes on its homepage.

 (4) A shareholder has the right to obtain a copy of the minutes of the general meeting or a copy of a part thereof if the minutes are not available on the homepage of the public limited company.

 (5) [Omitted - RT I 2001, 93, 565 - entry into force 14.12.2001]

 (6) On the demand of the management board, supervisory board or shareholders whose shares represent at least one-tenth of the share capital, the minutes of the general meeting shall be notarised. A corresponding written request shall be submitted at least three days prior to the meeting of the shareholders.

 (7) The minutes of the general meeting of a public limited company shall be notarised if a resolution of the general meeting is the basis for the election or removal of a member of the supervisory board, or for amendment of the articles of association with regard to the supervisory board. This requirement shall not apply if the public limited company has a single shareholder.

§ 305. General meeting of single member public limited company

 (1) If a public limited company has a single shareholder or if, in addition to such shareholder, only the public limited company is a shareholder, resolutions may be adopted without observing the provisions of § 291, 293–297 and 304 of this Code. In such event, a resolution shall be prepared in writing and signed by the shareholders and such resolution shall set forth, among other, the names of the shareholders, the number of votes and the time of passing the resolution. If a resolution of the shareholders provides the basis for the election of a member of the supervisory board, excluding in case of extension of the term of office of a member of the supervisory board, the signature of one of the shareholders shall be notarised. The notarisation of the signature shall be substituted by the digital signing of the resolution by the person specified in the previous sentence.
[RT I 2008, 52, 288 - entry into force 22.12.2008]

 (2) The provisions of subsection (1) of this section also applies in the case where there are more shareholders provided that they all agree to the resolution and sign it.

Division 2 Management board  

§ 306. Competence of management board

 (1) The management board is a managing body of the public limited company which represents and manages the public limited company.

 (2) The management board shall, in managing, adhere to the lawful orders of the supervisory board. Transactions which are beyond the scope of everyday economic activities may only be concluded by the management board with the consent of the supervisory board. The management board is required to act in the most economically purposeful manner.

 (3) The management board shall present an overview of the economic activities and economic situation of the public limited company to the supervisory board at least once every four months and shall immediately give notice of any material deterioration of the economic condition of the public limited company or of any other material circumstances related to the economic activities of the public limited company. The management board shall also notify of any circumstances related to the private limited companies connected to the public limited company, which may significantly affect the operation of the public limited company. The management board's reports and notices to the supervisory board shall be comprehensive and clear and shall be submitted in good time and in a format which can be reproduced in writing. The members of the members of the supervisory board may demand copies of reports and documents unless the supervisory board decides otherwise.

 (31) If a public limited company is insolvent and the insolvency, due to the company's economic situation, is not temporary, the management board shall promptly but not later than within twenty days after the date on which the insolvency became evident, submit the bankruptcy petition of the public limited company to a court. After insolvency has become evident, the members of the management board shall no longer make payments on behalf of the public limited company, except in the case where making the payments in the situation of insolvency conforms to the due diligence requirements. The members of the management board shall solidarily compensate to the public limited company any payments made by the public limited company after the insolvency of the company became evident which, under the circumstances, were not made with due diligence. The provisions of § 315 of this Act apply to the liability of the members of the management board.

 (4) The management board shall organise the accounting of the public limited company.

 (5) The specific work procedure of the management board may be prescribed by the articles of association or by a resolution of the management board or supervisory board.

 (6) The management board shall prepare the matters to he discussed at a general meeting, prepare the drafts of resolutions and necessary drafts and guarantee the enforcement of the resolutions of a general meeting.

 (7) The management board shall guarantee the application of necessary measures and above all, the organisation of internal audit in order to detect, as early as possible, any circumstances which likely to pose endanger the operation of the public limited company.

§ 307. Right of representation of management board

 (1) Every member of the management board may represent the public limited company in performing all transactions unless the articles of association prescribe that all or some of the members of the management board may represent the public limited company jointly. Joint representation shall apply with regard to third persons only if it is entered in the commercial register.

