3.2 Reporting requirements An annual report which consists of a management report and annual accounts, and which has been approved by the shareholders must be submitted to the Commercial Register together with a profit distribution proposal and auditor's report, if compulsory, not later than 6 months after the end of the financial year. 3.3 Requirements for local shareholding/directors A shareholder may be either Estonian or a foreign individual or company. There is no separate legal concept of a director in Estonian commercial law, but a member of the management board could be called a director. A director must be a natural person with active legal capacity. There are no requirements regarding citizenship. A person with respect to whom a court has 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 branch, or a person who is prohibited to act as a member of the management board based on law or a court decision shall not be a director. If none of the members of the management board is a resident of Estonia, the company has to designate a contact person to whom the procedural documents and the declarations of intent addressed to the company may be delivered in Estonia. The list of the individuals or companies that may be appointed as the contact person are as follows: a notary, an advocate, a law office, a sworn auditor, an audit firm, a tax representative, and an AML company. Directors of Estonian companies are subject to a range of duties imposed by the

Commercial Code, by the articles of association of the Company and by the resolution of the shareholders. For example, the members of the management board must a) perform their duties with due diligence; b) preserve the business secrets of the company; c) represent and manage the company; d) in managing, adhere to the lawful orders of the supervisory board/shareholders; e) organize the accounting of the company. 3.4 Protection of minority shareholders Public limited company Any shareholder (without having to meet a qualified minority requirement) has the right to receive information on the activities of the public limited company from the management board at the general meeting of shareholders, and the right to file an action to the court to demand the revocation of the shareholders’ resolution. Qualified minority consists of any shareholder(s) holding at least 10% of the share capital of the public limited company. In the case of listed public limited companies, the qualified minority may be higher (at least 20% of the share capital) in certain cases. Minority shareholders with a qualified minority are protected by the Commercial Code in several aspects. First, if it is demanded by minority shareholders with a qualified minority, the management board must call a special general meeting. They also 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. Minority shareholders may submit to the public limited company a draft of the

ILN Corporate Group – Establishing a Business Entity Series

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