Commercial Code in Estonia

Part I - GENERAL PART

Chapter 1 - GENERAL PROVISIONS

1. Undertaking

An undertaking is a natural person who offers goods or services for charge in his or her own name where the sale of goods or provision of services is his or her permanent activity, or a company provided by law. [RT I 2002, 53, 336 - entry into force 01.07.2002]

2. Classification of companies

(1) A company is a general partnership, limited partnership, private limited company, public limited company or commercial association. Other companies may also be prescribed by law.

(2) A company shall be entered in the commercial register.

(3) The passive legal capacity of a company shall commence as of its entry in the commercial register and shall terminate as of its deletion from the commercial register.

(4) Companies may merge, divide or be transformed into a company of other type only in the cases and pursuant to the procedure provided by law.

(5) In the cases provided by law, the permission of a competent agency is required for merger, division or transformation.

3. Sole proprietorship

(1) Any natural person may be a sole proprietor.

(2) A sole proprietor shall submit a petition for his or her entry in the commercial register before the commencement of the activity. [RT I 2008, 60, 331 - entry into force 01.01.2009]

(3) A sole proprietor may notify the registrar of the commercial register of the suspension of the activities of his or her enterprise in advance specifying the period of time when the enterprise does not operate. A sole proprietor, the activity of whose enterprise due to the nature of the area of activity is seasonal, may notify the registrar of the commercial register of the starting date and final date of the activity of the enterprise. The notification of the starting date and final date of the activity of the enterprise may also be provided in case of temporary activity. [RT I 2008, 27, 177 - entry into force 01.01.2009]

4. Areas of activity of undertaking

(1) An undertaking may operate in areas of activity in which operation is not prohibited by law.

(2) Areas of activity for which a licence is required or in which only a particular class of undertaking may operate may be provided by law.

(3) [Repealed - RT I 2006, 61, 456 - entry into force 01.01.2007]

(4) A farmer is an undertaking engaging in at least one activity which can be classified as production of agricultural products and who uses a farm for such purpose in the capacity of an owner, sanctuary or commercial lessee. [RT I 2006, 61, 456 - entry into force 01.01.2007]

(5) Upon entry in the commercial register, an undertaking shall specify its planned principal activity and shall keep the register informed of any changes to the principal activity. A company required to file the annual report with the commercial register, shall indicate the areas of activity of the year ended and the areas of activity intended for the new accounting year in its annual report and shall not make a separate announcement of any change in these. Upon notification the commercial register of activities and specification of activities in annual reports, the Classification of Economic Activities, EMTAK, is used. [RT I 2006, 61, 456 - entry into force 01.01.2007]

(6) The Classification of Economic Activities shall be established by a regulation of the Minister of Justice. The Minister of Justice may determine the level of classification to be used upon giving the commercial register notice of activities and upon specifying activities in annual reports. [RT I 2006, 61, 456 - entry into force 01.01.2007]

5. [Repealed – RT I 2009, 5, 35 - entry into force 01.07.2009]

6. Group

(1) If a company is a partner or shareholder of another company and owns a majority voting interest therein, the participating company shall be called the parent undertaking, and the company in which it participates shall be called a subsidiary. A company in which another subsidiary or subsidiaries, with or without the parent undertaking, have a majority voting interest is also a subsidiary of the parent undertaking.

(2) A subsidiary is also a company in which another company (parent undertaking) has control as a partner or shareholder, on the basis of an agreement or without an agreement.

(3) A parent undertaking together with its subsidiaries forms a group.

Chapter 2 - BUSINESS NAME

7. Definition of business name

A business name or firm is the name entered in the commercial register under which an undertaking operates.

8. Business name of sole proprietorship

(1) The business name of a sole proprietorship shall contain the given name and surname of the sole proprietor, and shall not contain an appendage or abbreviation referring to a company.

(2) The business name of a farmer who is a sole proprietor need not contain the given name and surname of the sole proprietor if the name of the farm is contained in the business name.

(3) If a sole proprietor transfers the enterprise to another natural person, the transferee may continue to operate under the existing business name with the written consent of the transferor.

(4) If a natural person acquires an enterprise by way of succession, the transferee may continue to operate under the existing business name.

(5) If a name contained in the business name of a sole proprietorship is changed, the sole proprietor may continue to operate under the existing business name.

(6) A sole proprietor may have several business names as long as such names are used with regard to different enterprises.

9. Business name of company

(1) A company may only have one business name.

(2) The business name of a general partnership shall contain the appendage “täisühing” [general partnership]; a limited partnership, the appendage “usaldusühing” [limited partnership]; a private limited company, the appendage “osaühing” [private limited company]; a public limited company, the appendage “aktsiaselts” [public limited company]; and a commercial association, the appendage “ühistu” [association].

(3) Instead of the appendages specified in subsection (2) of this section, a general partnership may use the abbreviation “TÜ”; a limited partnership, the abbreviation “UÜ”; a private limited company, the abbreviation “OÜ”; and a public limited company, the abbreviation “AS” in its business name.

(4) The appendages and abbreviations specified in subsections (2) and (3) may only be used at the beginning or end of the business name.

10. Transfer of business name

A business name shall not be transferred without the enterprise, except if the business name is transferred upon liquidation or in the bankruptcy proceedings of an undertaking.

11. Distinctiveness of business name

(1) The business name of a sole proprietorship shall be clearly distinguishable from other business names entered in the commercial register in the territorial jurisdiction of the same registrar.

(2) The business name of a company shall be clearly distinguishable from other business names entered in the commercial register in Estonia.

(21) [Repealed - RT I 2005, 57, 449 - entry into force 01.01.2006]

(3) If the given name and surname of a sole proprietor for which an application for entry in the register is made are the same as a given name and surname already entered in the register as a business name or as a part thereof, the applicant of the entry shall render his or her business name clearly distinguishable by adding or omitting appendages. [RT I 2005, 57, 449 - entry into force 01.01.2006]

12. Restrictions on choice of business name

(1) A business name shall not be misleading with regard to the legal form, area of activity or scope of activity of the undertaking.

(2) A business name shall not be contrary to good morals.

(3) A sign or combination of signs which consists of letters, words or numerals and is protected as a trade mark in Estonia shall not be used in a business name without the notarized consent of the owner of the trade mark, unless the undertaking is engaged in an area of activity in respect of which the trade mark is not protected. Subsection 33 (11) of this Code applies to such consent.

(3.1) A person who does not have the right to use a geographical indication is prohibited from using a registered geographical indication in the business name, except if the person operates in the area of activity concerning which the geographical indication is not protected.

(3.2) Subsections (3) and 3 (31) also apply upon changing of activities after the entry of the business name in the commercial register. [RT I 2006, 61, 456 - entry into force 01.01.2007]

(4) The Government of the Republic may establish restrictions on the use of the word “Eesti” [Estonia] in a business name in all expressions and foreign language equivalents, except in the business name of the branch of a foreign company pursuant to the provisions of § 14 of this Code.

(5) If a business name contains the name of a state or administrative unit or other place-name in addition to the appendage referring to the company, the business name shall contain an appendage which distinguishes it from the name of the state or administrative unit or other place-name.

(6) The names of state and local government bodies and agencies shall not be used in a business name.

(7) The words “riigi” [state], “linna” [city] and “valla” [rural municipality], and other words which refer to the participation of a local government may be used in the business name of a company only if the state or local government holds more than one-half of the shares of the company.

(8) A business name shall be written in the Estonian-Latin alphabet.

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

13. Use of name in business name

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

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

(3) The name of a person who is not the sole proprietor shall not be used in the business name of a sole proprietorship, the name of a person who is not a partner shall not be used in the business name of a general partnership, and the name of a person who is not a general partner shall not be used in the business name of a limited partnership.

(4) The provisions of subsection (3) of this section shall not apply if the sole proprietor transfers the enterprise, or if a partner of a general partnership or a general partner of a limited partnership departs or is excluded from the company.

14. Business name of branch of foreign company

The business name of the branch of a foreign company shall consist of the business name of the company and the words “Eesti filiaal” [Estonian branch].

15. Use and protection of business name

(1) An undertaking has the exclusive right to the business name of the undertaking. A court may prohibit, in proceedings on petition, the use of a business name which does not conform to the requirements of this Chapter or which a person has no right to use and, if such prohibition is violated, to impose a fine on the violator. The above shall not preclude the protection of the business name in the proceeding of an action. [RT I 2008, 59, 330 - entry into force 01.01.2009]

(2) The commercial documents of the undertaking and its website shall indicate the business name, registered office and commercial registry code of the undertaking. If the commercial documents and website of a private limited company or

Chapter 3 - PROCURATION

16. Definition of procuration

(1) Procuration is an authorisation which grants the representative of the undertaking (procurator) the right to represent the undertaking in concluding all transactions related to economic activities. [RT I 2009, 13, 78 - entry into force 01.07.2009]

(2) The procurator may transfer or encumber an immovable of the undertaking only if the undertaking grants this right to him or her in the procuration, and this is noted in the commercial register.

(3) If the undertaking restricts a procuration, the restriction shall not apply with regard to third persons, except the restrictions provided for in this Act.

(4) The provisions concerning representation in the General Part of the Civil Code Act apply to procuration unless otherwise provided for in this Code. [RT I 2005, 57, 449 - entry into force 01.01.2006]

17. Grant of procuration

(1) Procuration may be granted by a company, a sole proprietor entered in the commercial register or a legal representative of a sole proprietor. Upon entry of an undertaking in the commercial register, procuration shall be granted by a sole proprietor; upon foundation of a general partnership or limited partnership, procuration shall be jointly granted by all managing partners and, upon foundation of a private limited company, public limited company or commercial association, procuration shall be jointly granted by the founders by the memorandum of association of the company.

(2) Procuration may only be granted to a natural person. An undertaking may have one or several procurators.

(3) Procuration may be granted to several persons in such a manner that all or some of the procurators are only entitled to represent the undertaking jointly (joint procuration). Procuration may be granted in such a manner that the procurator may represent the undertaking only jointly with a member of the management board or with a partner who is entitled to represent the company.

(4) A foreign company may grant a procuration for the representation of a branch.

(5) A partner of the same general partnership or limited partnership, a member of the supervisory board of the same company or the auditor of the same company shall not be a procurator.

18. Signature of procurator

A procurator shall sign such that he or she adds the word “prokurist” [procurator] or the abbreviation “p.p.” (per procura) to his or her signature.

19. Bases for termination of procuration

(1) An undertaking may terminate a procuration at any time.

(2) A procurator may demand that the undertaking terminate the procuration if the legal relationship which is the basis for the procuration terminates.

(3) A procuration shall not terminate upon the death of a sole proprietor. [RT I 2002, 53, 336 - entry into force 01.07.2002]

20. Prohibition on transfer of procuration

A procurator shall not transfer a procuration.

21. Entry of procuration

(1) An entry concerning a procuration shall be entered in the commercial register based on the petition of the undertaking. In the case of a company, the resolution of the body which appointed the procurator shall be appended to the petition.

(2) An entry concerning a procuration shall set out the name and personal identification code of the procurator. If a procuration is granted to several procurators, the entry shall contain a notation concerning if and to which of them joint procuration is granted. [RT I 2006, 61, 456 - entry into force 01.01.2007]

(3) [Repealed - RT I 1998, 59, 941 - entry into force 10.07.1998]

Part II - COMMERCIAL REGISTER

Chapter 4 - GENERAL PROVISIONS REGARDING REGISTER

22. Maintenance of commercial register and judicial proceedings

(1) The registration departments of the county courts (hereinafter registrar) shall maintain the commercial register of the enterprises of sole proprietors located in and companies whose registered office is in the territorial jurisdiction of the registrar. [RT I 2008, 59, 330 - entry into force 01.01.2009]

(2) The registration department of a county court which maintains the commercial register can make:

1. an entry on a registry card maintained by the registration department of another county court;

2. rulings with regard to the enterprises of sole proprietors located in and companies whose registered office is in the territorial jurisdiction of the registration department of another county court. [RT I, 21.03.2014, 3 - entry into force 31.03.2014]

(3) [RT I 2005, 15, 85 - entry into force 01.01.2006]

(4) Documents submitted to a registrar shall be processed and rulings shall be made pursuant to the procedure provided for the registration proceedings in the Code of Civil Procedure unless otherwise provided by this Code. [RT I, 21.03.2014, 3 - entry into force 31.03.2014]

(5) [RT I 2005, 57, 449 - entry into force 01.01.2006]

(6) The provisions of the Public Information Act concerning databases apply to the commercial register and the maintenance thereof with the specifications provided for in this Code. [RT I 2007, 12, 66 - entry into force 01.01.2008]

23. –25. [Repealed - RT I 2005, 57, 449 - entry into force 01.01.2006]

26. Registration department seal

(1) The registration department of a court shall have a seal bearing the national coat of arms.

(2) A court officer engaged in the performance of acts of attestation on the registration department may have a seal bearing his or her name and the national coat of arms. [RT I 2005, 57, 449 - entry into force 01.01.2006]

27. Working language

(1) The commercial register shall be maintained in Estonian.

(2) Documents in a foreign language shall be submitted to the registrar together with translations into Estonian certified by a sworn translator or a notary or translations into Estonian where a notary certified the authenticity of a translator's signature. [RT I, 18.12.2012, 3 - entry into force 19.12.2012]

(3) An undertaking shall not rely on a translation which differs from the original document. A third person may rely on the translation of a document submitted to the registrar unless the undertaking proves that the third person was aware of the inaccuracy of the translation. [RT I 2005, 57, 449 - entry into force 01.01.2006]

28. Access to commercial register

(1) Entries in the commercial register are public. Everyone has the right to examine the registry cards and the business files, and to obtain copies of registry cards and of documents in the business files. [RT I, 18.12.2012, 3 - entry into force 19.12.2012]

(2) Registry data and files are available for examination in registration departments, notaries’ offices or through a relevant website. Certified print-outs from the commercial register can be obtained from registration departments or notaries' offices. [RT I, 18.12.2012, 3 - entry into force 19.12.2012]

(3) A registry file may be examined by a competent state agency including by the court in the course of a proceeding, a bailiff or a person with a legitimate interest in the matter. [RT I 2005, 57, 449 - entry into force 01.01.2006]

(4) At the request of a person, a registrar or notary shall issue a certificate that an entry has not been amended or that a particular entry is not in the register. [RT I, 18.12.2012, 3 - entry into force 19.12.2012]

29. [Repealed – RT I 2003, 4, 19 - entry into force 01.02.2003]

30. [Repealed – RT I 1999, 10, 155 - entry into force 01.01.2000]

31. Information to be entered in commercial register. Only information prescribed by law shall be entered in the commercial register.

32. Documents to be submitted to registrar

(1) An undertaking is required to submit the documents which are the basis for an entry, other documents provided by law and specimen signatures to the registrar. Specimen signatures shall be notarised. The registrar may also demand supplementary documents from the undertaking if these are necessary to determine the facts which are the basis for an entry. [RT I 2009, 13, 78 - entry into force 01.07.2009]

(2) An excerpt from the minutes, which contains only the resolution providing the basis for the registry data, may be submitted to the registrar instead of the minutes of the meeting of a body. A dissenting opinion, written proposals and declarations of a person who maintains a dissenting opinion with regard to a resolution need not be appended to the excerpt. The excerpt from the minutes shall be notarised if the minutes prepared with regard to the same meeting are notarised. The provisions concerning the minutes of the meeting of a respective body shall otherwise apply to the content of the excerpt from the minutes, signing and documents appended to the minutes. [RT I 2009, 13, 78 - entry into force 01.07.2009]

(3) The annual report and documents submitted together with the above, as well as data concerning the distribution of profit or covering of loss that are specified in this Code and the authorisation for the submission of the above documents and data shall be submitted to the commercial register in electronic format pursuant to the procedure established by the regulation of the Minister of Justice on the basis of clause 67 (4) 1) of this Code. [RT I 2009, 54, 363 - entry into force 01.01.2010]

32.1. Acts of attestation and additional services of notaries

(1) A petition submitted to a registrar and an authorisation document provided for signature of the petition shall be notarised.

(2) A specimen signature submitted to a registrar shall be certified by a notary and the Estonian translation of a document in a foreign language shall be made by a sworn translator or certified by a notary. A specimen signature of an undertaking or a legal representative thereof need not be submitted if the same person has signed a petition for a corresponding entry or a memorandum of association which contains a petition in the presence of a notary. [RT I, 23.12.2013, 1 - entry into force 01.01.2014]

(3) The following shall be attested by a notary:

1. memorandums of association of private limited companies and public limited companies;

2. merger agreements, division agreements and division plans of companies;

3. authorisation documents issued for the signature of documents specified in clauses 1) and 2).

(4) A notarised memorandum of association may also contain a petition from a legal person for entry in the register. [RT I 2010, 77, 589 - entry into force 01.01.2011]

(41) Based on the application of a legal person, a notary shall forward the annual report of the legal person to the registrar in electronic format. [RT I 2008, 27, 177 - entry into force 01.01.2010]

(5) [Repealed - RT I 2006, 7, 42 - entry into force 04.02.2006]

(6) [Repealed - RT I 2003, 18, 100 - entry into force 07.03.2003]

(7) [Repealed - RT I 2006, 7, 42 - entry into force 04.02.2006]

(8) [Repealed - RT I 2006, 7, 42 - entry into force 04.02.2006]

33. Entry in commercial register

(1) An entry in the commercial register shall be made on the petition of the undertaking, on the basis of a court decision or on another basis provided by law. A person entitled to submit a petition or other documents to the commercial register is required to do so. [RT I 2009, 51, 349 - entry into force 15.11.2009]

(1..1) A court decision shall substitute for a petition if an obligation concerning the person entitled or obliged to submit a petition to the registrar or a legal relationship due to which an entry must be made has been established by the court decision and such court decision has entered into force or is subject to immediate execution.

(1.2) If a court decision which has entered into force or is subject to immediate execution prohibits the submission of a petition for an entry, the entry may be made only if the person on whose request such court decision was made agrees to the making of the entry.

(2) A petition submitted to the registrar shall be notarised. Notarisation may substituted by certification of the signatures on the petition by an official of a foreign state who has the right to attest the identity of the undersigned. A document attested in a foreign state shall be legalised or authenticated by a certificate (apostille), unless otherwise provided by an international agreement. [RT I 2009, 29, 175 - entry into force 01.07.2009]

(3) A person entitled to sign a petition submitted to the registrar may authorise another person to sign. An authorisation document provided for signature of a petition shall be notarised.

(4) The registrar shall make an entry not later than on the fifth working day after signing a ruling on entry. The registrar shall promptly notify the petitioner of making or refusal to make the entry but not later than within ten working days after making the entry in the register or making the decision to deny the petition for an entry.

(4.1) [Repealed - RT I 2006, 7, 42 - entry into force 04.02.2006]

(5) The registrar shall not make an entry in the register if the petition or documents appended thereto do not comply with the law or are submitted prior to the term permitted or after the term prescribed by law.

(6) The registrar shall not have the right to decline to make an entry if all documents required by law are submitted, and they comply with the requirements of law.

(7) A petition for amendment of registry information shall be immediately submitted to the commercial register if the data entered in the commercial register change, including in the case of appointment, removal or change of the right of representation of a member of the management board of a company or a liquidator, or dissolution of a company. [RT I 2006, 61, 456 - entry into force 01.01.2007]

(7.1) Upon amending information in the commercial register, a registrar of the commercial register is required to make the corresponding necessary amendments in the commercial pledges register within 15 days. The provisions of the second sentence of 599 of the Code of Civil Procedure shall not apply.

(7.2) Correction of the name and personal identification code of a natural person in an entry of the commercial register is carried out exempt from state fees on the basis of a corresponding notice and the amendment to the population register. This provision also applies in the case of deletion of a deceased person's data from the commercial register unless the entry includes inheritable shareholder's rights or other such rights.

(7.3) Amendment of the name of a legal person, legal form or registry code in an entry in the commercial register concerning another person is carried out exempt from state fees on the basis of a corresponding notice and the amendment to the corresponding register This provision also applies to the merger of legal persons.

(7.4) Before amending personal data, the registrar shall check the existence, in the corresponding register, of the amendment on the basis of which the entry is to be made.

(7.5) If the registrar has no electronic access necessary for checking the existence, in the corresponding register, of the amendment on the basis of which the entry in the commercial register is to be made, the personal data may be amended on the basis of a notice to such effect and a certified extract from the appropriate register, or based on other reliable evidence. A document issued by a foreign state shall be legalised or authenticated by a certificate replacing legalisation (apostille), unless otherwise provided by an international agreement.

(8) If incorrect information is submitted to the commercial register, the persons who signed the petition shall be solidarily liable for any damage wrongfully caused.

(9) A person who is authorised to submit a petition may withdraw the petition until a ruling on entry is made. In order to withdraw a petition, a notarised petition which sets out the reason for withdrawal shall be submitted to the registrar. Upon the withdrawal of a petition, the petition and the documents submitted with it shall not be returned.

(10) In the case specified in subsection (9), all the submitted paper documents shall be returned to the petitioner in a registration department or by ordinary mail. In such case, the digitized documents shall be included in the registry file. [RT I, 21.03.2014, 3 - entry into force 01.04.2014]

(11) A digitally signed petition and authorisation document for submission of petition is deemed to be equivalent to a notarised petition and authorisation document for submission of petition. [RT I, 21.03.2014, 3 - entry into force 31.03.2014]

(12) A petition shall not be submitted by e-mail if it is possible to submit the digitally signed petition directly into the information system of the commercial register maintained using electronic means. Otherwise, the registrar shall return the petition submitted by e-mail and specify the reasons for return of petition. [RT I, 21.03.2014, 3 - entry into force 31.03.2014]

(12.1) A notarised petition shall be submitted together with the documents necessary for making an entry to the registrar through the electronic information system of notaries (hereinafter e-notary) through the notary having attested the petition. With good reason, the petition and the documents necessary for making an entry may be submitted through another notary. The notary shall explain to the person which documents shall be appended to the petition and which requirements apply thereto. [RT I, 18.12.2012, 3 - entry into force 19.12.2012]

(13) If submitting petitions directly into the information system of the commercial register maintained using electronic means is impossible due to permanent technical breakdown of the information system, petitions and documents appended thereto may be submitted on paper or by e-mail. The submitted documents shall be transferred to the information system of the commercial register maintained using electronic means at the earliest opportunity following the elimination of the breakdown and the petitions shall be reviewed within five working days. [RT I, 18.12.2012, 3 - entry into force 19.12.2012]

(14) The conditions and procedure for submitting the documents described in subsection (13) of this section shall be established by a regulation of the Minister of Justice. [RT I, 18.12.2012, 3 - entry into force 19.12.2012]

34. Legal effect of entry

(1) An entry in the commercial register shall enter into force upon signature by the person enforcing the ruling on entry and by the person who is competent to make the ruling on entry.

(2) An entry shall be held as correct with regard to a third person, except if the third person knew or should have known that the entry is not correct. An entry shall be deemed not to apply with regard to transactions which are concluded within fifteen days after the entry is made if a third person proves that the third person was not aware nor should have been aware of the content of the entry. [RT I 2009, 13, 78 - entry into force 01.07.2009]

(3) If facts which must be entered in the register are not entered in the register, such facts shall have legal effect with regard to a third person only if the third person knew or should have known about them.

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

35. Notification obligation of administrative agencies

The courts, state and local government agencies, the registrar of the Estonian Central Register of Securities, notaries, bailiffs and auditors are required to notify the registrar of any incorrect information in the commercial register or of any information which has not been submitted to the register that they become aware of. [RT I, 18.12.2012, 3 - entry into force 19.12.2012]public limited company contain reference to the company's capital, the amount of the share capital and, in case contribution for shares has not been completely paid, the amount of outstanding contributions shall also be specified. The commercial documents of the branch of a foreign undertaking and its website shall include the information specified in the first and the second sentence of this subsection regarding both the undertaking and its branch, if it is relevant. In addition, the commercial documents of the branch and its website shall indicate the legal form of the foreign undertaking and the register where the undertaking is registered. If the foreign undertaking is being liquidated, a reference to this fact shall be provided. [RT I, 02.11.2011, 1 - entry into force 12.11.2011]

(3) [Repealed - RT I 2002, 53, 336 - entry into force 01.07.2002]

Chapter 5 - CONTENT OF COMMERCIAL REGISTER

36. Composition of commercial register

The commercial register shall include:

1. the registry card; [RT I, 18.12.2012, 3 - entry into force 19.12.2012]

2. the business files;

3. the registry files.

37. Registry card [RT I, 18.12.2012, 3 - entry into force 19.12.2012]

(1) A separate registry card shall be opened for each undertaking entered in the register.