 (2) Upon concluding transactions on behalf of a public limited company, the members of the management board are required to adhere, with respect to the public limited company, the restrictions prescribed by the articles of association or established by the general meeting, the supervisory board or the management board. A restriction on the right of representation does not apply with regard to third persons.

 (3) A transaction concluded between a public limited company and a member of the management board is void if the supervisory board does not agree to the transaction. The above does not apply to transactions concluded in the course of the everyday economic activities of the public limited company or based on the market price of a service.

 (4) A member of the management board has no right to represent the public limited company in the performance of transactions for which, pursuant to law, the shareholders or the supervisory board must separately decide on the appointment of representatives.

§ 308. Members of management board

 (1) A member of the management board need not be a shareholder. The management board may have one member (manager) or several members.

 (2) A member of the management board must be a natural person with active legal capacity.

 (3) A member of the supervisory board shall not be a member of the management board. The articles of association may prescribe other persons who shall not be members of the management board.

 (31) A person with respect to whom a court has, pursuant to §§ 49 or 491 of the Penal Code, imposed a prohibition on acting as a member of the management board or a prohibition to engage in enterprise, a person who is prohibited from operating within the same area of activity as the public limited company, or a person who is prohibited to act as a member of the management board on the basis of law or a court decision shall not be a member of the management board.

 (4) [Repealed - RT I 2010, 77, 589 - entry into force 01.01.2011]

§ 309. Election and removal of members of management board

 (1) The members of the management board shall be elected and removed by the supervisory board. In order to elect a member of the management board, his or her consent is required.

 (2) A member of the management board shall be elected for a specified term of three years unless the articles of association prescribe another term. The articles of association shall not prescribe a term of office longer than five years for the members of the management board Extension of the term of office of a member of the management board shall not be decided earlier than one year before the planned date of expiry of the term of office, and not for a period longer than the maximum term of office prescribed by the articles of association. A resolution for extension of the term of office of a member of the management board entered in the commercial register shall be immediately sent to the registrar of the commercial register.

 (3) The supervisory board may remove a member of the management board regardless of the reason. Rights and obligations arising from a contract concluded with a member of the management board shall terminate pursuant to the contract. The provisions of the Law of Obligations Act concerning cancellation of authorisation agreement apply to cancellation of the contract of a member of the management board.

 (4) The chairman of the supervisory board or a person authorised by him or her shall sign a petition for entry of expiry of the authority of a member of the management board or for entry of a new member of the management board in the register. The corresponding minutes of the meeting of the supervisory board shall be appended to the petition.

 (5) A member of the management board may resign from the management board regardless of the reason by giving the notice thereof to the supervisory board. Rights and obligations arising from a contract concluded with a member of the management board shall terminate pursuant to the contract. The provisions of the Law of Obligations Act concerning cancellation of authorisation agreement apply to cancellation of the contract of a member of the management board.

 (6) If an entry made in the commercial register concerning a member of the management board becomes incorrect due to the removal, resignation or expiry of the term of office of the member of the management board, the provisions of § 61 of this Code apply.

§ 310. Substitute members

  With good reason, a court may appoint a new member of the management board to replace a withdrawn member of the management board on the petition of the supervisory board, a shareholder or other interested person. The authority of the court-appointed member of the management board shall continue until appointment of a new member of the management board by the supervisory board. A member of the management board appointed by a court has the right, at the expense of the public limited company, to be compensated for his or her costs to a reasonable extent and to receive a reasonable fee, the amount of which shall be established, in the case of dispute, by a court ruling.

§ 311. Chairman of management board

  If the management board has more than two members, the members of the management board shall elect a chairman of the management board from among themselves, who shall organise the activities of the management board. The articles of association may grant the right to appoint the chairman of the management board to the supervisory board.

§ 312. Prohibition on competition

 (1) Without the consent of the supervisory board, a member of the management board shall not:
 1) be a sole proprietor in the area of activity of the public limited company;
 2) be a partner of a general partnership or a general partner of a limited partnership which operates in the same area of activity as the public limited company;
 3) be a member of a managing body of a company which operates in the same area of activity as the public limited company, except if the companies belong to one group.