(2) [Repealed - RT I, 18.12.2012, 3 - entry into force 19.12.2012]

(3) [Repealed - RT I, 18.12.2012, 3 - entry into force 19.12.2012]

(4) [Repealed - RT I, 18.12.2012, 3 - entry into force 19.12.2012]

38. Business file

(1) A business file shall be opened for each undertaking entered in the register.

(2) Documents which are submitted to the registrar by the undertaking according to the law or which are forwarded to the registrar by a court or a trustee in bankruptcy on the basis of the Bankruptcy Act shall be maintained in the business file.

(3) Documents submitted to the registrar shall be originals, notarised copies or officially certified copies. Officially certified copies may be electronic. In such case the name and signature of the person certifying the copy and the seal of the agency shall be substituted by the digital signature of the person or the digital seal of the agency. [RT I, 18.12.2012, 3 - entry into force 19.12.2012]

(4) In an electronic folder, the original document on paper or notarised or officially certified transcript shall be substituted by a digitized document. [RT I, 21.03.2014, 3 - entry into force 31.03.2014]

39. Registry file

(1) A registry file shall be opened for each undertaking entered in the register.

(2) Proof of payment of state fees and other documents concerning the undertaking which are not maintained in the business file shall be maintained in the registry file. [RT I 2003, 4, 19 - entry into force 01.02.2003]

(3) The provisions of subsection 38 (4) of this Code shall apply to an electronic folder. [RT I, 21.03.2014, 3 - entry into force 31.03.2014]

40. Registry journal [Repealed - RT I 21.03.2014, 3 - entry into force 31.03.2014]

41. Alphabetical card index [Repealed - RT I, 18.12.2012, 3 - entry into force 19.12.2012]

Chapter 6 - FORM OF ENTRY

42. Registry code

Every undertaking shall be given a non-recurrent registry code upon entry in the commercial register.

43. Entries

(1) Each entry on a registry card shall have a consecutive number. [RT I, 18.12.2012, 3 - entry into force 19.12.2012]

(2) A notation shall be made beside each entry regarding the date it is made.

(3) Entries shall be written legibly. Only common abbreviations shall be used in entries.

44. Entry amendment

(1) Upon amendment of an entry, the new entry shall be entered in the register under a new consecutive number. An entry which loses its significance due to a later entry shall be displayed in the system underlined and in red. [RT I, 18.12.2012, 3 - entry into force 19.12.2012]

(2) [Repealed - RT I 1998, 59, 941 - entry into force 10.07.1998]

45. Correction of entry [RT I, 21.03.2014, 3 - entry into force 31.03.2014]

(1) If an entry does not comply with the ruling on entry on which it is based, the entry shall be corrected on the basis of a ruling of an assistant judge with a notation in the notations section of the registry card. [RT I, 18.12.2012, 3 - entry into force 19.12.2012]

(2) The person who submitted the petition for the entry shall promptly be notified of the correction of the entry.

(3) [Repealed - RT I, 18.12.2012, 3 - entry into force 19.12.2012]

451. Opening of replacement card [Repealed - RT I, 18.12.2012, 3 - entry into force 19.12.2012]

46. Entry made on basis of court decision

If an entry is made on the basis of a court decision, a notation to this effect shall be made in the entry. A notation concerning the amendment or annulment of the court decision shall be made in the same entry. [RT I, 18.12.2012, 3 - entry into force 19.12.2012]

47. Invalidity of registry card entries [Repealed - RT I, 18.12.2012, 3 - entry into force 19.12.2012]

48. [Repealed – RT I 2001, 56, 336 - entry into force 07.07.2001]

Chapter 7 - MAKING OF ENTRY

49. Content of document submitted to registrar

A document submitted to the registrar shall contain the information prescribed by law.

50. Receipt of documents [RT I 2003, 4, 19 - entry into force 01.02.2003]

(1) Upon submission of a petition, the registrar shall inscribe on the petition the date of receipt of the petition, a list of documents appended to the petition and the number of pages in each document. The inscription shall be signed by the person who receives the petition. A petition submitted on paper and the documents appended thereto shall be digitized and saved in an electronic folder, and petitions submitted by e-mail or through the information system and the documents appended thereto shall also be saved therein. [RT I, 21.03.2014, 3 - entry into force 31.03.2014]

(2) [Repealed - RT I 2005, 57, 449 - entry into force 01.01.2006]

(3) The registration and saving of a petition and the documents appended thereto shall be performed pursuant to the procedure established on the basis of subsection 33 (14) of this Act. [RT I, 18.12.2012, 3 - entry into force 19.12.2012]

(4) Paper documents shall be returned to the petitioner in a registration department or by ordinary mail to the address of the undertaking. [RT I, 21.03.2014, 3 - entry into force 01.04.2014]

51. [Repealed – RT I 2006, 61, 456 - entry into force 01.01.2007]

52. Business name verification

The registrar shall verify that the business name is in conformity with the requirements of law. If the business name is not in conformity with the requirements of law, the registrar shall propose that a new business name be chosen during the term designated by the registrar.

53. Terms in proceedings

(1) A petition for entry shall be reviewed within five working days after receipt of the petition. The time for submission of a petition received by the registration department after the end of a working day, but before 00:00, on a day off or public holiday is deemed to be the working day following the receipt. In case of amendment of a petition for entry or submission of an additional document, the term in proceedings shall commence as of the amendment of the petition for entry or submission of the document. [RT I, 21.03.2014, 3 - entry into force 31.03.2014]

(2) If the petitioner has been given a term for elimination of deficiencies by an order and the petitioner has eliminated all the differences then the petitioner for entry shall be reviewed once again within the period of five days.

(3) The court may, on the existence of circumstances requiring special investigation, extend the term for review by up to three months.

(4) In expedited procedure, a petition for entry shall be reviewed not later than during the next working day after the date of receipt of the petition. The time for submission of a petition received by the registration department after the end of a working day, but before 00:00, on a day off or public holiday is deemed to be the working day following the receipt. [RT I, 21.03.2014, 3 - entry into force 31.03.2014]

(5) A petition for entry shall be accepted for expedited procedure at the request of the petitioner if:

1. the petition and other documents required pursuant to law (entry documents) are submitted in compliance with the requirements established on the basis of clause 67 (4) 1) of this Code and such documents bear the digital signature of the persons who are required, pursuant to law, to sign them;

2. the articles of association provided in § 1391 of this Code are annexed to the petition if the articles of association, together or without the memorandum of association, must be annexed to the petition;

3. the registrar is able to automatically verify the personal data of a sole proprietor, founder of a company, limited or general partner or, in the case of a legal person, also the legality of the right of representation of a representative, and the personal data of a member of the management or supervisory board, auditor or procurator of an undertaking through a computer network pursuant to the procedure established on the basis of clause 67 (4) 1) of this Code;

4. only monetary contributions are made into the share capital upon foundation or upon the increase of share capital, and in the case of foundation, such contributions have been transferred as deposit to the account of the registrar or the account specified in subsection 15 (41) of the Money Laundering and Terrorist Financing Prevention Act, excluding the case when the foundation procedure specified in § 140 1 of this Code was chosen for the foundation of a private limited company; [RT I, 31.01.2014, 6 - entry into force 01.04.2014]

5. the shares of a private limited company who is to be entered in the commercial register or whose share capital is to be increased or decreased have not been registered in the Estonian Central Register of Securities;

6. the state fee for making the entry in the commercial register has been transferred to the bank account prescribed for such purposes in the amount provided by the State Fees Act;

7. the foundation number specified in subsection 520 (1) of this Code or, if the undertaking is already entered in the register, the registry code of the undertaking has been used upon payment of the share capital and payment of the state fee for the commercial register entry; [RT I 2008, 27, 177 - entry into force 10.07.2008]

8. the person himself or herself or, in the case of a legal person, the person's representative has signed the entry documents;

9. the activity has been indicated pursuant to subsections 4 (5) and (6) of this Code;

10. entry in or deletion from the commercial register of a merger, division, transformation, or dissolution of a company, change of registered office resulting in change of registry jurisdiction of a company, or entry in the commercial register of a company by the state or a local government is not applied for in the petition;

11. entry of a branch of a foreign company is not applied for in the petition.

(6) A petition for entry or other entry documents are not accepted for expedited procedure if these do not conform to the requirements of subsection (5) of this section or if these contain essential deficiencies. In such case, the reason for impossibility of submission is displayed for the petitioner. [RT I, 18.12.2012, 3 - entry into force 19.12.2012]

54. [Repealed – RT I 2006, 61, 456 - entry into force 01.01.2007]

54.1. [Repealed – RT I 2005, 57, 449 - entry into force 01.01.2006]

55. Content of ruling on entry

A ruling on entry shall set out:

1. the court and the name and title of the person competent to make the ruling; [RT I 2008, 59, 330 - entry into force 01.01.2009]

2. the time and place of making the ruling; [RT I 2008, 59, 330 - entry into force 01.01.2009]

3. the text of the entry with reference to the registry card and the section of the card in which the entry shall be made; [RT I, 18.12.2012, 3 - entry into force 19.12.2012]

4. if the petition is denied, the reasons and legal basis for the ruling; [RT I 2008, 59, 330 - entry into force 01.01.2009]

5. the procedure and term for an appeal against the ruling; [RT I 2008, 59, 330 - entry into force 01.01.2009]

56. Implementation of ruling on entry

(1) After a ruling on entry is made, the registrar shall enter the text of the entry on the registry card. The text of the entry shall be signed by the person enforcing the ruling and by the person competent to decide on making the entry.

(2) A copy of the ruling on entry shall be given or sent to the undertaking with regard to whom the ruling is made during the term specified in subsection 33 (4). [RT I 2008, 59, 330 - entry into force 01.01.2009]

57. Change of registered office of undertaking

(1) If the registered office of an undertaking changes and the new registered office is in the territorial jurisdiction of another registrar, no new registry card shall be opened for the undertaking. [RT I 2009, 67, 460 - entry into force 01.01.2010]

(2) [Repealed - RT I, 18.12.2012, 3 - entry into force 19.12.2012]

58. Registration proceedings in case of bankruptcy, prohibition on business and prohibition to engage in enterprise [RT I 2008, 52, 288 - entry into force 22.12.2008]

(1) The following shall be entered in the commercial register on the basis of a court decision:

1. the abatement of a bankruptcy proceedings without a declaration of bankruptcy – if the court terminates the proceedings because the debtor's property is insufficient to cover the costs of the bankruptcy proceedings. The name and personal identification code of the interim trustee in bankruptcy of the company shall be entered in the commercial register together with the entry concerning the abatement and it shall be indicated that the interim trustee organises the liquidation of the company and represents the company. If the bankrupt is a sole proprietor, he or she shall be deleted from the commercial register immediately; [RT I 2006, 61, 456 - entry into force 01.01.2007]

2. a declaration of bankruptcy together with the name and personal identification code of the trustee in bankruptcy, and a notation indicating that the trustee represents the undertaking; [RT I 2006, 61, 456 - entry into force 01.01.2007]

3. the abatement of bankruptcy proceedings after a declaration of bankruptcy together with an entry concerning the continuation of activities of the undertaking – if the court terminates the proceeding because a third person satisfies the claims of creditors or gives a pledge to secure the claims. The notation indicating that the undertaking is represented by the trustee in bankruptcy shall be deleted;

4. the abatement of bankruptcy proceedings after the declaration of bankruptcy together with the deletion of the undertaking from the register – if the court terminates the proceedings because the bankruptcy estate is not sufficient to make payments related to the bankruptcy proceedings. Unless the trustee in bankruptcy states otherwise, he or she shall be indicated in the commercial register as the depositary of the documents of the company deleted from the commercial register;

5. the termination of a bankruptcy proceedings together with the deletion of the undertaking from the register or continuation of the activities of the undertaking – if the court approves the final report of the trustee in bankruptcy. In the case of deletion of the undertaking from the register, the trustee in bankruptcy shall be indicated in the commercial register as the depositary of the documents of the company deleted from the commercial register, unless the trustee in bankruptcy states otherwise. In the case of continuation of activities, the notation indicating that the undertaking is represented by the trustee in bankruptcy shall be deleted;

6. a compromise and the term thereof together with an entry concerning the continuation of activities – if the court had previously declared bankruptcy. A concurrent notation shall be made in the commercial register indicating that the trustee in bankruptcy performs the functions specified in §§ 188–190 of the Bankruptcy Act. The notation indicating that the trustee in bankruptcy represents the undertaking shall be deleted;

7. the annulment of a compromise and restoration of bankruptcy proceedings after a declaration of bankruptcy. A notation shall be made in the register indication that the undertaking is represented by the trustee in bankruptcy;

8. the termination of a compromise due to expiry of the compromise term and release of the trustee in bankruptcy.

(2) No entry shall be made in the commercial register concerning a prohibition on business of a debtor or a person with the right to represent the debtor and a prohibition to engage in enterprise imposed on a person. [RT I 2008, 52, 288 - entry into force 22.12.2008]

(3) No entry shall be made in the commercial register if the person under a prohibition on business or the person who has received a prohibition to engage in enterprise, except for a shareholder of a private limited company who is not simultaneously a member of a managing body of a legal person, has signed the petition for an entry or has issued an authorisation document to do so or if the person participated in adopting the resolution of the supervisory board which is the basis of the petition, or if entry of the person in the commercial register as a member of the management board, general partner, procurator, liquidator or trustee in bankruptcy of a legal person is applied for. [RT I 2009, 51, 349 - entry into force 15.11.2009]

(4) In the case specified in clause (1) 1) of this section, a member of the management board of a legal person which is the debtor in bankruptcy proceedings shall be the depositary of documents after the deletion of the legal person from the register and he or she shall be indicated as the depositary of documents in the register unless otherwise agreed or otherwise determined on the basis of a court decision.

59. Deletion of undertaking from commercial register

(1) Upon dissolution of a company, the company shall be deleted from the commercial register on its own petition or on another basis provided by law.

(2) If a petition for deletion from the commercial register is not submitted upon completion of the liquidation of a company, the registrar has the right to delete the company from the register.

(3) A sole proprietor shall be deleted from the commercial register on his or her petition or on another basis provided by law. A sole proprietor shall not be deleted from the register on his or her petition if he or she must be entered in the register by law.

(3.1) A sole proprietor who acts on a temporary basis shall be deleted from the commercial register automatically after the expiry of the final date specified in clause 3 (3) of this Code. [RT I 2008, 27, 177 - entry into force 01.01.2009]

(3.2) The registrar may delete a sole proprietor from the commercial register if the person does not comply with the concept of an undertaking specified in § 1 of this Code and the sole proprietor has not notified of the suspension or termination of the activity. [RT I 2008, 27, 177 - entry into force 01.01.2009]

(4) A company shall not be deleted from the commercial register upon voluntary dissolution without the written consent of the Tax and Customs Board except if it has submitted a petition for deletion of the company from the commercial register. In order to obtain the consent, the registrar shall submit a written request to the Tax and Customs Board. The Tax and Customs Board shall not refuse the consent unless it has claims against the company. If the consent is not received within twenty days after sending a petition, the Tax and Customs Board shall be deemed to consent to deletion from the register. [RT I, 25.10.2012, 1 - entry into force 01.12.2012]

(5) If the articles of association of a company entered in the commercial register do not contain provisions required by law or if any of the provisions of the articles of association are in conflict with the law, the registrar shall set a term for the elimination of omissions by the company, which shall not be less than six months. If the company fails to eliminate the omissions during the set term, the registrar may decide on the compulsory dissolution of the company.

(6) If the membership of the management board of a company does not comply with the requirements of the law or the articles of association, the registrar shall set a term for the company to bring the membership of the management board into accordance with the requirements of the law or the articles of association; the term shall not be less than one month. If the company fails to bring the membership of the management board into accordance with the requirements of the law or the articles of association during the set term, the registrar shall decide on the compulsory dissolution of the company. [RT I 2005, 57, 449 - entry into force 01.01.2006]

60. Failure to submit annual report [RT I 2006, 7, 42 - entry into force 04.02.2006]

(1) If a private limited company, public limited company or commercial association fails to submit the requisite annual report to the registrar within six months after the expiry of the term specified by law, the registrar shall issue a warning on deletion from the register to such person and obligate the person to submit the annual report within a specified term which shall be at least six months. [RT I 2006, 7, 42 - entry into force 04.02.2006]

(2) If a company fails to submit an annual report within the term specified in subsection (1) of this section and has not notified the registrar of a justified good reason which hinders the company from submitting the report, the registrar may publish a notice concerning the company's failure to submit the annual report within the prescribed term in the publication Ametlikud Teadaanded and invite the creditors of the company to notify of their claims against the company and to request the conduct of a liquidation proceeding within one month after the date of publication of the notice, with a warning that if they fail to do so, the company may be deleted from the register without a liquidation proceeding. [RT I 2006, 7, 42 - entry into force 04.02.2006]

(3) If, within six months after publication of the notice specified in subsection (2) of this section, the company has failed to submit the annual report to the registrar and failed to provide the registrar with justification for the reason which hinders the company from submitting the report, and the creditors of the company have not requested the liquidation of the company, the registrar may delete the company from the commercial register in adherence to the provisions of subsection 59 (4) of this Code. [RT I 2006, 7, 42 - entry into force 04.02.2006]

(3.1) The court ruling on deletion of a company from the commercial register specified in subsection (3) of this section shall be served on the company. The company has the right to file an appeal against the ruling within thirty days after the service thereof. An entry on deletion of a company from the register shall not be made before the term prescribed for contestation of the court ruling or ruling on entry expires or, if such ruling is contested, before the court proceeding terminates. The provisions of the second sentence of § 599 of the Code of Civil Procedure do not apply to the case prescribed in this subsection. [RT I 2008, 59, 330 - entry into force 01.01.2009]

(4) If, within six months after publication of the notice specified in subsection (2) of this section, a creditor of the company or the company submits a petition for liquidation of the company, the registrar shall make a decision on compulsory dissolution of the company. [RT I 2006, 7, 42 - entry into force 04.02.2006]

(5) If after deletion from the company from the register, it becomes evident that the company has the means necessary for liquidation, the registrar may decide on the liquidation of the company. A company may be liquidated at the request of a creditor thereof after it has been deleted from the commercial register only if the registrar restores the term for submission of a petition for liquidation for the creditor pursuant to the procedure provided in the Code of Civil Procedure. [RT I 2006, 7, 42 - entry into force 04.02.2006]

61. Making entry without petition

(1) If a registrar has information concerning the incorrectness of an entry or that an entry is missing, the registrar may make the appropriate inquiries.

(2) Upon ascertaining that an entry is incorrect or missing, the registrar shall notify the undertaking on the basis of whose petition the entry should be made. If no objection to making or correcting the entry is made within two weeks after the notice, the registrar shall make or correct the entry. Upon receipt of an objection the registrar shall decide whether the objection is justified by issuing a ruling on entry.

(3) Failure to submit a petition shall not exempt an undertaking who is required to submit a petition from the obligation to pay the prescribed state fee for an entry. If the incorrectness of an entry is the result of the activities of the registrar, the registrar shall, by a ruling on entry, exempt the undertaking from payment of the state fee.

(4) If the making of an entry pursuant to subsection (2) of this section would result in the deletion of a company from the register, the registrar shall decide on the compulsory dissolution of the company. [RT I 2005, 57, 449 - entry into force 01.01.2006]

62. Personal data submitted to registrar

(1) If by law a personal identification code must be set out in a document submitted to a registrar, the Estonian personal identification code shall be submitted to the registrar and, in the absence thereof, a foreign personal identification code or other code substituting for the personal identification code and the day, month and year of birth of the person shall be submitted to the registrar. If a person has no Estonian personal identification code, the foreign personal identification code and the day, month and year of birth of the person shall entered in the register. [RT I, 18.12.2012, 3 - entry into force 19.12.2012]

(2) A legal person in public law shall, in a document submitted to a registrar, set out its registry code and reference to the Act or agreement pursuant to which the person is founded. A legal person is not required to submit its registry code or other registration number to a registrar if the legal person is not subject to entry in a public register.

(3) The name of the local government in which a natural person lives shall be submitted to a registrar and entered in the register as his or her residence.

(4) The name of the local government in which the registered office of a legal person is located shall be submitted to a registrar and entered in the register as the registered office of the legal person.

(5) Specific data concerning the address of a person’s residence or registered office (street number, apartment number, street name or name of the farm, settlement, local government and county, postal code) shall be submitted to a registrar as the person’s address. If the person is a subject of the population register, the person's residence data entered in the population register shall be entered in the register. [RT I, 14.03.2011, 1 - entry into force 01.01.2012]

(5.1) In the case of a foreign country, also the state, province or other administrative unit if it exists, and the name of the country shall be specified in the data of the residence or registered office.

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

(7) A sole proprietor, a member of the management board or the chairman of the supervisory board of a company, a partner of a general partnership or limited partnership and a shareholder of a private limited company or a head of a foreign branch of a company who is not a subject of the Estonian population register and who was not issued an Estonian identity card shall also submit his or her address and e-mail address to the registrar and notify the registrar of any changes in such address. The above also applies to partners in a general or limited partnership and shareholders of a private limited company who are not natural persons and have not been entered in the Non-profit Associations and Foundations Register of Estonia. [RT I, 14.03.2011, 1 - entry into force 01.01.2012]

63. Information on telecommunications of undertaking

An undertaking shall submit the telecommunications numbers (telephone number and fax number, e-mail address, etc.) of the undertaking to the registrar and may submit the address of the web-site of the undertaking. The national area code shall be indicated in front of telephone and fax numbers. Telecommunications numbers shall also be indicated in the annual report which is submitted to the registrar.

63.1. Person competent to receive documents

(1) An undertaking, inter alia, the branch of a foreign company, may in addition to its address submit to the registrar the Estonian address of one person, which can be used for the delivery to such person of the procedural documents of the undertaking and the declarations of intent addressed to the undertaking. The right of the above person to receive on behalf of the undertaking the procedural documents of the undertaking and the declarations of intent addressed to the undertaking applies in regard to third parties pursuant to the provisions of subsection 34 (2) of this Code. [RT I 2010, 77, 589 - entry into force 01.01.2011]

(2) If the residence of at least half of the members of the management board of a private limited company, a public limited company or a branch is not in Estonia, in another Member State of the European Economic Area or in the Swiss Confederation, the private limited company, the public limited company or the foreign company shall appoint the person specified in subsection (1) of this section. [RT I, 02.07.2013, 3 - entry into force 12.07.2013]

Chapter 8 - REGISTRY CARD

64. Registry card information

The following shall be entered on a registry card:

1. the business name and registry code of the undertaking or company;

2. the residence or registered office, and address of the undertaking or company;

3. information on the sole proprietor;

4. information on the suspension of the activity, seasonal or temporal activity of the enterprise of the sole proprietor;

5. information on general partners and liquidators of the company and persons who are granted right of representation specified in subsection 98 (3) and § 131 of this Code or information on members of the management board and liquidators of the company;

6. information on procurators;

7. the legal form of the undertaking or class of company;

8. the date of approval of the articles of association of the company;

9. the agreements on the right of representation of the partners or the authority of the members of the management board and of the liquidators of the company in representing the company;

10. information on the limited partners of the undertaking and the amounts of their contributions;

11. the monetary amount of the share capital of the company;

12. a notation concerning foundation of the private limited company without making contributions;

13. a notation concerning entry of the shares of the company in the Estonian Central Register of Securities;

14. the beginning and end of the financial year;

15. information on bankruptcy according to § 58 of this Code;

16. a notation concerning the merger, division and transformation, and the dissolution and deletion of the company;

17. reference to entries made by the registrar as provided by law without a petition of the undertaking;

18. information on the depositary of documents of a liquidated company;

19. the date of entry;

20. reference to later entries and other notations. [RT I, 18.12.2012, 3 - entry into force 19.12.2012]

65. Registry card information of part B of card register [Repealed - RT I, 18.12.2012, 3 - entry into force 19.12.2012]

66. Entry concerning invalidation of resolution of company

If a court declares invalid the resolution of a body of a company on the basis of which an entry was made in the commercial register, an entry concerning the court judgment shall be made in the same place of a registry card as the entry made on the basis of the resolution which is declared invalid. [RT I, 18.12.2012, 3 - entry into force 19.12.2012]

Chapter 9 - MAINTENANCE OF COMMERCIAL REGISTER USING ELECTRONIC MEANS

67. Conditions for maintenance of commercial register using electronic means

(1) The commercial register shall be maintained using electronic means.

(2) [Repealed - RT I 2006, 61, 456 - entry into force 01.01.2007]

(3) A copy of the commercial register maintained using electronic means shall be substituted by a print-out, the authenticity of which shall be certified by the registrar if so requested by a person. A print-out issued to a person shall contain invalid data only if such data were requested. [RT I, 18.12.2012, 3 - entry into force 19.12.2012]

(4) The Minister of Justice may establish by a regulation:

1. formal requirements for documents submitted to the registrar and technical requirements for their submission which are necessary for computerised data processing;

2. a requirement that petitions to be submitted to the registrar be prepared by a notary;

3. a procedure based on which the registrar and all interested persons can verify whether the business name applied for is distinguishable from previous business names;

4. a procedure for maintenance of the central electronic database of the commercial register. [RT I 2005, 57, 450 - entry into force 01.01.2006]

68. Validity of electronic entry [RT I, 18.12.2012, 3 - entry into force 19.12.2012]

(1) An entry in the commercial register maintained using electronic means is made if it is saved in the database assigned for commercial register entries. [RT I, 18.12.2012, 3 - entry into force 19.12.2012]

(2) An entry has legal effect provided for in subsections 34 (2) and (3) of this Code as of the moment when a reference concerning the making of the entry is published in public computer network.

69. Access to commercial register through computer network

(1) The procedure for accessing data in the commercial register through a computer network shall be established by the Minister of Justice.

(2) The Minister of Justice may require, by a regulation, that notaries ensure the connection with the electronic commercial register through the e-notary information system. In such case, all persons have the right to obtain attested print-outs from the commercial register from notaries’ offices. [RT I, 18.12.2012, 3 - entry into force 19.12.2012]

69.1. Information concerning prohibitions on business and prohibitions to engage in enterprise [RT I 2008, 52, 288 - entry into force 22.12.2008]

Information concerning valid prohibitions on business imposed on the basis of the Bankruptcy Act and valid prohibitions to engage in enterprise imposed on the basis of the Penal Code shall be made available through a computer network. [RT I, 21.03.2014, 3 - entry into force 31.03.2014]

70. Payment procedure for issuing of information in electronic register

(1) The issuing of information from the electronic commercial register, non-profit associations and foundations register and commercial pledge register is subject to a fee.

(2) The Minister of Justice shall establish, by a regulation, the rates of fees of up to two euros for one inquiry or object of inquiry.

(3) A person making an Internet inquiry concerning himself or herself or making an Internet inquiry concerning effective entry data and the persons determined by the Minister of Justice on the basis of subsection (4) of this section for the performance of the public law functions shall be exempt from payment of fees for the issuing of information from the electronic commercial register, non-profit associations and foundations register and commercial pledge register.

(4) The Minister of Justice shall establish, by a regulation, the list of legal persons in public law and other persons who shall be issued without charge the information for the performance of the public law functions prescribed by law. [RT I, 18.12.2012, 3 - entry into force 01.01.2013]

Chapter 10 - LIABILITY

71. Liability of undertaking

(1) The registrar may, pursuant to the procedure provided by the Code of Civil Procedure, impose a fine on an undertaking and any other person required to submit the information to the register who fails to submit information provided by law or submits incorrect information to the registrar, regardless of whether or not such information is subject to entry in the register.

(2) If a person fails to submit information to the registrar within the term prescribed by law, the registrar may impose a fine on the person without first issuing the ruling of warning specified in the Code of Civil Procedure.

(2.1) A fine is imposed in the amount specified in the Code of Civil Procedure, but no less than 200 euros. [RT I, 18.12.2012, 3 - entry into force 19.12.2012]

(3) This section also applies to violations of the requirements provided in subsection 15 (2) of this Code and the violations specified in subsection 42 (7) of the Estonian Central Register of Securities Act. [RT I 2006, 55, 407 - entry into force 01.01.2007]

72. [RT I 2005, 57, 449 - entry into force 01.01.2006]

Chapter 11 - APPEALS

73.–74. [Repealed - RT I 2005, 57, 449 - entry into force 01.01.2006]

Part III - SOLE PROPRIETORSHIP

75. Petition for entry in commercial register and information to be entered in commercial register

(1) The enterprise of a sole proprietor shall be entered in the commercial register on his or her petition, or on another basis provided by law. The petition shall set out the data specified in subsection (2) of this section and, additionally, the data pertaining to the person's telecommunications (telephone and fax numbers, e-mail and Internet website addresses, etc.) and information on the planned principal activity. [RT I, 21.03.2014, 3 - entry into force 31.03.2014]

(2) The following shall be entered in the commercial register with regard to the enterprise of a sole proprietor: [RT I, 21.03.2014, 3 - entry into force 31.03.2014]

1. the business name of the enterprise of a proprietor, the registered office and address of the enterprise, and the beginning and end of the financial year of the enterprise; [RT I, 21.03.2014, 3 - entry into force 31.03.2014]

2. name and personal identification code of the undertaking;

3. other information provided by law. [RT I 2006, 61, 456 - entry into force 01.01.2007]

76. [Repealed – RT I 2008, 60, 331 - entry into force 01.01.2009]

77. Accounting

A sole proprietor shall organise his or her accounts pursuant to the Accounting Act.

78. Liability

A sole proprietor shall be liable for his or her obligations with all of his or her assets.

Part IV - GENERAL PARTNERSHIP

Chapter 12 - DEFINITION AND FOUNDATION OF GENERAL PARTNERSHIP

79. Definition of general partnership

A general partnership is a company in which two or more partners operate under a common business name and are solidarily liable for the obligations of the general partnership with all of their assets.

80. Partner

(1) A natural person or legal person may be a partner in a general partnership.

(2) A local government shall not be a partner in a general partnership. [RT I 2009, 57, 381 - entry into force 01.01.2010]

(3) A new partner may be admitted into a general partnership only with the consent of all partners.

81. Registered office

(1) The registered office of a general partnership shall be the place from which the general partnership is managed or the place the general partnership operates.

(2) The registered office of a general partnership shall be determined by the partnership agreement.

82. Partnership agreement

(1) A general partnership shall operate on the basis of a partnership agreement entered into by the partners. The partners shall agree on:

1. the business name and registered office of the general partnership;

2. [Repealed - RT I 2006, 61, 456 - entry into force 01.01.2007]

3. the amount of the contributions of the partners;

4. other obligatory terms and conditions provided by law.

(2) The partners may also agree on other terms and conditions which are not in conflict with the law. If agreed terms and conditions are in conflict with the law, the provisions of law shall apply.

(3) The partnership agreement may be amended only with the consent of all partners. The partnership agreement may prescribe cases in which the partnership agreement may be amended by a majority vote. The partnership agreement shall not be amended by a majority vote of less than three-quarters of all votes.

(4) The partnership agreement may prescribe that a partner has different rights and obligations than the other partners, with the consent of the partner. These rights and obligations may be amended or terminated only with the consent of the partner.

83. Petition for entry in commercial register

(1) A petition for entry in the commercial register shall set out the information specified in § 84 of this Code. The petition shall be signed by all partners.

(2) The petition shall additionally set out the data pertaining to the general partnership's telecommunications (telephone and fax numbers, e-mail and Internet website addresses, etc.) and information on the planned principal activity. [RT I 2006, 61, 456 - entry into force 01.01.2007]

(3) Any other petition submitted to the commercial register shall be signed by a partner entitled to represent the general partnership. If the partners are only entitled to represent the general partnership jointly, the petition shall be signed by all partners entitled to represent the general partnership jointly.

(4) If an amendment to an entry or a new entry is applied for by a petition submitted to the commercial register, the corresponding resolution of the partners shall be appended to the petition. Upon entry or deletion from the register of a new partner, such partner shall also sign the petition submitted to the registrar unless the partner has been excluded from the partnership or is deceased.

84. Information to be entered in commercial register

The following shall be entered in the commercial register:

1. the business name of the general partnership;

2. the registered office and address of the general partnership;

3. the beginning and end of the financial year of the general partnership; [RT I 2006, 61, 456 - entry into force 01.01.2007]

4) the names, personal identification codes or registry codes of the partners; [RT I 2006, 61, 456 - entry into force 01.01.2007]

5. the partners authorised to represent the general partnership and which of them are entitled to represent the general partnership jointly; [RT I 2006, 61, 456 - entry into force 01.01.2007]

6. other information prescribed by law.

Chapter 13 - RELATIONS AMONG PARTNERS

85. Equality of partners

The partners shall be treated equally under equal circumstances.

86. Contributions

(1) The partners shall make contributions in the amount prescribed by the partnership agreement.

(2) Contributions shall be equal unless the partnership agreement prescribes otherwise.

(3) A contribution may be monetary or non-monetary. A non-monetary contribution may also be the provision of services to the general partnership, or the transfer to or use of assets by the general partnership. The monetary value of a non-monetary contribution shall be determined by the partnership agreement. Unless otherwise prescribed by the partnership agreement, assets shall be deemed to be transferred to the ownership of the general partnership, not to its use.

(4) The contribution of a partner may be increased or reduced only with the consent of the partner.

87. Payment of contribution

(1) A partner shall pay the contribution during the term determined by the partnership agreement.

(2) If the term for payment of the contribution is not specified by the partnership agreement, a partner shall pay it promptly after conclusion of the partnership agreement.

88. Management of partnership

(1) Each partner has the right and the obligation to participate in the management of the general partnership.

(2) The right to manage may be granted by the partnership agreement to one or several partners. In this case, the other partners shall not participate in the management of the general partnership.

(3) If several partners are entitled to manage the general partnership, each of them may act independently unless the partnership agreement prescribes otherwise. A managing partner shall not perform an act if another managing partner objects to it.

(4) If the partnership agreement prescribes that the managing partners of the general partnership may only act jointly, an act may be performed with the consent of all managing partners. An act may be performed without the consent of the other partners if a delay in performance would cause damage to the general partnership.

(5) The managing partners may jointly grant the right to manage the general partnership to a third person. Each managing partner may cancel the right granted to a third person.

(6) If there is reason to presume that damage will be caused to the general partnership, a partner who, pursuant to subsection (2) of this section, is not entitled to manage the general partnership may also manage the general partnership to avoid such damage.

89. Scope of competence

In managing the general partnership, a managing partner may perform acts which are necessary for the everyday economic activities of the general partnership. A resolution of the partners is required for the performance of acts which are beyond everyday economic activities.

90. Deprivation of management right

A court may deprive a managing partner of the management right at the request of the other partners if there is good reason. The primary good reason shall be non-performance of a material obligation by the partner or inability to manage the general partnership.

91. Relinquishment of management right

A managing partner may relinquish the management right with good reason by notifying the other managing partners thereof in advance if the relinquishment does not damage the interests of the general partnership.

92. Compensation for expenditure and damage

(1) The general partnership shall compensate a partner for necessary expenditure made, including expenditure for performance of the general partnership’s obligations, and losses incurred in acting in the interests of the general partnership unless the partnership agreement prescribes otherwise.

(2) Monetary expenditure made in the interests of the general partnership shall be compensated for to a partner together with interest in an amount provided by law unless the partnership agreement prescribes otherwise.

93. Adoption of resolution of partners

(1) A resolution of the partners shall be adopted if over one-half of the votes of all partners are in favour unless the law or the partnership agreement prescribes a greater majority requirement. The partners may adopt a resolution only if all partners are notified of the voting in advance.

(2) The number of votes of a partner shall correspond to the amount of the contribution of the partner unless the partnership agreement prescribes otherwise. If the number of votes of a partner is calculated according to the amount of the contribution of the partner, each one euro of the contribution shall give the partner one vote unless the partnership agreement prescribes otherwise. [RT I 2010, 20, 103 - entry into force 01.01.2011]

(3) A partner shall not participate in voting and the partners votes shall be subtracted from the quorum if release of the partner from an obligation or liability, entry into a transaction with the partner or assertion of a claim against the partner is being decided.

(4) A resolution which is in conflict with the law or the partnership agreement shall be declared invalid by a court at the request of a partner if the request is submitted within three months after adoption of the resolution.

94. Right of partner to information

(1) A partner has the right to obtain information concerning the activities of the general partnership, to examine all documents of the general partnership and to demand a copy of the approved annual report. Upon a resolution of the partners, the right of a partner to obtain information and examine documents may be restricted if there is reason to believe that this may damage the interests of the partnership.

(2) A partner shall preserve the secrecy of information received concerning the activities and documents of the general partnership unless otherwise decided by the partners or unless the law provides that the information and documents are subject to public disclosure.

95. Prohibition on competition

(1) Without the consent of the other partners, a partner shall not compete with the general partnership in the same area of activity or participate in a company which competes with the general partnership in the same area of activity, in a capacity which affects the commercial activities of such company. If upon foundation of the general partnership or upon the partner becoming a partner the above circumstances are known to the other partners but no objections are raised, the consent of the other partners shall be deemed to be given.

(2) The partnership agreement may prescribe a term during which the prohibition on competition specified in subsection (1) of this section is valid with regard to a former partner of the general partnership. The specified term shall not be longer than five years from the departure or exclusion of the partner from the general partnership.

(3) If the partnership agreement does not prescribe a prohibition on competition with regard to a former partner but the interests of the general partnership require such prohibition, a court may, at the request of the general partnership, impose a prohibition on competition for the term specified in subsection (2) of this section.

96. Violation of prohibition on competition

(1) Upon violation of the prohibition on competition provided for in § 95 of this Code, the general partnership may demand termination of the prohibited activity, transfer of the income received from the prohibited activity to the general partnership and compensation for damage to the extent exceeding the claimed income.

(2) A partner who violates the prohibition on competition shall not participate in the adoption of a resolution on assertion of the claim specified in subsection (1) of this section.

(3) The limitation period for the claim specified in subsection (1) of this section shall be three months from the date the other partners become aware of the violation of the prohibition on competition but not longer than three years from violation of the prohibition on competition. The general limitation period shall apply to a claim for compensation of damage.

97. Profit and loss

(1) The amount of the share of profit to be distributed among the partners shall be decided by the partners after the end of the financial year on the basis of the approved annual report. If a general partnership compiles the annual report of a consolidation group, the partners shall decide on the amount of the share of profit to be distributed on the basis of the consolidated reports of the consolidation group. [RT I 2009, 54, 363 - entry into force 01.01.2010]

(1.1) [Repealed - RT I 2009, 54, 363 - entry into force 01.01.2010]

(2) Each partner shall receive a part of the share of profit to be distributed corresponding to the amount of the contribution of the partner unless the partnership agreement prescribes otherwise.

(3) If a partner has not paid the contribution, the contribution shall be recovered from the share of profit apportioned to the partner.

(4) Losses shall be covered by the partners in proportion to their contributions unless the partnership agreement prescribes otherwise. [RT I 2005, 61, 478 - entry into force 01.12.2005]

97.1. Approval of annual report and submission to commercial register

(1) The annual report shall be approved by the partners. If a general partner is a private limited company, a public limited company, a commercial association or a non-profit association, the annual report shall be submitted to the commercial register together with the sworn auditor’s report, if auditing is compulsory, the proposal for the distribution of profit or the covering of loss and the division of the sales revenue within six months as of the end of the financial year. [RT I 2010, 9, 41 - entry into force 08.03.2010]

(2) Together with the annual report, the commercial register shall be submitted the information regarding the amount of the share of profit to be distributed that was decided pursuant to subsection 97 (1) of this Code or the information regarding the amount of losses covered pursuant to subsection 97 (1) of this Code if the above information is not manifested by the annual report. If the resolution on the distribution of profit or the covering of loss is adopted after the submission of the annual report, the aforementioned information shall be submitted together with the next annual report. [RT I 2009, 54, 363 - entry into force 01.01.2010]

(3) The division of the sales revenue shall contain information regarding the sales revenue for the accounting year in up to ten major areas of activity pursuant to the Classification of Economic Activities established on the basis of subsection 4 (6) of this Code. In case of the annual report of a consolidation group, the division of the sales revenue is submitted on the basis of the respective information in the unconsolidated income statement of the consolidating entity. [RT I 2009, 54, 363 - entry into force 01.01.2010]

Chapter 14 - RELATIONS OF GENERAL PARTNERSHIP WITH THIRD PERSONS

98. Representation of general partnership

(1) Each partner may represent the general partnership in making all transactions unless the partnership agreement prescribes otherwise. [RT I 2009, 13, 78 - entry into force 01.07.2009]

(2) The partnership agreement may provide that the general partnership may be represented by all or some of the partners jointly. These partners may authorise one or several partners among themselves to perform a certain transaction or act. Each partner who grants an authorisation may cancel the authorisation. Joint representation shall apply with regard to third persons only if it is entered in the commercial register.

(3) The managing partners may jointly grant the right of representation of the general partnership to a third person. Each managing partner may cancel the right granted to a third person.

(4) A person entitled to represent the general partnership may represent the general partnership in all relations with third persons. A restriction on the right of representation shall be invalid with regard to third persons.

99. Procurator of general partnership

A procurator of a general partnership shall be appointed jointly by the managing partners. Each managing partner may cancel the procuration.

100. Deprivation of right of representation

A court may deprive the right of representation of a partner at the request of all the other partners if there is good reason. The primary good reason shall be non-performance of an obligation to a material extent by the partner or inability to represent the general partnership.

101. Liability

(1) A general partnership shall be liable for its obligations with all of its assets.

(2) The partners shall be solidarily liable for the obligations of the general partnership with all of their assets. A partner may be required to perform obligations only in money.

(3) An agreement which is in conflict with the provisions of subsection (2) of this section shall not apply with regard to third persons.

(4) A partner has the right to present all objections against the claim of a creditor which the partner may present themselves or which the general partnership could present. A partner shall not lose the right to the objections even if the general partnership waives them or recognises its obligation.

(5) A partner may refuse to perform the obligations of the general partnership until a creditor has filed a claim against the general partnership which is not satisfied or as long as the general partnership has rights in respect of the creditor which may allow for the claim to be dismissed. Compulsory enforcement shall not be imposed on a partner pursuant to an enforcement document against the general partnership.

102. Liability of partner joining or departing from general partnership

(1) A person who becomes a partner of a general partnership shall also be liable for the obligations of the general partnership which arose before the person became a partner.

(2) A former partner of the general partnership shall also be solidarily liable with the other partners for an obligation of the general partnership which arose before entry of the departure or exclusion of the partner in the commercial register if the due date for performance of the obligation has arrived or arrives within five years after departure or exclusion.

(3) An agreement which is in conflict with the provisions of subsections (1) or (2) of this section shall not apply with regard to third persons.

(4) [Repealed - RT I 1998, 59, 941 - entry into force 10.07.1998]

Chapter 15 - DISSOLUTION OF GENERAL PARTNERSHIP AND DEPARTURE OF PARTNER

103. Bases for dissolution of general partnership and continuation of activities

(1) A general partnership shall be dissolved:

1. by a resolution of the partners;

2. by a court ruling; [RT I 2008, 59, 330 - entry into force 01.01.2009]

3. upon expiry of a term or achievement of an object;

4. on another basis provided by law.

(2) The partnership agreement may prescribe that the general partnership shall also be dissolved upon departure of a partner from the general partnership, the bankruptcy of a partner or upon the death of a partner who is a natural person, or dissolution of a partner who is a legal person.

(3) If dissolution of the general partnership is prescribed by the partnership agreement or if the general partnership is dissolved upon expiry of a term or achievement of an object, the partners may decide on continuation of the activities of the general partnership, or on merger, division or transformation of the general partnership. A resolution on continuation of activities shall be adopted if more than three-quarters of the votes of the partners are in favour unless the partnership agreement prescribes a greater majority requirement.

(4) The partners shall submit a joint petition for entry of the continuation of activities in the commercial register. The resolution on continuation shall enter into force as of its entry in the commercial register.

104. Dissolution of general partnership by resolution of partners

A general partnership may be dissolved by a resolution of the partners if more than three-quarters of the votes of the partners are in favour unless the partnership agreement prescribes a greater majority requirement.

105. Dissolution of general partnership by court judgment

(1) At the request of a partner, a court may decide on dissolution of the general partnership if there is good reason. The primary good reason shall be non-performance of a material obligation by a partner or the impossibility of its performance.

(2) An agreement which is in conflict with the provisions of subsection (1) of this section shall be void.

106. Successor joining general partnership

(1) Upon the death of a partner, his or her successors have the right to join the general partnership if prescribed by the partnership agreement or if all the partners agree to it.

(2) If the partnership agreement prescribes that only one successor may become a partner but neither this person nor the procedure for selecting him or her is specified, the person may be specified by the will of the bequeather. The partnership agreement may prescribe that a successor may join the general partnership only with the consent of the other partners.

(3) Upon the consent of the other partners, a successor or successors may be granted the status of a limited partner by which the general partnership shall be deemed to be transformed into a limited partnership. A partner who is a successor has the right to the same share of profit as the deceased general partner. The partnership agreement may prescribe a reduction in the share of profit of a successor if the share of profit of the bequeather was increased in consideration of his or her activities or increased responsibility.

(4) If a successor does not wish to or cannot join the general partnership or if the partners do not agree to the successor joining the general partnership, the successor has the right to receive a share of the compensation, corresponding to his or her share of the succession, which the deceased partner would have received upon departure from the general partnership.

(5) If one of the successors joins the general partnership, the corresponding share of the compensation which the deceased partner would have received shall be taken into account in calculating the successor’s share of the succession.

(6) A successor may submit a petition to join the general partnership within three months from the date the successor becomes aware of the successor’s right of succession.

(7) If a partner who is a successor departs or is excluded from the general partnership, or the general partnership is dissolved, or the partner is given the status of a limited partner during the term specified in subsection (6) of this section, the partner who is a successor shall be liable for the obligations of the general partnership which exist at that moment to the extent of his or her share of the succession.

107. Departure of partner from general partnership

A partner may depart from the general partnership at the end of the financial year by giving at least six months’ advance notice thereof unless the partnership agreement prescribes a shorter term.

108. Exclusion of partner at request of other partners

If the bases for dissolution of a general partnership provided for in § 105 of this Code become evident, a court may, at the request of the other partners, decide on exclusion from the general partnership of the partner who caused these circumstances.

109. Exclusion of partner at request of creditor

If satisfaction of the claim of a creditor of a partner from the assets of the partner is unsuccessful, the creditor of the partner may request within six months after the failure of the execution, that a court exclude the partner from the general partnership and that the claim of the creditor be satisfied from the compensation payment to be paid. [RT I 2005, 57, 449 - entry into force 01.01.2006]

110. Assumption

If a general partnership has two partners and one of them has left or is excluded from the general partnership pursuant to §§ 107-109 of this Code, a court may, at the request of the other partner, decide that this partner shall continue activities as the legal successor of the general partnership as a sole proprietor and that the general partnership shall be dissolved without liquidation.

111. Compensation

(1) Upon departure or exclusion of a partner from the general partnership, the partner shall be paid as compensation the share of the assets of the general partnership which the partner would receive if the company were dissolved on the date of departure or exclusion of the partner. The partnership agreement may prescribe a different procedure for the calculation of compensation.

(2) Compensation shall be paid not later than six months after departure or exclusion of the partner unless otherwise agreed. Compensation shall be paid with interest in an amount provided by law.

112. Making of entry concerning dissolution of general partnership and exclusion of partner

The partners shall submit a joint petition for entry of the dissolution of the general partnership in the commercial register. An entry concerning the exclusion of a partner shall be made on the basis of a court judgment.

112.1. Duty to submit bankruptcy petition

(1) In the case of the permanent insolvency of a general partnership, the legal representatives of the general partnership shall submit the bankruptcy petition of the general partnership promptly but not later than within twenty days after the date on which the insolvency of the general partnership became evident.

(2) If it becomes evident that a general partnership has become insolvent, only the payments necessary under the circumstances shall be made on account of the general partnership.

(3) In the case of violation of a requirement provided in subsection (1) or (2) of this section, the persons obligated to submit the petition are solidarily liable for the damage caused by the violation. The persons obligated to submit the petition are required to compensate any payments made after the date on which the insolvency became evident to the general partnership, except in the case where making the payments under the circumstances in question conforms to the due diligence requirements. The limitation period of the claim is five years after the violation of the obligation. [RT I 2005, 57, 449 - entry into force 01.01.2006]

Chapter 16 - LIQUIDATION OF GENERAL PARTNERSHIP

113. Basis for liquidation

A general partnership shall be liquidated upon dissolution unless otherwise provided by law.

114. Appointment of liquidators

(1) The liquidators of a general partnership shall be the partners unless the partnership agreement or a resolution of the partners prescribes otherwise. The legal successors of a partner shall appoint one liquidator to jointly represent them.

(2) Upon agreement of the partners, a third person may be appointed as a liquidator. At the request of a partner, a court may, with good reason, appoint a person who is not a partner as a liquidator.

(3) Upon the bankruptcy of a partner, the trustee in bankruptcy shall participate in the liquidation instead of the partner.

(4) [Repealed - RT I 1998, 59, 941 - entry into force 10.07.1998]

(5) The partners shall specify the procedure for and amount of remuneration of liquidators. If the partners do not reach an agreement on the procedure for and amount of remuneration, a court may be requested to specify them.

115. Removal of liquidators

(1) The partners may remove a liquidator if all partners vote in favour of the removal.

(2) A court may remove a liquidator with good reason at the request of a partner or other interested person.