 (2) If the activities of a member of the management board are in conflict with the provisions of subsection (1) of this section, the public limited company may demand that the member of the management board terminate the prohibited activity, transfer the income received from the prohibited activity to the public limited company and compensate for damage to the extent exceeding the claimed income.

 (3) The limitation period for a claim to terminate a prohibited activity and to transfer the income received from the prohibited activity shall be three months from the date the public limited company becomes aware of the violation of the prohibition on competition but not longer than three years after the violation of the prohibition on competition. The general limitation period shall apply to a claim for compensation of damage.

§ 313. Preservation of business secrets

 (1) The members of the management board shall preserve the business secrets of the public limited company.

 (2) The public limited company shall not claim compensation for any damage caused by violation of the obligation specified in subsection (1) of this section if the members of the management board acted in accordance with a lawful resolution of the general meeting or of the supervisory board.

§ 314. Remuneration of member of management board

 (1) The amount of remuneration payable to a member of the management board and the procedure for payment shall be determined by a resolution of the supervisory board.

 (2) Upon determining the procedure for remuneration of the members of the management board and the amount of fees and other benefits, and upon concluding contracts with the members of the management board, the supervisory board shall ensure that the total amount of the payments made by the public limited company to the members of the management board are in reasonable proportion to the duties of the members of the management board and the economic situation of the public limited company.

 (3) If the economic situation of a public limited company significantly deteriorates and further payment to a member of the management board of the fees established for or agreed upon with the member, or further allowing of other benefits to the member would be extremely unfair to the public limited company, the public limited company may require the decrease of the fees or benefits.

 (4) The decrease specified in subsection (3) of this section does not affect other terms and conditions of contracts concluded with the members of the management board. If decrease of fees or other benefits is demanded, the member of the management board may exercise the right to extraordinary cancellation of a contract concluded with him or her upon one month's advance notice of cancellation.

 (5) Upon declaration of bankruptcy of a public limited company and termination of the contract of a member of the management board, the member of the management board has the right to demand, in the course of the bankruptcy proceeding, compensation of the damage caused by the termination of the contract within one year after the date of termination of the contract.

§ 315. Liability of members of management board

 (1) A member of the management board shall perform his or her duties with due diligence.

 (2) Members of the management board who cause damage to the public limited company by violation of their obligations shall be solidarily liable for compensation for the damage caused. A member of the management board is released from liability if he or she proves that he or she has performed his or her obligations with due diligence.

 (3) The limitation period for assertion of a claim against a member of the management board is five years unless the articles of association of the public limited company or an agreement with the member of the management board prescribes another limitation period.

 (4) A claim for payment of compensation to a public limited company for damage specified in subsection (2) of this section may also be submitted by a creditor of the public limited company if the assets of the public limited company are not sufficient to satisfy the claims of the creditor. In the case of declaration of bankruptcy of a public limited company, only a trustee in bankruptcy may file a claim on behalf of the public limited company.

 (5) A creditor or trustee in bankruptcy has the right to file the claim specified in subsection (4) of this section also if the public limited company has waived the claim against a member of the management board or has entered into a contract of compromise with such member or, upon agreement with the member of the management board, has limited the claim or filing thereof in another manner or reduced the limitation period.

Division 3 Supervisory board  

§ 316. Competence of supervisory board

  The supervisory board shall plan the activities of the public limited company, organise the management of the public limited company and supervise the activities of the management board. The supervisory board shall notify the general meeting of the results of a review.

§ 317. Rights of supervisory board

 (1) The supervisory board shall give orders to the management board for organisation of the management of the public limited company. The consent of the supervisory board is required for conclusion of transactions which are beyond the scope of everyday economic activities and, above all, for conclusion of transactions which bring about:
 1) the acquisition or termination of holdings in other companies; or
 11) the foundation or dissolution of subsidiaries; or
 2) the acquisition or transfer of an enterprise, or the termination of its activities; or
 3) the transfer or encumbrance of immovables or registered movables; or
 4) the foundation or closure of foreign branches; or
 5) the making of investments exceeding a prescribed sum of expenditure for the current financial year; or
 6) the assumption of loans or debt obligations exceeding a prescribed sum for the current financial year; or
 7) the granting of loans or the guarantee of debt obligations if this is beyond the scope of everyday economic activities.