116. Entry of liquidator

(1) The partners shall submit a joint petition for entry of the first liquidators in the commercial register. A petition for entry in the commercial register of a change of liquidator or the right of representation of a liquidator shall be submitted by the liquidators. The resolution which constitutes the basis for the change of a liquidator or the right of representation of a liquidator shall be appended to the petition. All liquidators shall submit to the registrar a written confirmation concerning their right pursuant to law to act as liquidators.

(2) The appointment or removal of a liquidator on the basis of a court judgment shall be entered in the commercial register by the registrar on the basis of the court judgment.

(3) The names and personal identification codes of the liquidators shall be entered in the commercial register. [RT I 2006, 61, 456 - entry into force 01.01.2007]

117. Rights and obligations of liquidators

(1) The liquidators shall terminate the activities of the general partnership, collect debts, sell the assets of the general partnership and satisfy the claims of creditors.

(2) The liquidators only have the right to conclude transactions which are necessary for liquidation of the general partnership.

(3) The liquidators shall represent the general partnership.

(4) If the general partnership has several liquidators, the liquidators only have the right to represent the general partnership jointly. The liquidators may authorise one or several from among themselves to perform a certain transaction or certain type of activity.

(4.1) The right of one liquidator or some of the liquidators to represent the general partnership separately may be prescribed by the partnership agreement, a decision of the partners or a court decision. The right of sole representation applies with regard to third persons only if it is entered in the commercial register.

(5) A restriction on the authority of the liquidators shall be invalid with regard to third persons.

(6) During a liquidation proceeding, the notation “likvideerimisel” [in liquidation] shall be appended to the business name of the general partnership. [RT I 2005, 57, 449 - entry into force 01.01.2006]

118. Accounting during liquidation

(1) A general partnership undergoing liquidation shall organise its accounting pursuant to the procedure provided by the Accounting Act unless otherwise provided by the law or the nature of liquidation.

(2) Within three months after the date of the dissolution resolution, the liquidators shall prepare, taking account of the provisions concerning the balance sheet contained in the annual report, the opening balance sheet of the liquidation and a report explaining such balance sheet which shall contain the information subject to inclusion in the annexes of the annual accounts.

(3) With the adoption of the dissolution resolution, the current financial year of the general partnership shall end and a new financial year shall begin. The liquidators shall prepare the annual accounts of the general partnership as at the end of the financial year which ends at the time of dissolution of the general partnership and as at the end of every financial year following dissolution.

(4) The partners shall approve the opening balance sheet of the liquidation and the annual report by a resolution. After approval, the opening balance sheet of the liquidation and the annual report shall be immediately submitted to the commercial register.

(5) After completion of the liquidation, the liquidators shall prepare the final balance sheet. [RT I 2005, 57, 449 - entry into force 01.01.2006]

119.* Distribution of assets of general partnership

After satisfaction of the claims of creditors, the liquidators shall distribute the remaining assets among the partners corresponding to the contributions of the partners unless the partnership agreement prescribes otherwise.

120. Liability of partners upon liquidation of general partnership

(1) If the assets of a general partnership are not sufficient to cover the claims of creditors, the partners shall be liable for the obligations of the general partnership in proportion to the amounts of their contributions unless the partnership agreement prescribes otherwise.

(2) If the part to be paid by a partner provided for in subsection (1) of this section cannot be collected from a partner, the other partners shall cover the deficit in proportion to their contributions unless the partnership agreement prescribes otherwise. The partner whose part of the debt is paid by the other partners shall compensate this part of the debt to them.

(3) If the claims of creditors can also not be satisfied pursuant to the procedure provided for in subsection (2) of this section, the liquidators shall submit a bankruptcy petition for the general partnership.

(4) The provisions of § 101 of this Code shall apply to the right of a creditor to demand satisfaction of the creditor’s claim.

121. Relations among partners and relations with third persons

During liquidation, the provisions of §§ 85-102 of this Code shall apply to relations among partners and to relations between the general partnership and third persons. If satisfaction of the claim of a creditor of a partner from the assets of the partner is unsuccessful, the creditor of the partner may request that a court exclude the partner from the general partnership and that the claim of the creditor be satisfied from the compensation payment to be paid unless the provisions for liquidation provide otherwise.

122. Deletion from commercial register and deposit of documents

(1) After completion of liquidation, the liquidators shall submit a petition to the commercial register for deletion of the general partnership from the commercial register. The final balance sheet shall be appended to the petition.

(2) The liquidators shall deposit the documents of the general partnership with a liquidator or, based on the resolution of the partners, with a third person or an archive. If the liquidators have not assigned the depositary of documents, the depositary shall be appointed by the court. [RT I 2005, 57, 449 - entry into force 01.01.2006]

(3) The name, residence or registered office, and personal identification code or registry code of the depositary of documents shall be entered in the commercial register on the petition of the liquidators or, in the case of a court-appointed depositary, on the basis of the court ruling. Upon a change of depositary, the transferor shall notify the registrar before the transfer in order to allow for the entry of new information in the register. [RT I 2008, 59, 330 - entry into force 01.01.2009]

(4) Partners and their successors have the right to examine and use deposited documents. Third persons may examine the documents only if they have a legitimate interest.

(5) A general partnership is responsible for the preservation of documents created or received as a result of its activities during the term prescribed by law. Upon liquidation of a general partnership, the documents of the general partnership which are to be preserved may be transferred to an archives upon agreement with the archives. Upon a transfer of documents to an archives, the responsibility for preservation of the documents transfers to the archives.

123. Distribution of assets without liquidation proceeding

(1) If the partners decide to dissolve the general partnership without a liquidation proceeding, the claims of a third person shall be satisfied pursuant to the provisions for liquidation of the general partnership. A majority of over three-quarters of the votes of the partners is required to adopt a resolution on dissolution without a liquidation proceeding unless the partnership agreement prescribes a greater majority requirement.

(2) If a general partnership is dissolved due to the exclusion of a partner at the request of a creditor (§ 109), the general partnership may be dissolved without liquidation only with the consent of the creditor who petitioned for the exclusion of the partner. [RT I 2005, 57, 449 - entry into force 01.01.2006]

124. Claims asserted against partner

If a general partnership is dissolved, a partner shall be solidarily liable with the other partners for the obligations of the general partnership for five years after dissolution of the general partnership. Agreements which derogate from this requirement shall not be applicable with regard to third persons.

Part V - LIMITED PARTNERSHIP

125. Definition of limited partnership

(1) A limited partnership is a company in which two or more persons operate under a common business name, and at least one of the persons (general partner) is liable for the obligations of the limited partnership with all of the general partner’s assets, and at least one of the persons (limited partner) is liable for the obligations of the limited partnership to the extent of the limited partner’s contribution.

(2) The provisions concerning general partnerships shall apply to limited partnerships unless otherwise provided for in Part V of this Code.

(3) A share certificate shall not be issued with regard to a limited share.

126. Partner

The provisions concerning partners of general partnerships shall apply to general partners and limited partners unless otherwise provided for in Part V of this Code.

127. Petition for entry in commercial register [RT I 2003, 4, 19 - entry into force 01.02.2003]

(1) In addition to the provisions of § 83 of this Code, the amount of the contribution of a limited partner, which shall be entered in the commercial register, shall be set out in a petition for entry in the commercial register.

(2) [Repealed - RT I 2003, 4, 19 - entry into force 01.02.2003]

128. Management

(1) A limited partner shall not have the right to manage the limited partnership (§ 88) unless the partnership agreement prescribes otherwise.

(2) A limited partner shall participate as a general partner in the adoption of resolutions of the partners of the limited partnership.

129. Prohibition on competition

The provisions of §§ 95 and 96 of this Code shall apply to a limited partner only if the limited partner is granted the right to manage the limited partnership by the partnership agreement.

130. Right of limited partner to information

A limited partner has the rights specified in § 94 of this Code.

131. Representation of limited partnership

(1) A limited partner shall not have the right to represent the limited partnership unless the partnership agreement prescribes otherwise. The provisions of subsection 98 (3) of this Code shall apply to the right of representation of a limited partner.

(2) The right to represent the limited partnership granted to a limited partner shall be entered in the commercial register.

132. Extent of liability of limited partner

(1) A limited partner who has paid a contribution in full shall not be liable for the obligations of the limited partnership. If a limited partner has not paid a contribution in full, the limited partner shall be liable for the obligations of the limited partnership to the extent of the unpaid contribution.

(2) If a contribution is refunded to a limited partner without observing the provisions of § 133 of this Code, the limited partner shall be liable for the obligations of the limited partnership to the extent of the refunded contribution.

(3) The provisions of subsection (2) of this section shall also apply if a limited partner is paid the limited partner’s share of profit before the share of loss and contribution of the limited partner are covered.

(4) An agreement which is in conflict with the provisions of this section and an agreement which exempts a limited partner from payment of a contribution shall not apply with regard to third persons.

133. Reduction of contribution

(1) The reduction of a contribution of a limited partner shall apply with regard to third persons as of entry in the commercial register.

(2) The reduction of a contribution shall not apply with regard to a creditor whose claim against the limited partnership arises before entry of the reduction of contribution in the commercial register.

134. Transformation

(1) If a limited partner joins a general partnership or in the case provided for in subsection 106 (3) of this Code, the general partnership shall be deemed to be transformed into a limited partnership without dissolution. If all the limited partners depart or are excluded from a limited partnership and at least two general partners remain, the limited partnership shall be deemed to be transformed into a general partnership without dissolution.

(2) Transformation shall be entered in the commercial register on the initiative of the registrar or on a petition of the general partnership.

Part VI - PRIVATE LIMITED COMPANY

Chapter 17 - GENERAL PROVISIONS

135. Definition of private limited company

(1) A private limited company is a company which has share capital divided into private limited company shares.

(2) A shareholder shall not be personally liable for the obligations of the private limited company.

(3) A private limited company shall be liable for performance of its obligations with all of its assets.

136. Share capital

Share capital shall be denominated in euros. Share capital shall be at least 2500 euros. [RT I 2010, 20, 103 - entry into force 01.07.2010]

Chapter 18 - FOUNDATION

137. Founder

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

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

138. Memorandum of association

(1) In order to found a private 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 private limited company being founded; [RT I 2006, 61, 456 - entry into force 01.01.2007]

2. the names and residences or registered offices of the founders;

3. the proposed amount of share capital;

4. the nominal value and number of shares, and their division among the founders;

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. the information on the members of the management board and, if a supervisory board is formed, on its members;

8. the information on procurators or auditors, if appointed;

9. the projected costs of foundation and the procedure for payment thereof.

(3) Upon conclusion of a memorandum of association, the founders shall also approve the articles of association of the private 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 and the articles of association approved thereby if the authorisation document granted to the representative is notarised. The articles of association shall be amended after entry in the commercial register pursuant to the procedure provided for in § 175 and shall not require amendment of the memorandum of association. [RT I 2010, 77, 589 - entry into force 01.01.2011]

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

139. Articles of association

(1) The articles of association of a private limited company shall set out:

1. the business name and registered office of the private limited company; [RT I 2006, 61, 456 - entry into force 01.01.2007]

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. [Omitted - RT I 1996, 40, 773 - entry into force 08.06.1996]

4. the procedure for payment for shares;

5. the specific rights attaching to a share, or of a shareholder;

6. if a share is paid for by a non-monetary contribution, the valuation method of the non-monetary contribution;

7. the formation and amount of legal reserve; [RT I 2010, 77, 589 - entry into force 01.01.2011]

7.1) if there is a management board and supervisory board, the number of members thereof, 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; [RT I 2006, 61, 456 - entry into force 01.01.2007]

8. 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. The 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 private limited company jointly, by all the members of the management board authorised to represent the private limited company jointly.

139.1. Articles of association used upon expedited procedure

(1) The articles of association of a private limited company used upon expedited procedure, and the selection of data to be specified therein shall be established by a regulation of the Minister of Justice.

(2) The articles of association used upon expedited procedure shall provide for at least the information specified in clauses 139 (1) 1), 2), 4) and 7 of this Code. Share capital shall be set out as a specific amount. The private limited company itself is not allowed to add additional provisions to the articles of association used upon expedited procedure.

(3) The articles of association used upon expedited procedure substitutes for the memorandum of association and the articles of association provided in § 139 of this Code.

(4) The articles of association used upon expedited procedure shall be digitally signed by all the founders, indicating the nominal value of the share of each founder.

(5) The articles of association used upon expedited procedure shall not be used by a private limited company operating in an area of activity subject to special requirements if, in addition to the data provided by this Code, the law requires the presentation of additional information in the articles of association of such company.

(6) Otherwise, the general provisions of this Code regarding the articles of association of a private limited company apply to the articles of association used upon expedited procedure. [RT I 2006, 61, 456 - entry into force 01.01.2007]

140. 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 founders shall pay for the shares in full before submission of a petition for entry of the private limited company in the commercial register unless the memorandum of association prescribes otherwise. [RT I 2010, 77, 589 - entry into force 01.01.2011]

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

140.1. Foundation without making contributions

(1) If the planned share capital of a private limited company is not larger than 25,000 euros, the memorandum of association may prescribe that the founders are not required to pay for the share upon the foundation of the private limited company. The founder of the private limited company specified in the first sentence of this subsection may be exclusively a natural person.

(2) Until the shareholder has completely paid the contribution under the agreement specified in subsection (1) of this section, the shareholder shall be liable to the private limited company for the obligations of the private limited company in the amount of the outstanding contribution, unless the obligation of the private limited company can be performed on the account of the assets of the private limited company.

(3) In case of the declaration of bankruptcy of the private limited company, the claim specified in subsection (2) of this section may be filed on behalf of the private limited company exclusively by the trustee in bankruptcy.

(4) Until the complete payment of the contributions by all the shareholders, the private limited company shall neither increase nor decrease the share capital, and in addition the private limited company shall not make any disbursements to the shareholders. The prohibition on disbursements shall not comprise the salary and other remuneration paid to the shareholder.

(5) Contributions to the share capital shall be governed by the provisions of § 140, §§ 142–143, subsection 144 (2) and subsections 520 (2), (4) and (5) of this Code.

(6) An agreement which is in conflict with the provisions of this section and an agreement which exempts a shareholder from payment of a contribution shall not apply with regard to third persons. [RT I 2010, 77, 589 - entry into force 01.01.2011]

141. Payment of monetary contribution

Upon foundation, the founders shall open a bank account in the name of the private limited company being founded, into which they shall pay their monetary contributions.

142. Non-monetary contribution

(1) A non-monetary contribution may be any thing which is monetarily appraisable and transferable to the private 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 private limited company or the activities of the founders in the foundation of the private 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 a commercial register of a private limited company or increase of share capital, the value of a non-monetary contribution is lower than the nominal value of the share received on account of the contribution or the share to be increased, the private 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. The limitation period of the claim is five years after the entry in the commercial register of a private limited company or increase of share capital. [RT I 2005, 57, 449 - entry into force 01.01.2006]

143. Valuation of non-monetary contribution

(1) In case of a non-monetary contribution, the sufficiency of the value of the object of the contribution for the nominal value of the share of the shareholder obliged to make the non-monetary contribution shall be valuated by the management board of a private limited company. [RT I 2010, 77, 589 - entry into force 01.01.2011]

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

(3) If the share capital of a private limited company is at least 25,000 euros and the value of a non-monetary contribution exceeds 1/10 of the share capital or if all non-monetary contributions of such private limited company collectively form more than one-half of the share capital, the valuation of the sufficiency of the value of the non-monetary contribution in regard to compliance with the requirements specified in § 142 of this Code shall be verified by an auditor. The liability of an auditor shall be governed respectively by the provisions concerning the valuation of a non-monetary contribution of a public limited company and the liability of an auditor. [RT I, 02.11.2011, 1 - entry into force 12.11.2011]

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

(4) The members of the management board and the person obliged to make a contribution shall be solidarily liable for any damage incurred as a consequence of an inaccurate valuation of the non-monetary contribution. [RT I 2010, 77, 589 - entry into force 01.01.2011]

(5) Within one year after entry of the private limited company in the commercial register, the private limited company may acquire assets 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 shareholders. [RT I 2010, 77, 589 - entry into force 01.01.2011]

(6) The assets specified in subsection (5) of this section shall be valuated pursuant to the procedure provided for in this section. [RT I 2010, 77, 589 - entry into force 01.01.2011]

(7) The management board shall, immediately after valuation of the assets specified in subsection (5) of this section, submit the contract for transfer of the assets together with the documents in proof of the value of the assets to the commercial register. In the cases specified in subsection (3) of this section, the documents specified in the previous sentence and a signed opinion by an auditor concerning the valuation of the assets shall be submitted to the commercial register immediately after the auditor has inspected the valuation of the assets. [RT I 2008, 16, 116 - entry into force 15.04.2008]

143.1. [Repealed – RT I 2010, 77, 589 - entry into force 01.01.2011]

144. Petition for entry in commercial register

(1) In order to enter a private limited company in the commercial register, the management board shall submit a petition to the commercial register which shall set out the information specified in § 145 of this Code. The following shall be appended to the petition: [RT I 2010, 77, 589 - entry into force 01.01.2011]

1. the memorandum of association;

2. the articles of association;

3. a bank notice concerning the payment of share capital if pursuant to the memorandum of association the contributions shall be made before the entry of the private limited company in the commercial register; [RT I 2010, 77, 589 - entry into force 01.01.2011]

4. names, personal identification codes or registry codes and addresses of shareholders, and the nominal value of the share of each shareholder. Section 62 of this Code applies to the addresses and personal identification codes or registry codes; [RT I 2010, 77, 589 - entry into force 01.01.2011]

5. the names and personal identification codes of the members of the supervisory board, and of auditors, if the company has auditors and, in the case of expedited procedure, their digitally signed consent regarding assumption of the position of a member of the supervisory board or an auditor; [RT I 2006, 61, 456 - entry into force 01.01.2007]

4.1) notarised consent of all members of the management board to becoming a member of the management board and a certification that no circumstances arise, which pursuant to law preclude being a member of the management board; [RT I 2010, 77, 589 - entry into force 01.01.2011]

5. [Repealed - RT I 2005, 57, 449 - entry into force 01.01.2006]

5.1) information on the planned principal activity; [RT I 2006, 61, 456 - entry into force 01.01.2007]

6. upon payment of a non-monetary contribution – if pursuant to the memorandum of association the contributions shall be made before the entry of the private limited company in the commercial register, the agreement for transfer of the contribution to the private limited company and the certification of the management board regarding the fact that the contribution has been transferred to the private limited company and its value covers the nominal value of the share, and also, in the cases specified in subsection 143 (3) of this Code, a sworn auditor's report concerning the verification of the valuation of the sufficiency of the value of the non-monetary contribution; [RT I 2010, 77, 589 - entry into force 01.01.2011]

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

7. data on the telecommunications of the private limited company (telephone and fax numbers, e-mail and Internet home page address, etc.); [RT I 2006, 61, 456 - entry into force 01.01.2007]

8. other documents provided by law.

(2) 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. [RT I 2010, 77, 589 - entry into force 01.01.2011]

(3) Any other petition submitted to the commercial register shall be signed by a member of the management board. A petition for the entry of a new member of the management board in the commercial register shall be signed by the new member of the management board, who shall certify in the petition that he or she has the rights to be a member of the management board pursuant to law. A petition for the entry of a member of the management board in the commercial register shall indicate the final date of the period of office if pursuant to the articles of association the member of the management board shall be appointed to office for a fixed term. If foundation is done by way of expedited procedure, a member of the management board shall also confirm his or her right, according to law, to act as a board member in the petition for entry of the private limited company in the commercial register. 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. [RT I 2010, 77, 589 - entry into force 01.01.2011]

(3.1) [Repealed - RT I 2009, 13, 78 - entry into force 01.07.2009]

(4) A private limited company is not entered in the commercial register if the petition for entry in the register is submitted later than one year after the date of conclusion of the memorandum of association or receipt of the foundation number specified in subsection 520 (1) of this Code. [RT I 2006, 61, 456 - entry into force 01.01.2007]

145. Information to be entered in commercial register

(1) The following shall be entered in the commercial register:

1. the business name of the private limited company;

2. the registered office and address of the private limited company; [RT I 2006, 61, 456 - entry into force 01.01.2007]

3. the amount of share capital;

3.1) the foundation without making the contribution; [RT I 2010, 77, 589 - entry into force 01.01.2011]

4. the date of conclusion of the memorandum of association;

5. the names and personal identification codes of the members of the management board; [RT I 2006, 61, 456 - entry into force 01.01.2007]

6. the members of the management board entitled to represent the private limited company differently than provided for in subsection 181 (1) of this Code;

7. the beginning and end of the financial year of the private limited company;

8. other information provided by law. [RT I 2010, 77, 589 - entry into force 01.01.2011]

(2) The following shall be appended to a petition for the deletion of the entry specified in clause (1) 31) of this section:

1. a bank notice concerning the payment of share capital;

2. upon payment of a non-monetary contribution – the agreement for transfer of the contribution to the private limited company and the certification of the management board regarding the fact that the contribution has been transferred to the private limited company and its value covers the nominal value of the share, and also, in the cases specified in subsection 143 (3) of this Code, a sworn auditor's report concerning the verification of the valuation of the sufficiency of the value of the non-monetary contribution. [RT I 2010, 77, 589 - entry into force 01.01.2011]

146. Liability of founders and members of management board and supervisory board upon foundation of private limited companies

(1) The founders of a private limited company, the members of the management board and supervisory board shall be solidarily liable for damage caused to the private limited company by submission of inaccurate or incomplete information, incorrect valuation of contribution or foundation expenses or making contributions using the assets specified in subsection 4 (1) of the Money Laundering and Terrorist Financing Prevention Act or breach of other obligations upon the foundation of the private 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. [RT I 2008, 27, 177 - entry into force 10.07.2008]

(11) A claim for payment of compensation to a private limited company for damage specified in subsection (1) of this section may also be submitted by a creditor of the private limited company if the assets of the private limited company are not sufficient to satisfy the claims of the creditor. In the case of declaration of bankruptcy of a private limited company, only a trustee in bankruptcy may file a claim on behalf of the private limited company. [RT I 2010, 77, 589 - entry into force 01.01.2011]

(2) In addition to shareholders, the persons on whose account a private 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 behalf thereof was or should have been aware of such circumstances. [RT I 2005, 57, 449 - entry into force 01.01.2006]

(3) An agreement which derogates from the provisions of subsections (1), (11) and (2) of this section shall only be valid with respect to the creditors of a private limited company if such agreement was entered into in the course of bankruptcy proceedings of the private limited company. [RT I 2010, 77, 589 - entry into force 01.01.2011]

(4) The claims provided for in subsections (1), (11) and (2) of this section shall expire after five years of the entry of a private limited company in the commercial register and, in the case the act which constituted the basis for the causing of damage was committed at a later time, five years after the commission of such act. [RT I 2010, 77, 589 - entry into force 01.01.2011]

147. Transactions concluded before entry in commercial register

(1) Persons who conclude a transaction in the name of a private limited company being founded before entry of the private 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 private limited company as of entry of the private 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 private limited company if the shareholders approve the transaction by a resolution.

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

Chapter 19 - SHARE AND SHAREHOLDER

148. Share

(1) The minimum nominal value of a share shall be one euro. [RT I 2010, 20, 103 - entry into force 01.07.2010]

(2) If the nominal value of a share is greater than one euro, the nominal value shall be a multiple of one euro. [RT I 2010, 20, 103 - entry into force 01.07.2010]

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

(4) Each shareholder may have one share. If a shareholder acquires an additional share, the nominal value of the initial share shall increase accordingly. When increasing the nominal value of the existing share, the rights that encumbered the merged shares shall be extended to the share created as a result of the merger. [RT I 2010, 77, 589 - entry into force 01.01.2011]

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

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

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

149. Transfer of share

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

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

(3) The articles of association may prescribe that the transfer of a share shall be permitted exclusively in case of the fulfilment of an additional condition, primarily that a resolution of the other shareholders, the management board, the supervisory board or another person is required to transfer a share. In this case, the provisions of subsection (2) of this section do not apply to the private limited company. The articles of association may prescribe that the right of pre-emption shall not apply upon the transfer of a share. A transaction performed without the condition specified in the first sentence of this subsection shall be null and void. With good reason, the shareholder may demand from the person specified in the first sentence to grant the consent for the transfer of the share. [RT I 2010, 77, 589 - entry into force 01.01.2011]

(4) A transaction constituting an obligation to transfer a share and a disposition must be notarised. The notary who certifies a disposition for the transfer of a share shall send a notice concerning the transfer of the share in the format established by the Minister of Justice to the registrar of the commercial register within two days after certification of the contract. [RT I 2009, 51, 349 - entry into force 15.11.2009]

(5) The provisions of subsection (4) of this section do not apply to the transfer of shares entered in the Estonian Central Register of Securities. [RT I 2009, 51, 349 - entry into force 15.11.2009]

150. Notification of transfer

(1) The transfer of a share is deemed to be effected and a shareholder is deemed to have changed with respect to the private limited company after notification of the transfer of the share and certification of the transfer of the share. [RT I 2005, 57, 449 - entry into force 01.01.2006]

(2) Transactions between the transferor and the company made before notifying the company of the transfer of the share and related to the relationship between the shareholder and the company shall apply to the transferee of the share. [RT I 2009, 13, 78 - entry into force 01.07.2009]

(3) Upon receiving a notice of transfer, the management board of the private limited company shall promptly amend the entries in the list of shareholders as appropriate arising from the transfer. The above also applies to amending other information in the list of shareholders which has been submitted to the management board. [RT I 2005, 57, 449 - entry into force 01.01.2006]

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

(5) If only one shareholder remains in a private limited company as a result of a transfer of a share or if, in addition to one shareholder, only the private limited company itself has a share in the private limited company, the management board of the private limited company must submit a written notice to this effect to the registrar of the commercial register. Data concerning the single shareholder specified in subsection 182 (1) of this Code shall be set out in the notice. The notice shall be preserved in the business file. [RT I 2005, 57, 449 - entry into force 01.01.2006]

(6) The provisions of subsection (1) and (3) of this section do not apply to a private limited company the shares of which are entered in the Estonian Central Register of Securities. [RT I 2009, 51, 349 - entry into force 15.11.2009]

151. Pledging of shares

(1) A share may be pledged unless the articles of association prescribe otherwise. [RT I 2005, 57, 449 - entry into force 01.01.2006]

(2) A transaction constituting an obligation pledge a share and a disposition must be notarised. The notary who certifies a disposition for the pledge of a share shall send a notice concerning the pledging of the share in the format established by the Minister of Justice to the registrar of the commercial register within two days after certification of the contract. [RT I 2009, 51, 349 - entry into force 15.11.2009]

(3) Upon pledge of a share, the pledgor shall exercise the rights attaching to the share. [RT I 2005, 57, 449 - entry into force 01.01.2006]

(4) At the request of a shareholder, the management board of the private limited company shall enter a notice concerning a pledge in the list of shareholders. Notification of the pledge of a share to a private limited company or entry of a pledge in the list of shareholders does not affect the validity of the pledge. [RT I 2005, 57, 449 - entry into force 01.01.2006]

(5) Upon transfer of a pledged share, the right of security shall remain valid with respect to the share unless the acquirer of the share proves that the registrar of the commercial register had not been informed of the right of security at the time of the transfer and the acquirer was not aware nor should have been aware of the right of security. [RT I 2005, 57, 449 - entry into force 01.01.2006]

(6) The provisions of subsections (2), (4) and (5) of this section do not apply to the pledging of shares entered in the Estonian Central Register of Securities. [RT I 2005, 57, 449 - entry into force 01.01.2006]

152. Share division

(1) A shareholder may transfer a part of the shareholder’s share. [RT I 2010, 77, 589 - entry into force 01.01.2011]

(2) The provisions of § 149 of this Code apply to the partial transfer of a share. [RT I 2010, 77, 589 - entry into force 01.01.2011]

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

(4) The rights encumbering a share shall remain effective upon the division of the share. If the continuation of the effect of the rights in the existing form is impossible, the rights encumbering the share shall remain effective upon the division of the share according to a notarised agreement between the parties concerned. [RT I 2010, 77, 589 - entry into force 01.01.2011]

153. Share transfer to successor

(1) Upon the death of a shareholder, the share shall transfer to his or her successors unless the law or the articles of association prescribe otherwise. [RT I 2010, 77, 589 - entry into force 01.01.2011]

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

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

154. Equality of shareholders

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

(2) A shareholder shall not be required to pay a contribution exceeding the nominal value and premium of the share without the consent thereof. [RT I 2005, 57, 449 - entry into force 01.01.2006]

155. Amount of contribution

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

(2) The articles of association may prescribe the right of the private limited company to issue shares for a price exceeding their nominal value (premium). In this case, the shareholder is also required to pay the premium. A premium is adjusted in the cases prescribed by the applied accounting practices. A premium may be used:

1. to cover a loss of the private limited company if such loss cannot be covered by retained profit from previous periods, legal reserve prescribed in the articles of association or other reserves prescribed in the articles of association;

2. to increase share capital by a bonus issue. [RT I 2005, 61, 478 - entry into force 01.12.2005]

156. Consequences of delay of contribution

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

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

(3) If the shareholder does not pay the deficient sum during the term specified in the notice, the shareholder shall lose the shareholder’s share or the increase of the shareholder’s share, and the private limited company has the right to transfer the share to other shareholders or third persons. A sum paid by the shareholder or a part thereof which does not exceed one-fifth of the nominal value shall not be refunded to the shareholder. [RT I 2010, 77, 589 - entry into force 01.01.2011]

(4) If the shareholder who acquired the share in the case specified in subsection (3) of this section fails to pay for the share or the increase of the nominal value of the share in due time, the person who lost the share or the increase of the nominal value of the share shall be solidarily liable to the private limited company for the outstanding contribution to the private limited company. [RT I 2010, 77, 589 - entry into force 01.01.2011]

(5) If in the case specified in subsection (3) of this section the private limited company fails to transfer the share to the other shareholders or third persons, the other shareholders shall be solidarily liable for the deficient contribution. In the mutual relations among the shareholders, the shareholders shall be liable according to the nominal values of their shares. [RT I 2010, 77, 589 - entry into force 01.01.2011]

157. Payment of dividends

(1) Dividends may be paid to the shareholders from net profit or from retained profit from previous years from which losses from previous years have been deducted, on the basis of the approved annual report. [RT I 2009, 13, 78 - entry into force 01.07.2009]

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

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

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

(5) The dividend shall be paid in money. With the consent of the shareholder, the dividend may also be paid in other assets. [RT I 2005, 57, 449 - entry into force 01.01.2006]

158. Return of illegal dividend

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

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

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

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

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

(6) The members of the management board and supervisory board who caused the payment of the illegal dividend shall be liable for the return of the payment solidarily with the shareholder who received such dividend. [RT I 2005, 57, 449 - entry into force 01.01.2006]

159. Prohibited loans

(1) A private limited company shall not grant a loan:

1. to one of its shareholders whose share represents more than 5 per cent of the share capital;

2. to a shareholder or member of its parent undertaking, whose share represents more than 5 per cent of the share capital of the parent undertaking;

3. to a person to acquire a share of the private limited company;

4. to a member of its management board or supervisory board or its procurator.

(2) A subsidiary may grant a loan to its parent undertaking or a parent undertaking to a shareholder or a member who forms the same group as the subsidiary if this does not harm the financial status of the private limited company or the interests of creditors. A subsidiary shall not grant a loan for acquiring a share of the private limited company to the persons specified in the first sentence of this subsection. [RT I 2008, 16, 116 - entry into force 15.04.2008]

(3) A private limited company shall also not guarantee a loan taken by the persons specified in subsection (1) of this section. The prohibition does not apply to guaranteeing a loan taken by the parent undertaking or guaranteeing a loan taken by a shareholder or member of the parent undertaking that forms the same group as the subsidiary if this does not harm the financial status of the private limited company or the interests of creditors. A private limited company shall not guarantee a loan taken for acquisition of a share of the private limited company. [RT I 2008, 16, 116 - entry into force 15.04.2008]

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

(5) The provisions of subsections (1)–(4) of this section correspondingly apply to credit agreements and other economically equivalent transactions. [RT I 2005, 57, 449 - entry into force 01.01.2006]

160. Legal reserve

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

(2) If the articles of association prescribe the formation of the legal reserve, it shall not be less than one-tenth of the share capital. [RT I 2010, 77, 589 - entry into force 01.01.2011]

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

161. Use of legal reserve

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

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

162. Acquisition or taking as security of own shares

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

(2) The acquisition or taking as security of its own shares by the private limited company shall be permitted if:

1. this occurs within five years after adoption of a resolution of the shareholders which specifies the terms and conditions and term for the acquisition or taking as security of shares and the minimum and maximum amounts to be paid for the shares; [RT I 2008, 16, 116 - entry into force 15.04.2008]

1.1) the nominal value of the share belonging to the private limited company does not exceed one tenth of the share capital, and

2. acquisition of the share does not cause the net assets to become less than the total of share capital and reserves which pursuant to law or the articles of association shall not be paid out to shareholders. [RT I 2008, 16, 116 - entry into force 15.04.2008]

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

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

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

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

(61) A private limited company shall neither acquire nor take as security its own share, the contribution for which has not been completely paid. [RT I, 02.11.2011, 1 - entry into force 12.11.2011]

(7) A transaction constituting an obligation which is in conflict with the provisions of subsections (1), (2), (5), (6) or (61) of this section is void. The above does not affect the validity of the acquisition of a share or taking of a share as security. [RT I, 02.11.2011, 1 - entry into force 12.11.2011]

163. Transfer of own share

(1) If a private limited company acquires or takes as security its own shares based on subsection 162 (3) of this Code, and the total of the nominal values thereof, including the sum total of the nominal values of the own shares belonging to or taken as security by the private limited company is higher than 1/10 of the share capital, then the shares acquired or taken as security in such manner which exceed the 1/10 shall be transferred or taking them as security shall be terminated within three years after the transfer or taking as security. [RT I 2008, 16, 116 - entry into force 15.04.2008]

(2) If a private limited company acquires or takes as security its own shares illegally, the shares shall be transferred or the taking as security shall be terminated within one year after the acquisition or taking as security. [RT I 2008, 16, 116 - entry into force 15.04.2008]

(3) If the shares are not transferred or the taking as security is not terminated during the term specified in subsections (1) and (2) of this section, the shares shall be cancelled and the share capital shall be reduced accordingly. [RT I 2008, 16, 116 - entry into force 15.04.2008]

164. Mutual acquisition or taking as security of shares

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

165. Jointly held share

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

(2) If a share is held by several persons jointly, these persons shall be solidarily liable for performance of the obligations attaching to the share.

3. If the shareholders have not appointed a common representative for performance of the rights arising from the share, a transaction concluded by the private limited company with respect to the joint owners is deemed to be valid even if such act was performed with respect to only one shareholder. [RT I 2010, 77, 589 - entry into force 01.01.2011]

166. Right of partner to information

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

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

(3) If the management board refuses to give information or refuses to allow documents to be examined, the shareholder may demand that the legality of the shareholder's demand be decided by the meeting of shareholders or to submit, within two weeks after receiving the refusal of the management board or, within four weeks after submission of the request if the management board has not responded to the request, a petition to a court in a proceeding on petition in order to obligate the management board to give information or to allow documents to be examined. [RT I 2005, 57, 449 - entry into force 01.01.2006]

167. Exclusion of shareholder

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

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

(3) Upon exclusion of a shareholder, the shareholder’s share shall be sold by public auction or in another way determined by the court. Money received from the sale, from which reasonable expenses related to the sale have been deducted, shall be returned to the shareholder. [RT I 2008, 59, 330 - entry into force 01.01.2009]

167.1. Liability for damaging private limited company by influencing activity of private limited company

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

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

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

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

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

(6) A creditor or trustee in bankruptcy has the right to file the claim specified in subsection (5) of this section also if the private limited company has waived the claim or has entered into a contract of compromise with such member or resulting from an agreement, has limited the claim or filing thereof in another manner or reduced the limitation period. [RT I 2007, 67, 413 - entry into force 28.12.2007]

Chapter 20 - MANAGEMENT

168. Competence of shareholders

(1) The shareholders are competent to:

1. amend the articles of association;

2. increase and reduce share capital;

3. elect and remove members of the supervisory board;

4. elect and remove members of the management board, if the company does not have a supervisory board; [RT I 2008, 16, 116 - entry into force 15.04.2008]

5. approve the annual report and distribute profit;

6. divide shares;

7. elect an auditor;

8. designate a special audit;

9. if the company does not have a supervisory board, appoint and remove procurators;

10. decide on conclusion and terms and conditions of transactions with the members of the supervisory board or, if the company does not have a supervisory board, with the members of the management 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 private limited company in such transactions and disputes; [RT I 2008, 16, 116 - entry into force 15.04.2008]

11. decide on dissolution, merger, division or transformation of the private limited company;

12. decide on other matters placed in the competence of the shareholders by law or the articles of association.

(2) The shareholders may also adopt resolutions on matters within the competence of the management board or supervisory board. In such case, the shareholders shall be liable in the same manner as members of the management board or supervisory board. [RT I 2005, 57, 449 - entry into force 01.01.2006]

169. Number of votes of shareholder

(1) The number of votes of a shareholder shall be proportional to the amount of the shareholder’s share.

(2) Each one euro of a share shall grant one vote unless the articles of association prescribe otherwise. [RT I 2010, 20, 103 - entry into force 01.07.2010]

170. Meeting of shareholders

(1) The shareholders shall adopt resolutions at a meeting or pursuant to the procedure provided for in § 173 of this Code. In the cases provided by law, the shareholders may only adopt resolutions at a meeting of shareholders.

(2) A meeting of shareholders is competent to adopt resolutions if the represented votes represent over one-half of the shares unless the articles of association prescribe a greater representation requirement.

(3) A shareholder may participate in a meeting personally or through a representative, the availability of whose right of representation shall be certified by a document in a format which can be reproduced in writing. [RT I 2010, 77, 589 - entry into force 01.01.2011]

(4) The costs of organising a meeting of shareholders shall be borne by the private limited company. If a meeting of shareholders is called at the request of the shareholders or if shareholders themselves call a meeting, the shareholders who requested the calling of the meeting or called the meeting may be required to cover the costs of the general meeting by a resolution of the meeting of shareholders which receives at least two thirds of the votes represented at the general meeting. [RT I 2009, 13, 78 - entry into force 01.07.2009]

(5) The articles of association of a private limited company may prescribe that the shareholder may vote on the draft resolutions prepared in respect to the items on the agenda of a meeting of shareholders by submitting his or her vote to the private limited company prior to the meeting of shareholders by mail in writing. Subsections 2982 (2)–(4) of this Code are applied respectively. [RT I 2009, 51, 349 - entry into force 15.11.2009]

170.1. Electronic voting

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

(2) The shareholder who voted using electronic means shall be deemed to have taken part in the meeting and the votes represented by the shareholder's share shall be accounted as part of the quorum of the meeting unless otherwise provided by law. If only draft resolutions that were not disclosed before a meeting are voted on during the meeting, in respect to which the shareholder did not submit any votes, the shareholder shall not be deemed to have taken part in the 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. The articles of association may prescribe the moment of time until which it is possible to vote using electronic means prior to the meeting or during the meeting.

(5) The articles of association or a resolution of the management board or the supervisory board may prescribe that the 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 meeting for the purposes of this Code. [RT I 2009, 51, 349 - entry into force 15.11.2009]

171. Calling meeting of shareholders

(1) A meeting of shareholders shall be called by the management board.

(2) The management board shall call a meeting of shareholders if this is necessary in the interests of the private limited company, or if: [RT I 2005, 57, 449 - entry into force 01.01.2006]

1. the net assets (total assets minus total obligations shown under liabilities on a balance sheet) of the private limited company are less than one-half of the share capital or less than the amount of share capital specified in § 136 of this Code or other minimum amount of share capital provided by law, or [RT I 2005, 57, 449 - entry into force 01.01.2006]

2. this is demanded by the supervisory board or auditor; or

3. this is demanded by shareholders whose shares represent at least one-tenth of the share capital.

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

(4) A list of the shareholders participating in a meeting of shareholders shall be compiled at the meeting of shareholders, which shall set out their names, the number of votes arising from their shares and the way of participation in the meeting, and also the names of the representatives of shareholders. If the shareholder has voted prior to the meeting using electronic means 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 any shareholder or the shareholder's representative who physically attended the meeting. [RT I 2009, 51, 349 - entry into force 15.11.2009]

(5) Minutes shall be taken of the meetings of shareholders. The provisions of subsections 304 (1)–(6), respectively, apply to the minutes of the meetings of shareholders.

(6) If the votes specified in subsection 170 (2) of this Code are not represented at a meeting of shareholders and the meeting has no quorum due to the above, the management board shall call a new meeting without changing the agenda, which is competent to adopt resolutions regardless of the number of votes represented at the meeting. The above applies exclusively in case the notice for calling the new meeting has been sent to the shareholders no earlier than two days after the first meeting and no later than on the tenth day after the first meeting. [RT I 2010, 77, 589 - entry into force 01.01.2011]

171.1. Agenda of meeting of shareholders [RT I 2005, 57, 449 - entry into force 01.01.2006]

(1) The agenda of a meeting of shareholders shall be determined by the management board unless the articles of association prescribe otherwise. If a meeting of shareholders is called by the shareholders, the supervisory board or an auditor, such persons shall also determine the agenda of the meeting. [RT I 2005, 57, 449 - entry into force 01.01.2006]

(2) Shareholders whose shares represent at least one-tenth of the share capital may demand the inclusion of additional issues on the agenda. The agenda shall not be changed prior to the meeting if the respective demand is submitted later than three days before holding the meeting of shareholders. [RT I 2009, 51, 349 - entry into force 15.11.2009]

(3) An issue which is initially not on the agenda of a meeting of shareholders may be included on the agenda with the consent of at least nine-tenths of the shareholders who participate in the meeting of shareholders if their shares represent at least two-thirds of the share capital. The votes represented by the shares of the shareholder participating in the way specified in subsection 1701 (1) of this Code shall not be accounted as part of the meeting quorum. [RT I 2009, 51, 349 - entry into force 15.11.2009]

(4) A meeting of shareholders 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 meeting of the shareholders without adopting a resolution on such matters. [RT I 2008, 16, 116 - entry into force 15.04.2008]

171.2. Draft of resolution

(1) The person who calls the meeting shall prepare a draft of the resolution in respect to each item on the agenda unless the articles of association prescribe otherwise.

(2) If a meeting of shareholders is called by the shareholders, the supervisory board or an auditor, such persons shall submit the prepared drafts of the resolutions to the management board prior to the notification about calling the meeting of shareholders. The drafts of the resolutions may be additionally included in the notice on calling the meeting.

(3) If the shareholders demand the inclusion of additional issues on the agenda, they shall simultaneously with the demand on the modification of the agenda submit to the private limited company a draft of the resolution or substantiation regarding each additional issue.

(4) The private 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 private limited company or on the homepage of the private limited company. It shall be possible to examine the drafts of the resolutions at least as of the notification about a meeting until the day of holding the meeting of shareholders unless otherwise provided by law.

(5) The private limited company shall make the drafts of the resolutions and substantiations specified in subsection (3) of this section available to the shareholders immediately after the submission thereof to the private limited company if these are submitted to the private limited company after the notification about the meeting of shareholders.

(6) 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 meeting of shareholders. [RT I 2009, 51, 349 - entry into force 15.11.2009]

172. Notice calling meeting of shareholders

(1) The management board shall send a notice of a meeting of shareholders to all shareholders. The notice shall be sent to the address or e-mail address entered in the list of shareholders. If a private limited company is aware or should be aware that the address of a shareholder differs from the address entered in the list of shareholders, 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 one week before the meeting takes place. [RT I 2010, 77, 589 - entry into force 01.01.2011]

(2) A notice shall indicate the time, place and agenda for the meeting of shareholders and the location or homepage address of the private limited company, where it is possible to examine the drafts of the resolutions and substantiations, and also other important circumstances related to the meeting. If the private limited company provides an opportunity to vote using electronic means or by mail, the information regarding the procedure and term for voting using electronic means or by mail shall be specified in the notice. [RT I 2009, 51, 349 - entry into force 15.11.2009]

(3) If, after dispatching the notice on calling a meeting of shareholders, the agenda of the meeting is changed at the request of the shareholders, such changes to the agenda must be communicated before the meeting of the shareholders takes place pursuant to the same procedure and within the same term as prescribed for the dispatch of the notice on calling a meeting of shareholders. [RT I 2005, 57, 449 - entry into force 01.01.2006]

(4) If the share is jointly owned by several persons and the shareholders did not appoint a joint representative for exercising the rights arising from the share, the notice on calling a meeting of shareholders shall be considered sent to all the persons who jointly own the share also in case it has been sent exclusively to the shareholders who are entered as the shareholders in the list of shareholders. If the private limited company is aware or should be aware that not all persons who own the share are entered in the list of shareholders, the notice shall be sent to all the shareholders. [RT I 2010, 77, 589 - entry into force 01.01.2011]

(5) If in the case specified in subsection (4) of this section the notice has been sent to all the shareholders and only one of the persons who jointly own the share participates in the meeting, it shall be presumed that the attending shareholder is entitled to represent the other joint shareholders. The above does not apply if a resolution is adopted without calling a meeting. [RT I 2010, 77, 589 - entry into force 01.01.2011]

172.1. Violation of procedure for calling of meeting of shareholders

If the requirements of law or the articles of association are materially violated in calling a meeting of shareholders, the meeting of shareholders shall not have the right to adopt resolutions except if all shareholders participate in or are represented at the 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. [RT I 2005, 57, 449 - entry into force 01.01.2006]

173. Adoption of resolution without calling meeting

(1) Shareholders have the right to adopt resolutions without calling a meeting of shareholders.

(2) The management board shall send a draft of the resolution specified in subsection (1) of this section in a format which can be reproduced in writing to all shareholders, specifying the term during which the shareholder must present the shareholder’s position on it in a format which can be reproduced in writing. If a shareholder does not give notice of whether the shareholder is in favour of or opposed to the resolution during this term, it shall be deemed that the shareholder votes against the resolution. [RT I 2010, 77, 589 - entry into force 01.01.2011]

(3) The management board shall prepare a record of voting concerning the voting results and shall promptly send it to the shareholders. A record of voting shall set out:

1. the business name and registered office of the private limited company;

2. the name of the recording secretary;

3. the adopted resolution together with the voting results (including the shareholders who voted for the resolutions by name);

4. at the request of a shareholder who maintains a dissenting opinion with regard to a resolution, the content of the shareholder’s dissenting opinion;

5. other circumstances of importance with regard to the vote.

(4) The positions of shareholders specified in subsection (2) of this section that were submitted in a format which can be reproduced in writing shall be an integral part of the record of voting. [RT I 2010, 77, 589 - entry into force 01.01.2011]

(4.1) If the resolution of the shareholders provides the basis for the election of a member of the management board, the record of voting shall be signed by the member of the management board, in whose respect an entry has been made in the commercial register, or a shareholder of the private limited company. The signature under the record of voting by a person specified in the previous sentence shall be notarised. The notarisation of the signature shall be substituted by the digital signing of the record of voting by the person specified in the first sentence of this subsection. [RT I 2008, 52, 288 - entry into force 22.12.2008]

(4.2) The provisions of subsection (41) of this section need not be observed if the extension of the term of office of a member of the management board is decided. The provisions of subsection (41) of this section need not be observed also in case the petition for the entry of a member of the management board in the register is signed by the member of the management board, in whose respect an entry has been made in the commercial register, or a shareholder of the private limited company. [RT I 2008, 52, 288 - entry into force 22.12.2008]

(5) [Repealed - RT I 2005, 57, 449 - entry into force 01.01.2006]

(6) If a private limited company has a single shareholder or if, in addition to such shareholder, only the private limited company is a shareholder, resolutions may be adopted without observing the provisions of § 170, subsections 171 (4)–(6), § 172 and subsections (1)–(41) of this section. 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 the resolution of the shareholders provides the basis for the election of a member of the management board, the signature of one shareholder 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. Subsection

(4.2) of this section shall be implemented to the election of a member of the management board respectively. [RT I 2008, 52, 288 - entry into force 22.12.2008]

(7) The provisions of subsection (6) of this section also applies in the case where there are more shareholders provided that they all agree to the resolution and sign it. [RT I 2005, 57, 449 - entry into force 01.01.2006]

174. Resolution of shareholders

(1) A resolution of the shareholders shall be adopted if over one-half of the votes represented at the meeting of shareholders are in favour unless the law or the articles of association prescribe a greater majority requirement.

(2) If a resolution is made pursuant to the procedure provided for in subsection 173 (2) of this Code, the resolution shall be adopted if over one-half of the votes of the shareholders are in favour unless the law or the articles of association prescribe a greater majority requirement. [RT I 2008, 16, 116 - entry into force 15.04.2008]

(3) In the election of a person, 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.

(4) If the minutes of a meeting of shareholders, the record of votes or a resolution of shareholders is submitted to the commercial register, such document shall include a complete list of shareholders which sets out the number of votes of each shareholder. [RT I 2005, 57, 449 - entry into force 01.01.2006]

175. 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 of the shareholders who participate in the meeting or, in the case specified in subsection 174 (2) of this Code, at least two-thirds of the votes of the shareholders 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 shareholders on amendment of the articles of association, the minutes of the meeting of shareholders or the record of voting, and the new text of the articles of association shall be appended to the petition submitted to the commercial register.