 (2) The articles of association may prescribe that the consent of the supervisory board shall not be required, or is only required in the cases specified in the articles of association, for conclusion of transactions specified in subsection (1) of this section, and may prescribe other transactions for the conclusion of which the consent of the supervisory board is required. The articles of association may also grant the supervisory board the right to decide on other issues which are not placed within the competence of the management board or the general meeting pursuant to law or the articles of association.

 (3) The consent specified in subsections (1) and (2) of this section shall not be required for conclusion of a transaction if a delay in conclusion of the transaction would bring about significant damage to the public limited company.

 (4) The restrictions provided for in subsections (1) and (2) of this section shall not apply with regard to third persons.

 (5) The supervisory board shall appoint and remove procurators.

 (6) In order to fulfil its tasks, the supervisory board has the right to examine all documents of the public limited company and to audit the accuracy of accounting, the existence of assets and the conformity of the activities of the public limited company with the law, the articles of association and resolutions of the general meeting.

 (7) The supervisory board has the right to obtain information concerning the activities of the public limited company from the management board and to demand an activity report and preparation of a balance sheet from the management board. Every member of the supervisory board has the right to demand the submission of reports and information to the supervisory board. The supervisory board shall also approve the annual budget of the public limited company unless the articles of association place this within the competence of the general meeting.

 (8) The supervisory board shall decide on conclusion and terms and conditions of transactions with members of the management board and it shall also decide on the conduct of legal disputes with the members of the management board. The supervisory board shall appoint a representative of the public limited company for the conclusion of the transactions and conduct of the legal disputes.

 (9) The supervisory board also has other rights provided by law.

 (10) The supervisory board shall request the calling of a general meeting from the management board if this is clearly in the interests of the public limited company.

 (11) The specific work procedure of the supervisory board may be prescribed by the articles of association or by a resolution of a general meeting or supervisory board.

§ 318. Members of supervisory board

 (1) The supervisory board shall have three members unless the articles of association prescribe a greater number of members. A member of the supervisory board must be a natural person with active legal capacity.

 (2) A member of the supervisory board need not be a shareholder.

 (3) [Omitted - RT I 1996, 40, 773 - entry into force 08.06.1996]

 (4) A member of the management board, a procurator, auditor, or a member of the management board of a subsidiary of the public limited company shall not be a member of the supervisory board. The articles of association may prescribe other persons who shall not be members of the supervisory board.

 (41) A person with respect to whom a court has, pursuant to §§ 49 or 491 of the Penal Code, imposed a prohibition on acting as a member of the supervisory board or a prohibition to engage in enterprise, a person who is prohibited from operating within the same area of activity as the public limited company, or a person who is prohibited to act as a member of the supervisory board on the basis of law or a court decision shall not be a member of the supervisory board.
[RT I 2008, 52, 288 - entry into force 22.12.2008]

 (5) The management board shall submit the commercial register a list of members of the supervisory board which shall set out the names, personal identification codes, dates of entry into force of authorisations and, in the case specified in subsection 26 (7) of this Code, also the addresses of the members. Upon a change of the members of the supervisory board, the management board shall, within five days, submit a new list of the members of the supervisory board to the commercial register. The minutes of the general meeting at which the members were elected or other resolutions on the appointment of members of the supervisory board and the consent of each new member of the supervisory board specified in subsection 319 (1) of this Code shall be appended to the list of the members of the supervisory board.

 (51) If the minutes prepared in respect to a resolution of the general meeting of shareholders concerning the election or removal of a member is notarised then, instead of the management board, the notary who attests the minutes shall submit the amendments to the list of the members of the supervisory board to the commercial register pursuant to the procedure established by the Minister of Justice after having previously verified the consents specified in subsection 318 (1) of this Code.
[RT I 2009, 27, 164 - entry into force 08.06.2009]

 (6) A transaction concluded between a public limited company and a member of the supervisory board is void if a general meeting does not agree to the transaction. The above does not apply to transactions concluded in the course of the everyday economic activities of the public limited company or based on the market price of a service.