176. Decrease of assets

If the net assets of a private limited company are less than one-half of the share capital, or less than the amount of share capital specified in § 136 of this Code or another minimum amount of share capital provided by law, the shareholders 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 § 136 of this Code or other minimum capital provided by law; or

1.1) the implementation of other measures as a result of which the net assets of the private limited company would form at least one-half of the share capital specified in § 136 of this Code or other minimum capital provided by law; or

2. dissolution, merger, division or transformation of the private limited company; or

3. submission of a bankruptcy petition.

177. Restriction on right to vote

(1) A shareholder shall not vote if release of the shareholder from obligations or liabilities, consent for the transfer of the shareholder's share, conclusion of a transaction between the shareholder and the private limited company, or conduct of a legal dispute with the shareholder or appointment of a representative of the private 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 the shareholder shall not be taken into account in the determination of representation. [RT I 2005, 57, 449 - entry into force 01.01.2006]

(2) The provisions of subsection (1) of this section do not apply if a private limited company has only one shareholder or if, in addition to such shareholder, only the private limited company itself is a shareholder. In such case all transactions between the private 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. [RT I 2005, 57, 449 - entry into force 01.01.2006]

(3) Irrespective of the provisions specified in subsection (1) of this section, the shareholder may vote upon the shareholder's election as a member of the management board, extension of the term of office and removal. [RT I 2010, 77, 589 - entry into force 01.01.2011]

177.1. Nullity of resolution of shareholders

(1) A resolution of the shareholders is void if it violates a provision of law established for the protection of the creditors of the private limited company or due to other public interest, of if it is contrary to good morals, or if the procedure for calling the meeting of shareholders which made the resolution or making the resolution was materially violated. A resolution is also void in other cases provided by law. [RT I 2010, 77, 589 - entry into force 01.01.2011]

(2) The nullity of a resolution may be relied on in court proceedings by filing an action or an objection. [RT I 2005, 57, 449 - entry into force 01.01.2006]

(3) The 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. [RT I 2005, 57, 449 - entry into force 01.01.2006]

(4) Subsections 178 (5) and (6) correspondingly apply to a court proceeding for establishment of the nullity of a resolution. [RT I 2005, 57, 449 - entry into force 01.01.2006]

178. Contestation of resolution of shareholders

(1) Based on an action filed against a private limited company, a court may revoke a resolution 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 shareholders. [RT I 2005, 57, 449 - entry into force 01.01.2006]

(2) Revocation of a resolution cannot be demanded if the shareholders have approved the resolution by a new resolution and the action specified in subsection (1) of this section has not been filed against the new resolution within the term specified in the same subsection. [RT I 2005, 57, 449 - entry into force 01.01.2006]

(3) Revocation of a resolution of shareholders may be demanded by the management board or supervisory board if, by performing the resolution, an offence or misdemeanour would be committed or if performance of the resolution would clearly result in an obligation to compensate for damage, and by a shareholder who did not participate in passing the resolution. A shareholder who participated in the adoption of a resolution may demand the revocation of the resolution only if the shareholder's objection to the resolution has been entered in the minutes. The shareholder participating in the meeting in the way specified in subsection 1701 (1) or subsection 170 (5) of this Code may demand revocation of a resolution also without entering the objection in the minutes. [RT I 2009, 51, 349 - entry into force 15.11.2009]

(4) If an action is filed, the court shall not hear the matter before the expiry of term specified in subsection (1) of this section. Different actions filed in order to revoke the same resolution shall be joined and heard in one proceeding. [RT I 2005, 57, 449 - entry into force 01.01.2006]

(5) A court judgment for revocation of a resolution of the shareholders applies to all shareholders and members of the management board and supervisory board regardless of whether or not they participated in the court proceeding. [RT I 2005, 57, 449 - entry into force 01.01.2006]

(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. [RT I 2005, 57, 449 - entry into force 01.01.2006]

179. Approval of reports

(1) After the end of the financial year, the management board shall prepare the annual report pursuant to the procedure provided for in the Accounting Act. [RT I 2009, 13, 78 - entry into force 01.07.2009]

(2) The management board shall submit the annual report and the profit distribution proposal to the shareholders. The annual report shall be approved and executed pursuant to the provisions of § 25 of the Accounting Act. If the private limited company has an auditor, the sworn auditor's report shall be appended to the annual report. If the private limited company has a supervisory board, the report of the supervisory board shall be appended to the annual report. [RT I, 25.05.2012, 8 - entry into force 04.06.2012]

(3) Approval of the annual report shall be decided by the shareholders. A shareholder may request the private limited company the presence of the auditor who provided the sworn auditor's report at the decision on the approval of the annual report and provision of explanations concerning the sworn auditor's report by him or her. A corresponding written request shall be submitted at least five days prior to the meeting of the shareholders. [RT I 2010, 9, 41 - entry into force 08.03.2010]

(4) The management board shall submit the approved annual report together with the proposal for the distribution of profit or the covering of loss, the division of the sales revenue and the sworn auditor's report, if auditing is compulsory, to the commercial register within six months after the end of the financial year. Together with the submission of the annual report, the management board shall notify the commercial register in what way specified in § 176 of this Code the shareholders have decided to cover the loss. If compared to the time of the approval of the previous annual report the shareholders' data have changed, a new list of shareholders shall also be submitted together with the annual report as at the approval of the annual report. The list shall set forth the data specified in subsection 182 (1) whereas only the country of the residence or registered office of the shareholder shall be specified instead of the address of the shareholder. [RT I 2010, 9, 41 - entry into force 08.03.2010]

(4.1) [Repealed - RT I 2009, 54, 363 - entry into force 01.01.2010]

(5) The information specified in subsection 332 (3) shall be indicated in the profit distribution proposal. The provisions of § 335 shall correspondingly apply to the resolution on profit distribution.

(6) The division of the sales revenue shall contain information regarding the sales revenue for the accounting year in up to ten major areas of activity pursuant to the Classification of Economic Activities established on the basis of subsection 4 (6) of this Code. In case of the annual report of a consolidation group, the division of the sales revenue is submitted on the basis of the respective information in the unconsolidated income statement of the consolidating entity. [RT I 2009, 54, 363 - entry into force 01.01.2010]

180. Management board

(1) The management board is a managing body of the private limited company which represents and manages the private limited company. [RT I 2009, 13, 78 - entry into force 01.07.2009]

(2) The management board may have one member (manager) or several members. A member of the management board need not be a shareholder. A member of the management board must be a natural person with active legal capacity. [RT I 2010, 77, 589 - entry into force 01.01.2011]

(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.

(3.1) 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 private 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. [RT I 2008, 52, 288 - entry into force 22.12.2008]

(4) If the private limited company has a supervisory board, 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. Such restriction shall not apply with regard to third persons.

(5) The management board shall present an overview of the economic activities and economic situation of the private 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 private limited company or any other material circumstances related to the economic activities of the private limited company. The management board shall also notify of any circumstances related to other private limited companies belonging to the same group as the private limited company, which may significantly affect the operation of the private limited company.

(5.1) If a private 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 private limited company to a court. After insolvency has become insolvent, the members of the management board shall no longer make payments on behalf of the private 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 private limited company for any payments made by the private limited company after the insolvency of the company became evident which, under the circumstances in question, were not made with due diligence. The provisions of § 187 of this Act apply to the liability of the members of the management board.

(6) 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. If the private limited company has a supervisory board, the articles of association of the private limited company may prescribe that the chairman of the management board shall be appointed by the supervisory board.

(7) [Repealed - RT I 2005, 57, 449 - entry into force 01.01.2006]

(8) The specific work procedure of the management board may be prescribed by the articles of association or by a resolution of the shareholders, management board or supervisory board. [RT I 2005, 57, 449 - entry into force 01.01.2006]

180.1. Remuneration of members 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 shareholders or, in the case there is a supervisory board, by a resolution of the supervisory board.

(2) Upon establishing the procedure for remuneration of the members of the management board and the amount of fees and other benefits, and entry into contracts with the members of the management board, the shareholders or the supervisory board shall ensure that the total amount of the payments made by the private 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 private limited company.

(3) If the economic situation of a private 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 private limited company, the private limited company may demand 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 entered into with the member 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 entered into with him or her upon one month's advance notice of cancellation.

(5) Upon declaration of bankruptcy of a private 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. [RT I 2005, 57, 449 - entry into force 01.01.2006]

181. Right of representation of management board

(1) Every member of the management board may represent the private limited company in all transactions unless the articles of association prescribe that some or all of the members of the management board shall represent the private limited company jointly. Joint representation shall apply with regard to third persons only if it is entered in the commercial register. [RT I 2009, 13, 78 - entry into force 01.07.2009]

(11) The differences concerning the right of representation of the members of the management board of a private limited company with articles of association used for expedited procedure shall be prescribed by the petition for entry of the company in the register and later, in the resolution of the shareholders. The provisions on § 175 of this Code apply to the approval and entry into force of the resolution of the shareholders. [RT I 2006, 61, 456 - entry into force 01.01.2007]

(2) Upon concluding transactions on behalf of a private limited company, the members of the management board are required to adhere, with respect to the private limited company, the restrictions prescribed by the articles of association or established by the shareholders, 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 private limited company and a member of the management board is void if the shareholders or the supervisory board do not agree to the transaction. The above does not apply to transactions concluded in the course of the everyday economic activities of the private limited company or according to the market price of a service.

(4) A member of the management board has no right to represent the private 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. [RT I 2009, 13, 78 - entry into force 01.07.2009]

182. List of shareholders

(1) The management board shall keep a list of shareholders which shall set out the names, addresses, personal identification codes or registry codes and the nominal value of their shares. Section 62 of this Code applies to the addresses and personal identification codes or registry codes. [RT I 2006, 61, 456 - entry into force 01.01.2007]

(2) The shareholders, members of the management board and supervisory board, competent state agencies and other persons with a legitimate interest have the right to examine the list of shareholders.

(3) If so decided by the shareholders, shares may be entered in the Estonian Central Register of Securities. In such case, the list of shareholders shall be maintained by the registrar of the Estonian Central Register of Securities. The management board of a private limited company shall ensure timely submission of correct information provided by law to the person maintaining the list of the shareholders.

(4) Upon entry of shares in the Estonian Central Register of Securities, the management board of the private limited company shall promptly submit a notice from the registrar of the Estonian Central Register of Securities concerning registration of the shares to the registrar of the commercial register.

183. Accounting

The management board shall organise the accounting of the private limited company.

184. Election and removal of members of management board

(1) The members of the management board shall be elected and removed by the shareholders. If the private limited company has a supervisory board, the members of the management board shall be elected and removed by the supervisory board. The resolution of the supervisory board and minutes of the meeting or, if no supervisory board exists, the resolution of the meeting of shareholders and the minutes of the meeting or record of voting shall be appended to a petition for entry of the termination of the authority of a member of the management board, or for entry of a new member of the management board in the register. In order to elect a member of the management board, his or her consent is required.

(1.1) If a private limited company has a supervisory board, the chairman of the supervisory board or a person authorised by the chairman shall sign a petition for deletion of a member of the management board from the register or entry of a new member of the management board in the register. [RT I 2005, 57, 449 - entry into force 01.01.2006]

(1.2) If a member of the management board is elected at a meeting of shareholders, the recording secretary or the chairman of the meeting shall be the member of the management board, in whose respect an entry has been made in the commercial register, or a shareholder of the private limited company. The signature under the minutes of the meeting by a person specified in the previous sentence shall be notarised. The notarisation of the signature shall be substituted by the digital signing of the minutes by the person specified in the first sentence of this subsection. [RT I 2008, 52, 288 - entry into force 22.12.2008]

(13) The provisions of subsection (12) of this section need not be observed if the minutes of the meeting of shareholders are notarised or if the extension of the term of office of a member of the management board is decided. The provisions of subsection (12) of this section need not be observed also in case the petition for the entry of a member of the management board in the register is signed by the member of the management board, in whose respect an entry has been made in the commercial register, or a shareholder of the private limited company. [RT I 2008, 52, 288 - entry into force 22.12.2008]

(2) A member of the management board shall be elected for an unspecified term unless the articles of association prescribe a term. 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. [RT I 2010, 77, 589 - entry into force 01.01.2011]

(3) A member of the management board may be removed upon a resolution of the shareholders regardless of the reason. Rights and obligations arising from contracts entered into with a member of the management board terminate pursuant to the contracts. 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. If the private limited company has a supervisory board, the supervisory board may also remove a member of the management board. [RT I 2009, 51, 349 - entry into force 15.11.2009]

(4) [Repealed - RT I 1998, 59, 941 - entry into force 10.07.1998]

(5) If the private limited company does not have a supervisory board, shareholders whose shares represent at least one-tenth of the share capital may, with good reason, request the removal of a member of the management board by a court.

(6) With good reason, a court may appoint a new member to replace a removed member of the management board at the request of the supervisory board, a shareholder or other interested person. A member of the management board appointed by a court has the right, at the expense of the private 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. 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 shareholders or the supervisory board. [RT I 2005, 57, 449 - entry into force 01.01.2006]

(7) A member of the management board may resign from the management board regardless of the reason by giving the notice thereof to the body that appointed him or her. Rights and obligations arising from contracts entered into with a member of the management board terminate pursuant to the contracts. 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. [RT I 2009, 51, 349 - entry into force 15.11.2009]

(8) 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. [RT I 2009, 51, 349 - entry into force 15.11.2009]

185. Prohibition on competition

(1) Without the consent of the shareholders or, if a supervisory board exists, 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 private 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 private limited company;

3. be a member of a managing body of a company which operates in the same area of activity as the private limited company, except if the companies belong to one group. [RT I 2009, 13, 78 - entry into force 01.07.2009]

(2) If the activities of a member of the management board are in conflict with the provisions of subsection (1) of this section, the private 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 private 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 private 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.

186. Preservation of business secrets

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

(2) The private 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 meeting of shareholders or of the supervisory board.

187. Liability of members of management board [RT I 2005, 57, 449 - entry into force 01.01.2006]

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

(5) A creditor or trustee in bankruptcy has the right to file the claim specified in subsection (4) of this section also if the private 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.

(6) [Repealed - RT I 2005, 68, 525 - entry into force 01.01.2006]

188. Liability of shareholders

(1) A shareholder shall be liable for any damage wrongfully caused to the private limited company, another shareholder or a third person, in the capacity of shareholder.

(2) A shareholder shall not be liable for any damage caused if the shareholder did not participate in the adoption of the resolution which was the basis for the cause of damage or if the shareholder voted against the resolution. In the case provided for in subsection 173 (2) of this Code, a shareholder who does not give notice of whether the shareholder is in favour of or opposed to a resolution shall be deemed to vote against the resolution. [RT I 2002, 53, 336 - entry into force 01.07.2002]

189. Supervisory board

(1) A private limited company shall have a supervisory board if prescribed by the articles of association of the private limited company. [RT I 2010, 77, 589 - entry into force 01.01.2011]

(2) The provisions of this Code concerning the supervisory board of a public limited company shall correspondingly apply to the competence and activity of the supervisory board unless otherwise provided by law.

(3) The election and removal of members of the supervisory board shall be governed by the provisions concerning the election of the supervisory board of a public limited company, excluding the provisions of subsection 304 (7) of this Code. The minutes and record of voting prepared in respect to a resolution concerning the election of a member of the supervisory board shall be governed by the provisions regarding the minutes and record of voting prepared in respect to the election of a member of the management board of a private limited company. [RT I 2008, 52, 288 - entry into force 22.12.2008]

190. Auditor

(1) The obligation of auditing the annual accounts of a private limited company shall be stipulated in the Auditors Activities Act or the articles of association of the private limited company. [RT I 2010, 9, 41 - entry into force 08.03.2010]

(2) The provisions of §§ 328–3291 of this Code shall apply to the competence and activity of the auditor. [RT I 2005, 57, 449 - entry into force 01.01.2006]

191. Special audit

(1) 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 private limited company, and the appointment of an auditor for the special audit by a resolution of the shareholders.

(2) If the shareholders do 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 private limited company before deciding on the conduct of a special audit.

(2.1) 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 shareholders if the person appointed by the shareholders 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 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 shareholders, the shareholders 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 private limited company being audited. The auditors for the special audit shall preserve the business secrets of the private 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 a meeting of shareholders.

(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. [RT I 2005, 57, 449 - entry into force 01.01.2006]

Chapter 21 - ALTERATION OF SHARE CAPITAL

Division 1 - Increase of Share Capital

192. Adoption of resolution on increase of share capital

(1) A resolution on increase of share capital shall be adopted if at least two-thirds of the votes of the shareholders who participate in the meeting or, in the case specified in subsection 174 (2) of this Code, at least two-thirds of the votes of the shareholders are in favour, unless the articles of association prescribe a greater majority requirement.

(2) If the articles of association must be amended due to the increase of share capital, amendment of the articles of association shall be decided before share capital is increased.

(3) A resolution on increase of share capital shall not be adopted before entry of the private limited company in the commercial register.

192.1. Resolution on increase of share capital

The following shall be set out in a resolution on increase of share capital:

1. the number of new shares and their nominal values and the amount of increase of share capital;

1.1) the name or business name, personal identification or registry code, address and nominal value of the shares of each new shareholder. Section 62 of this Code applies to the addresses and personal identification codes or registry codes; [RT I 2006, 61, 456 - entry into force 01.01.2007]

2. if the nominal values of the shares are increased, the new nominal values of existing shares;

3. specifications for the rights attaching to the new shares;

4. the time and place for payment for the new shares and whether and to what extent the shares are to be paid by a monetary or non-monetary contribution; in the case of a non-monetary contribution, the item of the contribution;

5. if the shares are issued at a premium, the amount of the premium;

6. in the case of a bonus issue, reference to the underlying balance sheet and equity categories, and the amount of each equity category used to carry out the bonus issue.

193. Pre-emptive right of shareholder

(1) Upon increase of share capital, a shareholder has the right to acquire issued shares in proportion to the shareholder’s share unless the resolution on increase of share capital prescribes otherwise. The pre-emptive right of shareholders to acquire shares may be excluded by a resolution of shareholders supported by at least three-quarters of the shares represented at the meeting or, in the case specified in subsection 174 (2) of this Code, by at least three-quarters of the votes of the shareholders, unless the articles of association prescribe a greater majority requirement.

(2) If a shareholder does not wish to exercise the right specified in subsection (1) of this section, the other shareholders have the right to acquire the new shares.

(3) If the shareholders do not wish to exercise the right specified in subsections (1) and (2) of this section, the new shares may be acquired by third persons.

194. Application of foundation provisions

The provisions of § 140, §§ 141–143, subsection 144 (2) and subsections 520 (2), (4) and (5) of this Code shall apply to an increase of share capital unless this division prescribes otherwise. [RT I 2010, 77, 589 - entry into force 01.01.2011]

194.1. Set-off of claim

Upon an increase of share capital, payment for a new share or for a share increasing the size of a share may, pursuant to a resolution of shareholders, be set off against a claim of the shareholder or the person acquiring the share against the private limited company if this does not harm the interests of the private limited company or of its creditors. A claim shall be valuated as a non-monetary contribution.

195. Bonus issue

(1) A private limited company may increase share capital on account of the shareholders’ equity of the private limited company without making contributions (bonus issue).

(2) After approval of the annual report and adoption of the profit distribution resolution, the shareholders may decide on a bonus issue based on the annual report and the profit distribution resolution. A bonus issue may also be carried out on the basis of the interim balance sheet which must be prepared and approved pursuant to the procedure for the preparation and approval of the balance sheet included in the annual report. Increase of the share capital shall not be entered in the commercial register if the petition for increasing the share capital and the corresponding resolution are submitted to the registrar of the commercial register eight months after the date as at which the annual report or interim balance sheet, which was the basis for the share capital increase, was prepared.

(3) Upon a bonus issue, the share of a shareholder shall be increased in proportion to the nominal value of the shareholder’s share. Any resolution contrary to the above is void.

(4) Upon a bonus issue, the own shares held by the private limited company shall also be increased. [RT I 2005, 57, 449 - entry into force 01.01.2006]

196. Submission of petition to commercial register

(1) If share capital is paid in full or a bonus issue is conducted, the management board shall submit a petition to the commercial register for entry of the increase of share capital in the commercial register. The following shall be appended to the petition:

1. the resolution of the shareholders;

2. the new text of the articles of association if the articles of association are amended;

3. the minutes of the meeting of shareholders or, in the case provided for in § 173 of this Code, the record of voting;

4. upon increase of share capital by new contributions, a bank notice concerning payment of the share capital;

5. upon a bonus issue, the annual report or interim balance sheet on which it is based;

6. upon payment by a non-monetary contribution, documents certifying the value of the contribution and its transfer;

6.1) if the shares are entered in the Estonian Central Register of Securities, a notice from the Estonian Central Register of Securities confirming that the management board has notified the register of the increase in share capital;

7. other documents prescribed by law.

(2)* The members of the management board shall certify the transfer of a non-monetary contribution to the private limited company by their signatures. If the non-monetary contribution is an immovable, an extract from the land register shall be appended to the petition.

(3) The management board shall submit a petition for entry of the increase of share capital in the commercial register within six months after adoption of the resolution on increase of share capital.

(3.1) In the case of increase of share capital by a bonus issue, the petition submitted to the registrar shall include a confirmation that the members of the management board who signed the petition are not aware of a decrease to the assets of the private limited company, during the time between the date of preparation of the balance sheet which was the basis for the increase of the share capital and the date of submission of the petition to the registrar, to an extent which could hinder the adoption of the resolution on the increase of the share capital on the date of submission of the petition.

(3.2) The registrar need not check the conformity of the content of the balance sheet which was the basis for the increase of the share capital with the law.

(4) Share capital shall be deemed to be increased and the rights arising from the newly issued or increased portion of shares shall be deemed to have arisen as of the making of such entry in the commercial register. [RT I 2005, 57, 449 - entry into force 01.01.2006]

196.1. Liability of members of management board upon entry of increase of share capital in register

(1) The members of the management board of a private limited company are solidarily liable for damage caused to the private limited company by submission of incorrect or inaccurate information or incorrect valuation of contributions upon the increase of the share capital unless a member of the management board proves that he or she was not aware and did not have to be aware of the circumstances which caused the damage.

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

(3) The claim provided in subsection (1) of this section expires after five years of the date on which the increase of the share capital was entered in the commercial register. [RT I 2005, 57, 449 - entry into force 01.01.2006] 196.2. Participation in profit distribution

(1) The resolution on increase of share capital may prescribe a date as of which the new shares or the shares whose nominal value was increased grant the right to receive a dividend. Such right does not arise with respect to a dividend payable for a later financial year than the financial year following the year of increase of the share capital.

(2) If the date specified in subsection (1) of this section is not prescribed in a resolution on increase of share capital, the right to receive a dividend shall arise during the financial year in which the entry on increase of share capital is made. [RT I 2005, 57, 449 - entry into force 01.01.2006]

Division 2 - Reduction of Share Capital

197. Adoption of resolution on reduction of share capital

(1) A resolution on reduction of share capital shall be adopted if at least two-thirds of the votes of the shareholders who participate in the meeting or, in the case specified in subsection 174 (2) of this Code, at least two-thirds of the votes of the shareholders are in favour, unless the articles of association prescribe a greater majority requirement.

(1.1) If upon a reduction of share capital there is a desire to reduce the nominal values of shares or to cancel shares other than proportionally with regard to each share, the corresponding resolution shall be adopted if, in addition to the provisions of subsection (1) of this section, the resolution is supported by the shareholders whose shares are disproportionately cancelled compared with other shares, or the nominal values of whose shares are disproportionately reduced.

(2) If the articles of association must be amended due to the reduction of share capital, amendment of the articles of association shall be decided before share capital is reduced, except if share capital is reduced in the case specified in subsection 198 (2) of this Code.

197.1. Resolution on reduction of share capital

The following shall be set out in a resolution on reduction of share capital:

1. the reason for the reduction of share capital;

2. the extent and method of reduction of share capital;

3. the new nominal values of shares.

198. Extent of reduction of share capital

(1) Share capital shall not be reduced below the amount of share capital specified in § 136 of this Code or any other minimum amount of share capital provided by law.

(2) The provisions of subsection (1) of this section shall not apply if an increase of share capital at least to the amount of share capital specified in § 136 of this Code is decided concurrently with a reduction of share capital. The provisions of § 199 shall also not apply if an increase of share capital at least to the current size of the share capital is decided concurrently with a reduction of share capital. Shares which are issued concurrently with a decrease of the share capital shall only be paid for in money. A resolution on increase or reduction of share capital shall be entered in the commercial register. [RT I 2009, 13, 78 - entry into force 01.07.2009]

199. Notification of creditors

(1) The management board shall, within fifteen days after adoption of a resolution on reduction of share capital, send a notice concerning the new amount of share capital to the known creditors of the private limited company who have claims against the private limited company which predate the adoption of the resolution on reduction of share capital.