§ 319. Election and removal of members of supervisory board

 (1) The members of the supervisory board shall be elected and removed by the general meeting. In order to elect a member of the supervisory board, his or her written consent is required.

 (2) The law or the articles of association may prescribe that not more than half of the members of the supervisory board shall be elected or appointed and removed in a manner different than provided for in subsection (1) of this section.

 (3) A member of the supervisory board shall be elected for a term of five years unless the articles of association prescribe a shorter term of authority.

 (4) Upon a resolution of the general meeting, a member of the supervisory board elected by the general meeting may be removed regardless of the reason. A resolution on removal of a member of the supervisory board before expiry of his or her term of authority shall be adopted if at least two-thirds of the votes represented at the general meeting are in favour. Members of the supervisory board who are not elected by the general meeting may be removed before the term provided for in the resolution on their election or appointment by a resolution of their elector or appointer. Rights and obligations arising from a contract concluded with a member of the supervisory board shall terminate pursuant to the contract. The provisions of the Law of Obligations Act concerning cancellation of authorisation agreement apply to cancellation of the contract of a member of the supervisory board.

 (5) Shareholders whose shares represent at least one-tenth of the share capital may, with good reason, request the removal of a member of the supervisory board by a court.

 (6) On the petition of the management board, supervisory board, a shareholder or other interested person, a court may, with good reason, appoint a new member to replace a removed member of the supervisory board. The authority of the court-appointed member of the supervisory board shall continue until the election or appointment of a new member of the supervisory board by the general meeting. A member of the supervisory board appointed by a court has the right to be compensated, to a reasonable extent, for his or her costs and to receive a reasonable fee at the expense of the public limited company, the amount of which shall be established, in the case of dispute, by a court ruling.

 (7) A member of the supervisory board may resign from the supervisory board regardless of the reason notifying thereof the general meeting or his or her appointer. Rights and obligations arising from a contract concluded with a member of the supervisory board shall terminate pursuant to the contract. The provisions of the Law of Obligations Act concerning cancellation of authorisation agreement apply to cancellation of the contract of a member of the supervisory board.

§ 320. Chairman of supervisory board

  The members of the supervisory board shall elect a chairman from among themselves, who shall organise the activities of the supervisory board. The registrar of the commercial register shall be notified of the election and exchange of the chairman of the supervisory board within five days. For notification, the relevant resolution of the supervisory board shall be submitted.

§ 321. Meeting of supervisory board

 (1) Meetings of the supervisory board shall be held when necessary but not less frequently than once every three months. A meeting shall be called by the chairman of the supervisory board or by a member of the supervisory board substituting for the chairman. Advance notice of at least one day shall be given of the holding of a meeting and of its agenda unless the articles of association prescribe a longer term.

 (2) A meeting of the supervisory board has a quorum if more than one-half of the members of the supervisory board participate. The articles of association may prescribe a greater representation requirement. A member of the supervisory board shall not be represented by another member of the supervisory board or by a third person at a meeting or in the adoption of a resolution.

 (3) A meeting of the supervisory board shall be called if this is demanded by a member of the supervisory board, the management board, an auditor or shareholders whose shares represent at least one-tenth of the share capital. If the meeting is not called within two weeks after the date of receipt of the relevant request, a member of the supervisory board, the management board, auditors or shareholders have the right to call the meeting themselves.

 (31) An issue which is not included on the agenda in the notice may be added to the agenda by the supervisory board only if all members of the supervisory board participate in the meeting and at least three-quarters of the members of the supervisory support including the issue on the agenda.

 (4) Minutes shall be taken of a meeting of the supervisory board. The minutes shall be signed by all the members of the supervisory board who participate in the meeting and the recording secretary of the meeting. The dissenting opinion of a member of the supervisory board shall be entered in the minutes, which shall be confirmed by his or her signature.