(2) The management board shall publish a notice concerning a resolution on reduction of share capital in the publication Ametlikud Teadaanded and invite all creditors to submit their claims. The notice shall indicate that creditors are to submit their claims within two months. [RT I 2006, 55, 412 - entry into force 01.01.2007]

(3) The private limited company shall secure the claims of creditors if they are submitted within two months after publication of the notice. If the due date for fulfilment of a claim has arrived or if a claim is not sufficiently secured, the creditor may demand satisfaction or securing the claim. The creditor may demand securing the claim if the creditor provides proof that decrease in the share capital endangers the satisfaction of the claim. [RT I, 02.11.2011, 1 - entry into force 12.11.2011]

199.1. [Repealed – RT I 2007, 67, 413 - entry into force 28.12.2007]

199.2. Simplified reduction of share capital

(1) Share capital may be reduced in order to cover a loss of the private limited company without applying the provisions of § 199 of this Code (simplified reduction of share capital). [RT I 2005, 57, 449 - entry into force 01.01.2006]

(2) Simplified reduction of share capital may be applied if the profit of the private limited company and the legal reserve are not sufficient to cover a loss and if the private limited company has no other reserves. [RT I 2005, 57, 449 - entry into force 01.01.2006]

(3) The resolution on reduction of share capital shall indicate the loss for the coverage of which the share capital is being reduced. [RT I 2005, 57, 449 - entry into force 01.01.2006]

(4) Available capital which arises upon a simplified reduction of share capital may only be used to cover the loss of the private limited company. [RT I 2010, 77, 589 - entry into force 01.01.2011]

(5) In the case of simplified reduction of the share capital, no payments shall be made to the shareholders and no dividends shall be paid to the shareholders during the financial year on which the decrease of the share capital was decided and for the two subsequent financial years. [RT I 2005, 57, 449 - entry into force 01.01.2006]

200. Submission of petition to commercial register

(1) The management board shall submit a petition for entry of a reduction of share capital in the commercial register not earlier than three months after publication of the notice of share capital reduction, unless a notice on reduction of the share capital need not be published. The following shall be appended to the petition:

1. the resolution of the shareholders;

2. the new text of the articles of association if the articles of association are amended;

3. the minutes of the meeting of shareholders or, in the case provided for in § 173 of this Code, the record of voting;

3.1) if the shares are entered in the Estonian Central Register of Securities, a notice from the Estonian Central Register of Securities confirming that the management board has notified the register of the reduction of share capital;

3.2) reference to the dates on which notices to the creditors were published in the Ametlikud Teadaanded;

4. other documents prescribed by law.

(2) In the petition, the members of the management board shall confirm that the claims of creditors who submitted their claims during the term or who opposed the reduction are secured or satisfied.

(3) The share capital shall be deemed to be reduced as of the making of such entry in the commercial register.

200.1. Payments to shareholders

(1) Payments may be made to the shareholders upon a reduction of share capital if prescribed in the resolution on reduction of share capital.

(2) The payments specified in subsection (1) of this section may be made no earlier than three months after entry of the reduction of share capital in the commercial register and on the condition that the claims of creditors submitted during the term are secured or satisfied. [RT I 2005, 57, 449 - entry into force 01.01.2006]

Chapter 22 - DISSOLUTION OF PRIVATE LIMITED COMPANY

201. Bases for dissolution of private limited company

A private limited company shall be dissolved:

1. by a resolution of the shareholders;

2. by a court decision;

2.1) by declaration of bankruptcy of the private limited company;

2.2) by abatement of the bankruptcy proceeding of the private limited company without a declaration of bankruptcy;

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

4. on other bases prescribed by law or the articles of association. [RT I 2005, 57, 449 - entry into force 01.01.2006]

202. Adoption of dissolution resolution of private limited company

(1) A dissolution resolution shall be adopted if at least two-thirds of the votes of the shareholders who participate in the meeting or, in the cases specified in subsection 174 (2) of this Code, at least two-thirds of the votes of the shareholders are in favour, unless the articles of association prescribe a greater majority requirement.

(2) The management board shall present the preceding annual report and an overview of the economic activities of the private limited company for the current year to the shareholders.

(3) The overview of economic activities shall indicate the term during which the private limited company is able to satisfy the claims of creditors.

203. Compulsory dissolution

(1) A private limited company shall be dissolved by a court ruling if:

1. the shareholders do not adopt a dissolution resolution if its adoption is obligatory pursuant to law or the articles of association, or if the shareholders do not adopt any of the resolutions prescribed in § 176 or if no meeting of shareholders is called to adopt a resolution specified in § 176;

2. the term of office of the management board expired more than two years previously and a new management board has not been elected;

3. in other cases provided by law. [RT I 2005, 57, 449 - entry into force 01.01.2006]

(2) A petition for the compulsory dissolution of a private limited company may be submitted by the management board, the supervisory board, a member of the management board, a shareholder or other persons specified by law. Unless otherwise provided by law, a court may also decide on compulsory dissolution at its own initiative. [RT I 2005, 57, 449 - entry into force 01.01.2006]

(3) If the deficiency or other circumstance that provides the basis for compulsory dissolution can be evidently eliminated, the court shall previously establish a term for the private limited company for the elimination of the deficiency or circumstance. [RT I 2008, 59, 330 - entry into force 01.01.2009]

204. Petition for dissolution of private limited company

(1) The management board shall submit a petition for entry of the dissolution resolution of the private limited company in the commercial register. The resolution of the shareholders and the minutes of the meeting of shareholders or, in the cases provided for in § 173 of this Code, the record of voting shall be appended to the petition.

(2) If a private limited company is dissolved on the basis of a court decision, the court shall send the decision to the commercial register for entry.

(3) A private limited company is deemed to be dissolved as of the making of the entry on dissolution in the commercial register. Compulsory dissolution enters into force as of the entry into force of the court decision. [RT I 2005, 57, 449 - entry into force 01.01.2006]

205. Liquidation

A private limited company shall be liquidated (liquidation proceeding) upon dissolution unless otherwise provided by law.

206. Appointment of liquidators

*(1) The liquidators of a private limited company shall be members of the management board unless the articles of association, a resolution of the shareholders or a court ruling prescribes otherwise. A natural person who is prohibited from acting as a member of the management board shall not be a liquidator. [RT I 2008, 59, 330 - entry into force 01.01.2009]

(2) The residence of at least one liquidator must be in Estonia.

(3) A court shall appoint the liquidators in a compulsory dissolution or if this is requested by shareholders whose shares represent at least one-tenth of the share capital. The court shall also specify the procedure for and amount of remuneration for the liquidators.

207. Removal of liquidators

(1) A liquidator who is a member of the management board, or who has been appointed in accordance with the articles of association or by a resolution of the shareholders can be recalled at any time by a resolution of the shareholders. In order to adopt such resolution, a majority of votes equal to the majority of votes necessary for appointment of a liquidator is needed.

(2) A court may recall a liquidator appointed by the court, and to appoint a new liquidator. At the request of the shareholders whose shares represent at least one tenth of the share capital, a court may also recall, for a good reason, a liquidator who is a member of the management board, or who has been appointed in accordance with the articles of association or by a resolution of the shareholders, and to appoint a new liquidator.

(3) A liquidator may resign for the same reasons and pursuant to the same procedure as a member of the management board. [RT I 2005, 57, 449 - entry into force 01.01.2006]

208. Entry of liquidator

(1) The management board shall submit a petition for entry of the first liquidators in the commercial register. A petition for entry in the commercial register of a change of liquidator or the right of representation of a liquidator shall be submitted by the liquidators. The resolution which constitutes the basis for the change of a liquidator or the right of representation of a liquidator shall be appended to the petition. All liquidators shall submit to the registrar a written confirmation concerning their right pursuant to law to act as liquidators.

(2) If a liquidator is appointed by a court decision, the court shall send the decision to the commercial register for entry.

(3) The names and personal identification codes of the liquidators shall be entered in the commercial register. [RT I 2006, 61, 456 - entry into force 01.01.2007]

209. Rights and obligations of liquidators

(1) Liquidators have the rights and obligations of the management board which are not contrary to the nature of liquidation. Liquidation does not affect the legal relationships between the shareholders or between the shareholders and the private limited company, or the rights of the supervisory board, unless otherwise provided by law and the nature of liquidation.

(2) The liquidators shall terminate the activities of the private limited company, collect debts, sell assets and satisfy the claims of creditors.

(3) The liquidators may only conclude transactions which are necessary for liquidation of the private limited company. The right of representation of liquidators is unrestricted with regard to third persons.

(4) The right of representation of liquidators who are members of the management board does not change upon liquidation unless the articles of association, a resolution of the shareholders or a court decision prescribes the changing of the right of representation into joint representation or sole representation. Liquidators appointed by a resolution of the shareholders or a court decision may represent the private limited company only jointly, unless the resolution of the general meeting or a court decision prescribe that all or some of the liquidators may represent the private limited company alone or together. A division of the right of representation which differs from the right of representation prescribed by law applies with respect to third persons only if it has been entered in the commercial register.

(5) During a liquidation proceeding, the notation “likvideerimisel” [in liquidation] shall be appended to the business name of the private limited company. [RT I 2005, 57, 449 - entry into force 01.01.2006]

210. Submission of bankruptcy petition

If the assets of a private limited company being liquidated are insufficient for satisfaction of all claims of creditors, the liquidators shall submit a bankruptcy petition.

211. Accounting during liquidation

(1) A private limited company undergoing liquidation shall organise its accounting pursuant to the procedure provided by the Accounting Act unless otherwise provided by the law or the nature of liquidation.

(2) Within three months after the date of the dissolution resolution, the liquidators shall prepare, taking account of the provisions concerning the balance sheet contained in the annual report, the opening balance sheet of the liquidation and a report explaining such balance sheet which shall contain the information subject to inclusion in the annexes of the annual accounts.

(3) With the adoption of the dissolution resolution, the current financial year of the private limited company shall end and a new financial year shall begin. The liquidators shall prepare the annual accounts of the private limited company as at the end of the financial year which ends at the time of dissolution of the private limited company and as at the end of every financial year following dissolution.

(4) The shareholders shall approve the opening balance sheet of the liquidation and the annual report by a resolution. After approval, the opening balance sheet of the liquidation and the annual report shall be immediately submitted to the commercial register.

(5) A court may release a private limited company from the obligation to audit the opening balance sheet of the liquidation and the annual report if the financial situation of the private limited company is sufficiently clear and auditing is evidently not necessary in the interests of the shareholders and creditors. [RT I 2005, 57, 449 - entry into force 01.01.2006]

212. Notification of creditors

(1) The liquidators shall promptly publish a notice of the liquidation proceeding of the private limited company in the official publication Ametlikud Teadaanded.

(2) The liquidators shall send a notice of liquidation to the known creditors.

(3) The notice of liquidation shall indicate that creditors are to submit their claims within four months after publication of the notice.

213. Submission of claims

The creditors shall notify the liquidators of all their claims against the private limited company within four months after publication of the notice. The notice shall set out the content, basis and amount of the claim, and documents substantiating the claim shall be appended thereto. Failure to notify of a claim on time does not affect the validity of the claim or restrict the right of the creditor to file an action with a court against the private limited company being liquidated. [RT I 2005, 57, 449 - entry into force 01.01.2006]

214. Satisfaction of claims

(1) Liquidators shall satisfy the claims of creditors of which the private limited company is aware regardless of whether or not notification of such claims has been given.

(2) If a creditor known to the private limited company has not filed a claim and the claim cannot be satisfied for reasons independent of the private limited company, the money which belongs to the creditor shall be deposited if the conditions for depositing exist.

(3) If an obligation cannot be performed during liquidation or if a claim is under dispute, the assets of the private limited company cannot be distributed between the shareholders unless the contested amount of money has been deposited and the creditor has been granted sufficient security. [RT I 2005, 57, 449 - entry into force 01.01.2006]

215. Final balance sheet

(1) After satisfaction of the claims of all creditors and the deposit of money, the liquidators shall prepare the final balance sheet and distribution plan for the assets remaining upon liquidation.

(2) An auditor shall audit the final balance sheet and asset distribution plan if audit of the annual report of the private limited company by an auditor is prescribed.

(3) The liquidators shall present the final balance sheet and asset distribution plan to all shareholders for examination at the registered office of the private limited company and shall notify the shareholders thereof.

(4) If the provisions of law or of the articles of association, or the resolutions of the meeting of the shareholders are not observed in the preparation of a balance sheet or asset distribution plan, a court may, based on an action by the shareholders whose shares represent at least one tenth of the share capital, order preparation of a new balance sheet or asset distribution plan, or supplementary liquidation. Such action may be filed within two months after the date on which the shareholders were informed that the balance sheet and asset distribution plan are presented to the shareholders for examination. The private limited party shall be the defendant. [RT I 2008, 16, 116 - entry into force 15.04.2008]

216. Distribution of assets

(1) After satisfying or securing all the creditors' claims and depositing the money, the remaining assets shall be distributed among the shareholders according to the nominal values of their shares pursuant to the asset distribution plan prepared by the liquidators unless the articles of association prescribe otherwise.

(2) Assets may be distributed within six months after the entry of the dissolution of the private limited company in the commercial register and within two months after the date on which the shareholders were informed that the final balance sheet and asset distribution plan are presented to the shareholders for examination, except in the case where the balance sheet or asset distribution plan have been contested in court, the action has not been heard or has not been satisfied, or if the proceeding in the matter has been concluded.

(3) A court may allow payments to shareholders within six months after publication of the notice of liquidation unless this damages the interests of the creditors.

(4) Payments shall be made in money unless the articles of association prescribe otherwise.

(5) The liquidators need not sell assets unless this is necessary for satisfaction of the claims of creditors, and if the shareholders consent thereto. [RT I 2005, 57, 449 - entry into force 01.01.2006]

217. Continuation of activities of dissolved private limited company

(1) If dissolution of a private limited company is prescribed by the articles of association or is decided by the shareholders, the shareholders may, until commencement of the distribution of assets among the shareholders, decide on continuation of the activities of the private limited company or on merger, division or transformation of the private limited company. A resolution on continuation of activities shall be adopted if at least two-thirds of the votes of the shareholders who participate in the meeting or, in the cases specified in subsection 174 (2) of this Code, at least two-thirds of the votes of the shareholders are in favour, unless the articles of association prescribe a greater majority requirement.

(2) If continuation of activities is decided, the same resolution shall designate the new management board and supervisory board, and shall reduce the share capital to the value of the remaining assets. If the assets have decreased below the amount of share capital specified in § 136 of this Code, increase of share capital shall also be decided.

(3) The liquidators shall submit a petition for entry of the continuation of activities in the commercial register. The resolution on continuation shall enter into force as of its entry in the commercial register.

218. Deletion from commercial register and supplementary liquidation

(1) Liquidators shall submit a petition for deletion of a private limited company from the commercial register after the conclusion of the liquidation, however not earlier than six months after the entry of the liquidation of the private limited company in the commercial register and publication of the liquidation notice and after three months of the date on which the shareholders were informed that the final balance sheet and asset distribution plan are presented to the shareholders for examination, provided that the private limited company is not a party to any court proceedings currently conducted in Estonia. The final balance sheet and asset distribution plan shall be appended to the petition. The petition shall include a confirmation by all the liquidators that the final balance sheet and asset distribution plan have not been contested in court, or the action has been not been heard or has not been satisfied, or that the proceeding in the matter has been terminated and the claims of the creditors of the private limited company have been satisfied or that the assets necessary to satisfy the claims have been deposited and that the private limited company is not a party to any court proceedings currently conducted in Estonia.

(2) If, after the private limited company has been deleted from the register, it becomes evident that the private limited company has assets which were not distributed and that supplementary liquidation measures are necessary, a court may, at the request of an interested person, order a supplementary liquidation and restore the rights of the former liquidators or appoint new liquidators.

(3) After a private limited company has been deleted from the register, liquidation may be carried out at the request of a creditor only in the case where the creditor proves that the creditor's claim against the private limited company was not satisfied in the liquidation proceeding, that the creditor has no other possibility for the satisfaction of the claim and that, upon restoration of the liquidation proceeding, the claim could be satisfied, or that the private limited company should not have been deleted from the register because a dispute over the claim existed. Among other, a creditor's demand for supplementary liquidation shall not be satisfied if the creditor has failed, without good reason, to submit the creditor's claim to the liquidators on time. [RT I 2005, 57, 449 - entry into force 01.01.2006]

219. Preservation of documents

(1) The liquidators shall deposit the documents of a private limited company with a liquidator, a person maintaining an archive or another trustworthy person. If the liquidators have not appointed a depositary of documents, a court shall appoint one as necessary.

(2) The name, residence or registered office, and personal identification code or registry code of the depositary of documents shall be entered in the commercial register on the petition of the liquidators or, in the case of a court-appointed depositary, on the basis of the court ruling. The depositary of documents shall be replaced and a new depositary shall be appointed based on a court ruling.

(3) The depositary of documents shall be responsible for the preservation, during the term prescribed for by law, of the documents deposited with the depositary.

(4) Shareholders and their legal successors have the right to examine the deposited documents. The creditors of the private limited company and persons with a legitimate interest in the matter may examine the documents with the permission of the court. [RT I 2009, 13, 78 - entry into force 01.07.2009]

220. Liability of liquidators

The liquidators shall be liable in the same manner as members of the management board for any damage caused.

Part VII - PUBLIC LIMITED COMPANY

Chapter 23 - GENERAL PROVISIONS

221. Definition of public limited company

(1) A public limited company is a company which has share capital divided into public limited company shares.

(2) A shareholder shall not be personally liable for the obligations of the public limited company.

(3) A public limited company shall be liable for performance of its obligations with all of its assets.

222. Share capital

Share capital shall be denominated in euros. Share capital shall be at least 25,000 euros. [RT I 2010, 20, 103 - entry into force 01.07.2010]

222.1. Share with nominal value and without nominal value

(1) A share may be issued as share with nominal value or share without nominal value. The simultaneous issue and use of shares with nominal value and without nominal value is prohibited. Any shares issued in contradiction to the requirement specified in the previous sentence shall be null and void. The second sentence of subsection 223 (3) of this Code shall apply respectively. [RT I 2010, 20, 103 - entry into force 01.07.2010]

(2) An equal part of the share capital shall conform to all shares without nominal value. The part of the share capital corresponding to one share without nominal value (book value of the share) shall be established by dividing the share capital by the number of shares. [RT I 2010, 20, 103 - entry into force 01.07.2010]

(3) A public limited company, which has issued shares with different nominal value, may introduce shares without nominal value in case the equalisation of the nominal values of the shares is decided prior to the introduction of the share without nominal value. [RT I 2010, 20, 103 - entry into force 01.07.2010]

(4) The number of shares without nominal value shall be deemed to be effected as of the making of an entry in the commercial register. [RT I, 02.11.2011, 1 - entry into force 12.11.2011]

Chapter 24 - SHARE

223. Nominal value and book value of share

(1) The minimum nominal value or book value of a share shall be ten cents.

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

(3) Shares with a nominal value or book value of less than ten cents shall be void. The issuers shall be solidarily liable for any damage caused by the issue of such shares. [RT I 2010, 20, 103 - entry into force 01.07.2010]

224. Indivisibility of share

A share shall be indivisible.

225. Issue price of share

(1) The issue price of a share shall not be less than the nominal value or book value of the share. [RT I 2010, 20, 103 - entry into force 01.07.2010]

(2) The issue price of a share may be greater than the nominal value or book value of the share (premium). A premium is adjusted in the cases prescribed by the applied accounting practices. A premium may be used: [RT I 2010, 20, 103 - entry into force 01.07.2010]

1. to cover a loss of the public limited company if such loss cannot be covered by retained profit from previous periods or the legal reserve prescribed in the articles of association; [RT I 2005, 61, 478 - entry into force 01.12.2005]

2. to increase share capital by a bonus issue. [RT I 2005, 61, 478 - entry into force 01.12.2005]

(3) The issue price of a share shall be paid in full by the subscriber upon issue of the share.

226. Rights attaching to share

A share shall grant the shareholder the right to participate in the general meeting of shareholders and in the distribution of profits and, upon dissolution, of the remaining assets of the public limited company, as well as other rights provided by law or prescribed by the articles of association.

226.1. Share subscription

(1) By share subscription, a subscriber shall receive the right to receive a share and shall undertake to pay for it.

(2) A subscriber may be given a certificate of subscription concerning shares which are subscribed for.

(3) A subscriber may transfer the rights and obligations attaching to a subscription. If the shares are not paid for in full, the subscriber and the transferee shall be solidarily liable for payment. The provisions for transfer of registered shares shall apply to delivery of certificates of subscription. [RT I 2005, 57, 449 - entry into force 01.01.2006]

227. [Repealed – RT I 2000, 57, 373 - entry into force 01.01.2001]

228. Registered shares

(1) Shares shall be registered. Shares shall be entered in the Estonian Central Register of Securities. Upon foundation of a public limited company, a notice from the registrar of the Estonian Central Register of Securities concerning registration of the shares shall be annexed to the petition to be submitted to the registrar of the commercial register.

(2) The rights attaching to a registered share shall belong to the person who is entered as the shareholder in the share register.

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

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

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

229. Transfer of registered share

(1) Registered shares may be freely transferred.

(2) The articles of association may prescribe that, upon transfer of shares to third persons, other shareholders have a pre-emptive right which applies to each transfer of shares for charge and the term of which shall not exceed two months as of the presentation of the transfer agreement. The seller shall notify the management board of the public limited company of entry into a contract of sale, which shall promptly notify the other shareholders thereof. The provisions of the Law of Obligations Act concerning the right of pre-emption otherwise apply to the right of pre-emption and exercise thereof.

(2.1) Shareholders may exercise the right of pre-emption only commonly and to the full extent. If one of the shareholders waives the right of pre-emption, the others have the right to exercise the right of pre-emption jointly and to the full extent.

(2.2) If the articles of association of a public limited company prescribe the right of pre-emption for the shareholders, a notice concerning the right of pre-emption shall be made in the Estonian Central Register of Securities at the request of the public limited company. The disposal of share after the entry of a notation in the register is void to the extent that this prejudices or restricts the exercise of the right of pre-emption.

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

(4) The transferee has the right to demand to be entered as a shareholder in the share register. For the purposes of the public limited company, the share shall be deemed to be transferred as of entry of the transferee in the share register. [RT I 2005, 57, 449 - entry into force 01.01.2006]

230. [Repealed – RT I 2000, 57, 373 - entry into force 01.01.2001]

231. Transfer of share to successor

Upon the death of a shareholder, the share shall transfer to a successor of the shareholder.

232. Pledging of share

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

(2) In order to pledge a share, a written disposition shall be prepared concerning the establishment of the pledge and a notice concerning the pledge shall be entered in the Estonian Central Register of Securities.

(3) Upon pledge of a share, the pledgor shall exercise the rights attaching to the share. [RT I 2005, 57, 449 - entry into force 01.01.2006]

233. Share register

(1) A share register concerning registered shares shall be maintained which shall set out:

1. the name, address and personal identification code or registry code of the shareholder;

2. the class and nominal value of the shares; [RT I 2010, 20, 103 - entry into force 01.07.2010]

3. the date of subscription and acquisition of the shares.

4. [Repealed - RT I 2005, 57, 449 - entry into force 01.01.2006]

(2) The share register shall be maintained by the registrar of the Estonian Central Register of Securities. The information contained in the share register shall be determined by legislation regulating the maintenance of the Estonian Central Register of Securities. The management board of the public limited company shall ensure timely submission of correct information provided by law to the person maintaining the share register. [RT I 2005, 57, 449 - entry into force 01.01.2006]

*234. Access to share register

(1) The share register may be examined in accordance to the provisions of the Estonian Central Register of Securities Act. [RT I 2006, 55, 407 - entry into force 01.01.2007]

(2) [Repealed - RT I 2005, 57, 449 - entry into force 01.01.2006]

235. Classes of shares

(1) Rights attaching to shares may be different in the case of distribution of profit according to the articles of association and in the event of division of remaining assets upon liquidation of the public limited company. Shares with the same rights form a class of shares.

(2) Rights attaching to a class of shares may be amended by a resolution of the general meeting by at least a four-fifths majority of votes in favour unless the articles of association prescribe a greater majority requirement. At least nine-tenths of the shareholders whose shares belong to the class of which the rights are amended must vote in favour of the resolution.

(3) The management board shall promptly notify all holders of registered shares in writing of an amendment to the rights attaching to a class of shares. [RT I 2005, 57, 449 - entry into force 01.01.2006]

236. Right to vote

(1) Each share shall grant a separate vote unless otherwise provided by law.