 (5) If the requirements of law or of the articles of association are violated in the calling of a meeting of the supervisory board, the supervisory board shall not be authorised to adopt resolutions unless all the members of the supervisory board participate in the meeting. Resolutions adopted at such meeting of the supervisory board are void unless the members of the supervisory board with respect to whom the procedure for calling the meeting was violated approve of the resolutions.

§ 322. Resolution of supervisory board

 (1) A resolution of the supervisory board shall be adopted if more than one-half of the members of the supervisory board who participate in the meeting vote in favour. The articles of association may prescribe a greater representation requirement.

 (11) The quorum of the supervisory board or the validity of a resolution is not affected by the fact that less members than prescribed by the articles of association belong to the supervisory board.

 (12) The members of the supervisory board absent from a meeting may participate in voting if they communicate their vote in a form which can be reproduced in writing.

 (2) Each member of the supervisory board shall have one vote. A member of the supervisory board does not have the right to abstain from voting or to remain undecided. The chairman of the supervisory board shall have the deciding vote upon an equal division of votes if so prescribed by the articles of association.

 (3) A member of the supervisory board shall not participate in voting if approval of the conclusion of a transaction between the member and the public limited company is being decided, or if approval of the conclusion of a transaction between a third person and the public limited company is being decided if the interests of the member of the supervisory board arising from such transaction are in conflict with the interests of the public limited company.

 (4) Based on an action filed against a public limited company, a court may revoke a resolution of the supervisory board which is in conflict with the law or the articles of association. The limitation period for the claim is three years after the date of adopting the resolution of the supervisory board.

 (5) Revocation of a resolution of the supervisory board cannot be demanded if the supervisory board has approved the resolution by a new resolution and the new resolution has not been contested within the term specified in the same subsection or the action has not been satisfied.

 (6) Revocation of a resolution of the supervisory board may be demanded by the management board or a shareholder if, by enforcing the resolution, an offence or misdemeanour would be committed or if enforcement of the resolution would clearly result in an obligation to compensate for damage, and by a member of the supervisory board who did not participate in the adoption of the resolution. A member of the supervisory board who participated in the adoption of a resolution may demand the revocation of the resolution only if the objection of the member of the supervisory board to the resolution has been entered in the minutes.

 (7) A resolution of the supervisory board is void if he requirements of law or the articles of association are violated in calling the supervisory board or if it violates a provision of law established for the protection of the creditors of the public limited company or due to other public interest, or if it is contrary to good morals, or other cases prescribed by law.

 (8) The provisions of subsections 302 (4)–(6) otherwise apply to revocation of resolutions of the supervisory board and the provisions of subsections 3011 (3)–(5) otherwise apply to the nullity of resolutions.

§ 323. Adoption of resolutions without calling meeting

 (1) The supervisory board has the right to adopt resolutions without calling a meeting, unless the articles of association prescribe otherwise, and if all of the members of the supervisory board consent to it.

 (2) The chairman of the supervisory board shall send a draft of the resolution specified in subsection (1) of this section to all members of the supervisory board, specifying the term by which the member of the supervisory board must present his or her written position on it. If a member of the supervisory board does not give notice of whether the member is in favour of or opposed to the resolution during this term, it shall be deemed that he or she votes against the resolution.

 (3) If a resolution is made pursuant to the procedure provided for in this section, the resolution shall be adopted if more than one-half of the votes of the members of the supervisory board are in favour unless the law or the articles of association prescribe a greater majority requirement.

 (4) The chairman of the supervisory board shall prepare a record of voting on the results of voting in lieu of minutes of the meeting and shall send the record promptly to the members of the supervisory board and management board. A record of voting shall set out:
 1) the business name and registered office of the public limited company;
 2) the adopted resolutions and the number of votes in favour (including the names of the members of the supervisory board who voted in favour of each resolution);
 3) other circumstances of importance with regard to the vote.

 (5) The written opinions of members of the supervisory board specified in subsection (2) of this section shall be an integral part of the record of voting.

 (6) A resolution may be formalised also without advance notice and record of vote if all the members of the supervisory board agree to and sign the resolution. A resolution shall set out the names of the members of the supervisory board and the time of passing the resolution.

§ 324. Prohibition on competition

 (1) Without a resolution of the general meeting, a member of the supervisory board shall not:
 1) be a sole proprietor in the area of activity of the public limited company;
 2) be a partner of a general partnership or a general partner of a limited partnership which operates in the same area of activity as the public limited company;
 3) be a member of a managing body of a company which operates in the same area of activity as the public limited company, except if the companies belong to one group.

 (2) If the activities of a member of the supervisory board are in conflict with the provisions of subsection (1) of this section, the public limited company may demand that the member of the supervisory board terminate the prohibited activity, transfer the income received from the prohibited activity to the public limited company and compensate for damage to the extent exceeding the claimed income.

 (3) The limitation period for a claim to terminate a prohibited activity and to transfer the income received from the prohibited activity shall be three months from the date the public limited company becomes aware of the violation of the prohibition on competition but not longer than three years after the violation of the prohibition on competition. The general limitation period shall apply to a claim for compensation of damage.

§ 325. Preservation of business secrets

 (1) The members of the supervisory board shall preserve the business secrets of the public limited company.

 (2) The public limited company shall not claim compensation for any damage caused by violation of the obligation specified in subsection (1) of this section if the members of the supervisory board acted in accordance with a lawful resolution of the general meeting.

§ 326. Remuneration for work by member of supervisory board

 (1) The general meeting shall specify the procedure for and amount of remuneration for the members of the supervisory board. The founders shall decide on remuneration of the first members of the supervisory board.

 (2) Upon determining the procedure for remuneration of the members of the management board and the amount of fees and other benefits, and upon concluding contracts with the members of the supervisory board, it shall be ensured that the total amount of the payments made by the public limited company to the members of the supervisory board are in reasonable proportion to the duties of the members of the supervisory board and the economic situation of the public limited company.

 (3) If the economic situation of a public limited company significantly deteriorates and further payment to a member of the supervisory board of the fees established for or agreed upon with the member, or further allowing of other benefits to the member would be extremely unfair to the public limited company, the public limited company may require the decrease of the fees or benefits.

 (4) The decrease specified in subsection (3) of this section does not affect other terms and conditions of contracts concluded with the member of the supervisory board. If decrease of fees or other benefits is demanded, the member of the supervisory board may exercise the right to extraordinary cancellation of a contract concluded with him or her upon one month's advance notice of cancellation.

 (5) Upon declaration of bankruptcy of a public limited company and termination of the contract of a member of the supervisory board, the member of the supervisory board has the right to demand, in the course of the bankruptcy proceeding, compensation of the damage caused by the termination of the contract within one year after the date of termination of the contract.

§ 327. Liability of members of supervisory board

 (1) A member of the supervisory board shall perform his or her duties with due diligence.

 (2) Members of the supervisory board who cause damage to the public limited company by violation of their obligations shall be solidarily liable for compensation for the damage caused. A member of the supervisory board is released from liability if he or she proves that he or she has performed his or her obligations with due diligence.

 (3) The limitation period for assertion of a claim against a member of the supervisory board is five years unless the articles of association of the public limited company or an agreement with the member of the management board prescribes another limitation period.

 (4) A claim for payment of compensation to a public limited company for damage specified in subsection (2) of this section may also be submitted by a creditor of the public limited company if the assets of the public limited company are not sufficient to satisfy the claims of the creditor. In the case of declaration of bankruptcy of a public limited company, only a trustee in bankruptcy may file a claim on behalf of the public limited company.

 (5) A creditor or trustee in bankruptcy has the right to file the claim specified in subsection (4) of this section also if the public limited company has waived the claim against a member of the supervisory board or has entered into a contract of compromise with such member or, upon agreement with the member of the supervisory board, has limited the claim or filing thereof in another manner or reduced the limitation period.

Division 4 Auditor and Special Audit  

§ 328. Appointment of auditor

 (1) The number of auditors shall be specified and auditors shall be appointed by the general meeting, which shall also specify the procedure for remuneration of auditors. The written consent of a person shall be required for appointment of the person as auditor.

 (2) [Omitted - RT I 1999, 24, 360 - entry into force 01.07.1999]

 (3) The management board shall submit a list of auditors to the commercial register, which shall set out the names and personal identification codes of the auditors, and the legal basis for their activities as auditors. Upon a change of auditors, the management board shall, within five days, submit a new list of auditors to the commercial register. The consent of auditors specified in subsection (1) of this section shall be appended to a list of auditors submitted to the commercial register.

 (4) On the petition of the management board, supervisory board, a shareholder or other interested person, a court may, with good reason, appoint a new auditor to replace a withdrawn auditor. The authority of a court-appointed auditor shall continue until election of a new auditor by the general meeting. The court shall also specify the procedure for and amount of remuneration for the auditors it appoints.

§ 329. Term of authority of auditor

  An auditor may be appointed to conduct a single audit or for a specified term.

§ 3291. Change and replacement of auditor by court

 (1) The management board, supervisory board, another person specified in the law or the shareholders whose shares represent at least one tenth of the share capital may request the change of an auditor appointed by the general meeting from a court if doubt exists concerning the impartiality of the person appointed by the general meeting. The court shall hear the auditor appointed by the general meeting.

 (2) The request specified in subsection (1) of this section may be submitted within two weeks after the appointment of an auditor or becoming aware of the respective circumstances.

 (3) A court shall also decide on the procedure for and amount of remuneration for the auditors appointed by the court.
[RT I 2010, 9, 41 - entry into force 08.03.2010]

§ 330. Special audit

 (1) At the general meeting of shareholders, shareholders whose shares represent at least one-tenth of the share capital may demand a resolution on conduct of a special audit on matters regarding the management or financial situation of the public limited company, and the appointment of an auditor for the special audit.

 (2) If the general meeting does not decide on conduct of a special audit, shareholders whose shares represent at least one tenth of the share capital may request that a special audit be conducted and that an auditor for the special audit be appointed by a court. The court shall decide on conduct of a special audit only with good reason. If possible, the court shall also hear the members of the management board and supervisory board of the public limited company before deciding on the conduct of a special audit.

 (21) The shareholders whose shares represent at least one tenth of the share capital may also demand, pursuant to the procedure provided by subsection (2) of this section, the substitution of the auditor for the special audit appointed by the general meeting of shareholders if such person clearly lacks the expertise or experience necessary for the conduct of the special audit or if doubts exist concerning his or her impartiality. The court shall also hear the auditor for the special audit appointed by the general meeting of shareholders.

 (3) Auditors, sworn advocates or companies of advocates may be the auditors for a special audit. If the auditors for a special audit are appointed by the general meeting, the general meeting shall also approve the procedure for their remuneration. The procedure for and amount of remuneration for court-appointed auditors for a special audit shall be specified by the court.

 (4) The members of the management board and supervisory board shall enable the auditors for the special audit to examine all documents necessary for conduct of the special audit and shall provide necessary information. The auditors for the special audit also have the above right with respect to companies belonging to the same group as the public limited company being audited. The auditors for the special audit shall preserve the business secrets of the public limited company. In the case of refusal to allow documents to be examined or information to be given, an auditor for the special audit may submit, within two weeks after the refusal, or within four weeks after submission of a request to such effect if no response to such request has been received, a petition to a court by way of proceedings on petition in order to obligate the members of the management board or supervisory board to allow documents to be examined or information to be given.

 (5) The auditors for the special audit shall prepare a report concerning the results of the special audit, which they shall present to the general meeting of shareholders. Clause 294 (4) 8) and subsection 294 (42) of this Code shall respectively apply to making the report available.

 (6) The provisions concerning the liability of auditors for mandatory auditing apply to the liability of auditors for special audit. The provisions of the Bar Association Act apply to the liability of sworn advocates and companies of advocates conducting special audits.

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