(2) Shares with equal nominal values shall grant an equal number of votes. If the public limited company has shares with different nominal values, the difference in votes granted by them shall correspond to the difference in nominal values.

(3) Shares without nominal value shall grant an equal number of votes. [RT I 2010, 20, 103 - entry into force 01.07.2010]

237. Preferred share

(1) A public limited company may issue non-voting shares which grant the preferential right to receive dividends and to participate in the distribution of the remaining assets of the public limited company upon dissolution (preferred shares). The owner of a preferred share has all the rights of a shareholder with the exception of the right to vote. [RT I 2005, 57, 449 - entry into force 01.01.2006]

(2) The sum of the nominal values or book values of preferred shares shall not be greater than one-third of the share capital. [RT I 2010, 20, 103 - entry into force 01.07.2010]

(3) The articles of association may prescribe that a preferred share shall grant the right to vote in the adoption of certain resolutions (restricted voting right).

(4) The consent of all holders of preferred shares is required to adopt a resolution on cancellation or amendment of the preference of preferred shares, or on cancellation of preferred shares. Upon cancellation of the preferential right, the holders of preferred shares shall acquire the right to vote.

238. Dividend on preferred share

(1) A holder of a preferred share shall be paid a dividend prior to the payment of dividends to other shareholders. The dividend shall be specified in the articles of association as a percentage of the nominal value or book value of the share unless the articles of association prescribe otherwise. [RT I 2010, 20, 103 - entry into force 01.07.2010]

(2) The holder of a preferred share may be paid a larger dividend than prescribed by the articles of association.

(3) If the public limited company does not have distributable profit or if it is insufficient, the dividends to holders of preferred shares may be left unpaid in whole or in part. The unpaid part shall be added to the dividend to be paid the following year, including interest in the amount provided by law.

239. Acquisition and loss of right to vote

(1) If the holder of a preferred share is not paid dividends in full during two financial years, the holder of a preferred share shall acquire the right to vote. In case of a share with nominal value, the holder of a preferred share shall acquire the right to vote according to the nominal value of the share; in case of a share without nominal value, the holder of a preferred share shall acquire the right to vote according subsection 236 (3) of this Code. The votes attaching to preferred shares shall be included in the quorum of the general meeting. [RT I 2010, 20, 103 - entry into force 01.07.2010]

(2) The holder of a preferred share shall lose the right to vote on the last day of the financial year during which a dividend is paid in full.

(3) Acquisition of the right to vote shall not exempt the public limited company from its obligation to pay dividends for the previous years and the interest provided by law, nor cancel the preferential right of the holder of a preferred share to receive dividends and to participate in the distribution of remaining assets upon dissolution.

240. [Repealed – RT I 2000, 57, 373 - entry into force 01.01.2001]

241. Convertible bond

(1) If prescribed in the articles of association, a public limited company may issue, for a conditional increase of the share capital, bonds by a resolution of the general meeting, the holders of which have the right to convert their bonds to shares (convertible bond).

(2) A convertible bond may be registered.

(3) Convertible bonds may be issued after entry of the public limited company in the commercial register.

(4) At least the nominal value of a convertible bond shall be paid for the convertible bond, in money. The nominal value or book value of shares issued for the bond may be greater than the nominal value of the bond only if this difference is paid for in money. [RT I 2010, 20, 103 - entry into force 01.07.2010]

(5) The sum of the nominal values of convertible bonds shall not be greater than one-third of the share capital.

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; [RT I 2006, 61, 456 - entry into force 01.01.2007]

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; [RT I 2010, 20, 103 - entry into force 01.07.2010]

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; [RT I 2006, 61, 456 - entry into force 01.01.2007]

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; [RT I 2010, 20, 103 - entry into force 01.07.2010]

3.1) in case of shares without nominal value, the number of the shares, which may be specified as certain number or minimum and maximum number; [RT I, 02.11.2011, 1 - entry into force 12.11.2011]

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; [RT I 2010, 20, 103 - entry into force 01.07.2010]

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; [RT I 2006, 61, 456 - entry into force 01.01.2007]

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 public 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. [RT I 2010, 20, 103 - entry into force 01.07.2010]

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. [RT I 2010, 77, 589 - entry into force 01.01.2011]

(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 a petition for entry of the public limited company in the commercial register. Instead of publication in Ametlikud Teadaanded, the notice may be submitted to the commercial register together with the petition 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; [RT I 2010, 20, 103 - entry into force 01.07.2010]

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 petition 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. [RT I 2008, 16, 116 - entry into force 15.04.2008]

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; [RT I 2008, 16, 116 - entry into force 15.04.2008]

4.1) 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; [RT I 2008, 16, 116 - entry into force 15.04.2008]

5. the names and personal identification codes of the members of the supervisory board and the names and personal identification codes of the auditors; [RT I 2006, 61, 456 - entry into force 01.01.2007]

5.1) the information on the planned principal activity; [RT I 2006, 61, 456 - entry into force 01.01.2007]

6. [Repealed - RT I 2005, 57, 449 - entry into force 01.01.2006]

7. data on the telecommunications of the public limited company (telephone and fax numbers, e-mail and Internet home page address, etc.); [RT I 2006, 61, 456 - entry into force 01.01.2007]

7.1) 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 public limited company jointly, all the members of the management board entitled to represent the public limited company jointly shall sign the petition submitted to the register. [RT I 2009, 13, 78 - entry into force 01.07.2009]

(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; [RT I 2006, 61, 456 - entry into force 01.01.2007]

3. the amount of share capital;

3.1) the number of shares without nominal value; [RT I, 02.11.2011, 1 - entry into force 12.11.2011]

4. the date of approval of the articles of association;

5. the names and personal identification codes of the members of the management board; [RT I 2006, 61, 456 - entry into force 01.01.2007]

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 company

(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. [RT I 2005, 57, 449 - entry into force 01.01.2006]

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. [Repealed – RT I 2005, 57, 449 - entry into force 01.01.2006]

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 assets 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. [RT I 2005, 57, 449 - entry into force 01.01.2006]

(2) The assets 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 assets specified in subsection (1) of this section, submit the contract for transfer of the asset, the documents in proof of the value of the assets and an opinion signed by the auditor on valuation of the assets to the commercial register. [RT I 2008, 16, 116 - entry into force 15.04.2008]

Division 2

Chapter 26 - SHAREHOLDER AND PUBLIC LIMITED COMPANY

272. Equality of shareholders

The shareholders shall be treated equally under equal circumstances.

273. Obligation of shareholder to pay contributions

A shareholder shall not be required to pay a contribution exceeding the nominal value or book value and premium of the share without the shareholder's consent. [RT I 2010, 20, 103 - entry into force 01.07.2010]

274. Prohibition on refund of contribution and on accrual of interest on contribution

(1) A contribution paid by a shareholder shall not be refunded, nor shall any interest be paid on a contribution.

(2) Payment of the purchase price by the public limited company upon repurchase of its own shares shall be deemed not to be a refund of contribution.

275. Consequences of delay of contribution

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

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

(3) If the shareholder does not pay the deficient sum during the term specified in the notice, the shareholder shall lose the shareholder’s share and the public limited company has the right to transfer it to other shareholders or third persons. A sum paid by the shareholder which does not exceed one-fifth of the nominal value or book value of the share shall be transferred to the legal reserve, and the remainder of the sum shall be refunded to the shareholder. [RT I 2010, 20, 103 - entry into force 01.07.2010]

276. Payment to shareholders

(1) A public limited company may only make payments to shareholders from net profit or from retained profits from previous financial years from which uncovered losses from previous years have been deducted, pursuant to law.

(2) A shareholder shall be paid a share of profit (dividend) according to the nominal value or book value of the shareholder’s shares. The articles of association may prescribe different rights attaching to different classes of shares with regard to distribution of profit. [RT I 2010, 20, 103 - entry into force 01.07.2010]

277. Procedure for payment of dividends

(1) Dividends may be paid on the basis of the approved annual report.

(2) The procedure for payment of dividends shall be prescribed in the articles of association or by a resolution of the general meeting.

(3) The articles of association may give the management board of a public limited company the right to make advance payments to the shareholders with the consent of the supervisory board after the end of a financial year and before approval of the annual report on account of the presumed profit in the amount of up to one half of the amount subject to distribution among the shareholders. [RT I 2005, 57, 449 - entry into force 01.01.2006]

278. Amount of dividend

The amount of a dividend shall be approved by the general meeting. The management board shall present a proposal concorded with the supervisory board. Payments shall not be made to shareholders if the net assets of the public limited company, as apparent from the annual report approved at the end of the previous financial year of the public limited company, are less than or would be less than the total of share capital and reserves which pursuant to law or the articles of association shall not be paid out to shareholders.

279. Payment of dividend

(1) A shareholder has the right to demand payment of a dividend prescribed by a resolution of the general meeting.

(2) The dividend shall be paid in money. Upon the consent of the shareholder, the dividend may also be paid in other property.

280. Return of illegal payment

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

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

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

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

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

(6) The members of the management board and supervisory board who caused the making of the unlawful payment shall be liable for the return of the payment solidarily with the shareholder who received such payment. [RT I 2005, 57, 449 - entry into force 01.01.2006]

281. Prohibited loans

(1) A public limited company shall not grant a loan:

1. to one of its shareholders whose shares represent more than 1 per cent of the share capital;

2. to a shareholder or member of its parent undertaking, whose shares represent more than 1 per cent of the share capital of the parent undertaking;

3. to a person to acquire shares of the public limited company;

4. to a member of its management board or supervisory board or its procurator.

(2) [Repealed - RT I 2000, 29, 172 - entry into force 17.04.2000]

(2.1) A subsidiary may grant a loan to its parent undertaking or to a shareholder of the parent undertaking or to a member who forms the same group as the subsidiary if this does not harm the financial status of the public limited company or the interests of creditors. A subsidiary shall not grant a loan for acquiring a share of the public limited company to the persons specified in the first sentence of this subsection. [RT I 2008, 16, 116 - entry into force 15.04.2008]

(3) A public limited company shall also not guarantee a loan taken by the persons specified in subsection (1) of this section. The prohibition does not apply to guaranteeing a loan taken by the parent undertaking or guaranteeing a loan taken by a shareholder or member of the parent undertaking who forms the same group as the subsidiary if this does not harm the financial status of the public limited company or the interests of creditors. A public limited company shall not guarantee a loan taken for acquisition of a share of the public limited company. [RT I 2008, 16, 116 - entry into force 15.04.2008]

(4) Transactions in violation of the provisions of subsections (1) and (21) of this section are void. Violation of the provisions of subsection (3) of this section does not result in the nullity of the transaction but the person whose loan was secured must compensate the damage caused to the public limited company by the provision of the security.

(5) The provisions of subsections (1)–(4) of this section correspondingly apply to credit agreements and other economically equivalent transactions. [RT I 2005, 57, 449 - entry into force 01.01.2006]

282. Subscription for own shares

(1) A public limited company shall not itself or through a third person acting at the expense of the public limited company subscribe for its own shares.

(2) A subsidiary shall not subscribe for shares of its parent undertaking.

283. Acquisition or taking as security of own shares

(1) A public limited company shall not itself or through a third person acting in its own name but at the expense of the public limited company acquire or take as security its own shares unless otherwise provided by law.

(2) The acquisition or taking as security of its own shares by a public limited company shall be permitted if:

1. this occurs within five years after adoption of a resolution of the general meeting which specifies the terms and conditions and term for the acquisition or taking as security of shares and the minimum and maximum amounts to be paid for the shares; [RT I 2008, 16, 116 - entry into force 15.04.2008]

2. the sum of the nominal values or book values of the shares held or taken as security by the public limited company does not exceed one-tenth of the share capital; and [RT I 2010, 20, 103 - entry into force 01.07.2010]

3. acquisition of the shares does not cause the net assets to become less than the total of share capital and reserves which pursuant to law or the articles of association shall not be paid out to shareholders. [RT I 2008, 16, 116 - entry into force 15.04.2008]

(3) The public limited company may acquire its own shares by a resolution of the supervisory board without a resolution of the general meeting if the acquisition of shares is necessary to prevent significant damage to the public limited company. The shareholders shall be informed of the circumstances surrounding and the details of the acquisition of shares at the next general meeting of shareholders. [RT I 2008, 16, 116 - entry into force 15.04.2008]

(4) A public limited company may acquire its own shares without the restrictions provided for in subsection (2) of this section if the shares are acquired by succession.

(5) A public limited company’s own shares shall not grant the public limited company any rights of a shareholder.

(6) In the course of ongoing transactions, a credit institution or another professional securities market participant is permitted to take as security own shares to the extent of up to one-tenth of the share capital.

(7) A transaction constituting an obligation which is in conflict with the provisions of subsections (1), (2) or (6) of this section is void. The above does not affect the validity of the acquisition of a share or taking of a share as security. [RT I 2005, 57, 449 - entry into force 01.01.2006]

284. Transfer of own shares

(1) [Repealed - RT I 2008, 16, 116 - entry into force 15.04.2008]

(2) If a public limited company has acquired or taken as security its own shares based on subsection 283 (4) of this Code, and the total of the nominal values or book values thereof, including the sum total of the nominal values or book values of the own shares belonging to or taken as security by the public limited company is higher than 1/10 of the share capital, then the shares acquired or taken as security in such manner which exceed the 1/10 shall be transferred or taking them as security shall be terminated within three years after the transfer or taking as security. [RT I 2010, 20, 103 - entry into force 01.07.2010]

(3) If a public limited company acquires or takes as security its own shares illegally, the shares shall be transferred or the taking as security shall be terminated within one year after the acquisition or taking as security. [RT I 2008, 16, 116 - entry into force 15.04.2008]

(4) If the shares are not transferred or the taking as security is not terminated during the term specified in subsections (2) or (3) of this section, the shares shall be cancelled and the share capital reduced accordingly. [RT I 2008, 16, 116 - entry into force 15.04.2008]

285. Mutual acquisition of shares

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

286. Jointly held share

(1) If a share is held by several persons jointly, these persons may only exercise the rights attaching to the share jointly. The above does not apply to a public limited company if the public limited company has not been informed of the common ownership of the share.

(2) The common owners of a share shall be solidarily liable for the obligations attaching to the share.

(3) A common owner of a share has the right to demand the entry of the owner in the share register.

(4) If the shareholders have not appointed a common representative for performance of the rights arising from the share, a transaction performed by the public limited company with respect to the joint owners is deemed to be valid even if such act was performed with respect to only one shareholder or some of the shareholders. [RT I 2009, 13, 78 - entry into force 01.07.2009]

287. Right of shareholder to information

(1) A shareholder has the right to receive information on the activities of the public limited company from the management board at the general meeting.

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

(3) If the management board refuses to give information, the shareholder may demand that the general meeting decide on the legality of the shareholder's request or to file, within two weeks after the general meeting, a petition to a court by way of proceedings on petition in order to obligate the management board to give information. [RT I 2005, 57, 449 - entry into force 01.01.2006]

288. [Repealed – RT I 2005, 57, 449 - entry into force 01.01.2006]

289. Liability of shareholder

(1) A shareholder shall be liable for any damage wrongfully caused to the public limited company, another shareholder or third persons, in the capacity of shareholder.

(2) A shareholder shall not be liable for any damage caused if the shareholder did not participate in the adoption of the resolution of the general meeting which was the basis for the cause of damage or if the shareholder voted against the resolution. [RT I 2002, 53, 336 - entry into force 01.07.2002]

289.1. Public limited company with one shareholder

(1) If all the shares in a public limited company belong to one single shareholder or if, in addition to the single shareholder, the shares of the public limited company are owned only by the public limited company itself, the management board shall immediately submit a corresponding written notice to the registrar of the commercial register. The notice shall set out the name, address and personal identification code or registry code of the single shareholder. The notice shall be preserved in the business file.

(2) The members of the management board shall be solidarily liable for damage caused by violation of the notification requirement provided for in subsection (1) of this section.

289.2. Liability for damaging public limited company by influencing activity of public limited company

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

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

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

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

(5) A claim for payment of compensation for the damage specified in subsection (1)–(3) of this section to a public limited company 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.

(6) A creditor or trustee in bankruptcy has the right to file the claim specified in subsection (5) of this section also if the public limited company has waived the claim or has entered into a contract of compromise with such member or resulting from an agreement, has limited the claim or filing thereof in another manner or reduced the limitation period. [RT I 2005, 57, 449 - entry into force 01.01.2006]

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. [RT I 2009, 51, 349 - entry into force 15.11.2009]

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

290.1. 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, vote using electronic means 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. [RT I 2009, 51, 349 - entry into force 15.11.2009]

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. [RT I 2009, 51, 349 - entry into force 15.11.2009]

(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. [RT I 2005, 57, 449 - entry into force 01.01.2006]

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 [RT I 2009, 51, 349 - entry into force 15.11.2009]

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. [RT I 2009, 51, 349 - entry into force 15.11.2009]

(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. [RT I 2009, 51, 349 - entry into force 15.11.2009]

(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. [RT I 2009, 51, 349 - entry into force 15.11.2009]

(2.1) If a special general meeting is called at the request of the auditor or the shareholders, the auditor or the shareholders, at whose request 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. [RT I 2009, 51, 349 - entry into force 15.11.2009]

(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. [RT I 2009, 51, 349 - entry into force 15.11.2009]

(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. [RT I 2005, 57, 449 - entry into force 01.01.2006]

293.1. 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. [RT I 2009, 51, 349 - entry into force 15.11.2009]

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. [RT I 2009, 51, 349 - entry into force 15.11.2009]

(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. [RT I 2007, 67, 413 - entry into force 28.12.2007]

(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. [RT I 2009, 51, 349 - entry into force 15.11.2009]

(3.1) 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

(2.1) 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 using electronic means or by mail, the information regarding the procedure and term for electronic participation or voting using electronic means 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; [RT I 2010, 9, 41 - entry into force 08.03.2010]

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. [RT I 2009, 51, 349 - entry into force 15.11.2009]

(4.1) 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. [RT I 2009, 51, 349 - entry into force 15.11.2009]

(4.2) 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. [RT I, 02.11.2011, 1 - entry into force 12.11.2011]

(4.3) 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. [RT I 2009, 51, 349 - entry into force 15.11.2009]

(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. [RT I 2009, 51, 349 - entry into force 15.11.2009]

(6) If following the notification about calling the annual general meeting the agenda is amended at the request 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. [RT I 2009, 51, 349 - entry into force 15.11.2009]

(7) The costs of sending or publishing the notice calling the general meeting shall be borne by the public limited company. [RT I 2009, 51, 349 - entry into force 15.11.2009]

294.1. 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. [RT I 2009, 51, 349 - entry into force 15.11.2009]

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. [RT I 2009, 51, 349 - entry into force 15.11.2009]

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. [RT I 2009, 51, 349 - entry into force 15.11.2009]

(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. [RT I 2009, 51, 349 - entry into force 15.11.2009]

(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 using electronic means 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. [RT I 2009, 51, 349 - entry into force 15.11.2009]

(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. [RT I 2009, 51, 349 - entry into force 15.11.2009]

(4.1) 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. [RT I 2009, 51, 349 - entry into force 15.11.2009]

(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. [RT I 2009, 51, 349 - entry into force 15.11.2009]

(6) The costs of organising a general meeting of shareholders shall be borne by the public limited company. If a general meeting is called at the request 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. [RT I 2009, 51, 349 - entry into force 15.11.2009]

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 at the request 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. [RT I 2005, 57, 449 - entry into force 01.01.2006]

298.1. 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 using electronic means 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 using electronic means 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. [RT I 2009, 51, 349 - entry into force 15.11.2009]

298.2. 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. [RT I 2009, 51, 349 - entry into force 15.11.2009]

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. [RT I, 02.11.2011, 1 - entry into force 12.11.2011]

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

1.1) 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.

301.1. 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. 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. [RT I 2009, 51, 349 - entry into force 15.11.2009]

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

(3) The nullity of a resolution may be relied on in court proceedings by filing an action or an objection.

(4) The 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. [RT I 2005, 57, 449 - entry into force 01.01.2006]

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. [RT I 2005, 57, 449 - entry into force 01.01.2006]

(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. [RT I 2005, 57, 449 - entry into force 01.01.2006]

(3) Revocation of a resolution of the general meeting 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. [RT I 2009, 51, 349 - entry into force 15.11.2009]

(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. [RT I 2005, 57, 449 - entry into force 01.01.2006]

(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. [RT I 2005, 57, 449 - entry into force 01.01.2006]

(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. [RT I 2005, 57, 449 - entry into force 01.01.2006]

303. Restriction of 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. [RT I 2005, 57, 449 - entry into force 01.01.2006]

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; [RT I 2009, 51, 349 - entry into force 15.11.2009]

6. at the request 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 applications 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. [RT I 2009, 51, 349 - entry into force 15.11.2009]

(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. [RT I 2009, 51, 349 - entry into force 15.11.2009]

(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. [RT I 2009, 51, 349 - entry into force 15.11.2009]

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

(6) At the request 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. [RT I 2006, 61, 456 - entry into force 01.01.2007]

(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 the adoption of 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. [RT I 2005, 57, 449 - entry into force 01.01.2006]

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. [RT I 2009, 13, 78 - entry into force 01.07.2009]

(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 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. [RT I 2005, 57, 449 - entry into force 01.01.2006]

(3.1) 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. [RT I 2005, 57, 449 - entry into force 01.01.2006]

(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. [RT I 2005, 57, 449 - entry into force 01.01.2006]

(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.[RT I 2009, 51, 349 - entry into force 15.11.2009]

(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. [RT I 2005, 57, 449 - entry into force 01.01.2006]

307. Right of representation of management organ

(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. [RT I 2009, 13, 78 - entry into force 01.07.2009]

(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. [RT I 2009, 13, 78 - entry into force 01.07.2009]

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. [RT I 2005, 57, 449 - entry into force 01.01.2006]

(3.1) 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. [RT I 2008, 52, 288 - entry into force 22.12.2008]

(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 contracts entered into with a member of the management board terminate pursuant to the contracts. 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. [RT I 2009, 51, 349 - entry into force 15.11.2009]

(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 contracts entered into with a member of the management board terminate pursuant to the contracts. 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. [RT I 2009, 51, 349 - entry into force 15.11.2009]

(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. [RT I 2009, 51, 349 - entry into force 15.11.2009]

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 at the request 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. [RT I 2005, 57, 449 - entry into force 01.01.2006]

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. [RT I 2009, 13, 78 - entry into force 01.07.2009]

(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 entry into 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 entered into 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 entered into 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. [RT I 2005, 57, 449 - entry into force 01.01.2006]

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. [RT I 2005, 57, 449 - entry into force 01.01.2006]

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

1.1) 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 fulfill 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. [RT I 2009, 13, 78 - entry into force 01.07.2009]

(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. [RT I 2005, 57, 449 - entry into force 01.01.2006]

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.

(4.1) 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. [RT I 2006, 61, 456 - entry into force 01.01.2007]

(5.1) 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 entered into 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. [RT I 2009, 51, 349 - entry into force 15.11.2009]

(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) At the request 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. [RT I 2005, 57, 449 - entry into force 01.01.2006]

(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 entered into 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. [RT I 2009, 51, 349 - entry into force 15.11.2009]

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. [RT I 2005, 57, 449 - entry into force 01.01.2006]

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.

(3.1) 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. [RT I 2005, 57, 449 - entry into force 01.01.2006]

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.

(1.1) 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.

(1.2) 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. [RT I 2005, 57, 449 - entry into force 01.01.2006]

323. Adoption of resolution 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. [RT I 2005, 57, 449 - entry into force 01.01.2006]

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. [RT I 2009, 13, 78 - entry into force 01.07.2009]

(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 entered into 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 entered into 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. [RT I 2005, 57, 449 - entry into force 01.01.2006]

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. [RT I 2005, 57, 449 - entry into force 01.01.2006]

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. [RT I 2006, 61, 456 - entry into force 01.01.2007]

(4) At the request 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.

329.1. 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.

(2.1) 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. [RT I 2009, 51, 349 - entry into force 15.11.2009]

(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. [RT I 2005, 57, 449 - entry into force 01.01.2006]

Chapter 28 - REPORTING AND DISTRIBUTION OF PROFITS

331. Preparation of annual report

After the end of the financial year, the management board shall prepare the annual accounts and activity report pursuant to the procedure provided for in the Accounting Act. [RT I 2009, 13, 78 - entry into force 01.07.2009]

332. Presentation of reports

(1) After the preparation of the annual report, the management board shall promptly present it to the auditor. [RT I 2009, 13, 78 - entry into force 01.07.2009]

(2) The management board shall present the annual report, the sworn auditor's report and the profit distribution proposal to the general meeting. [RT I 2010, 9, 41 - entry into force 08.03.2010]

(3) A profit distribution proposal shall set out:

1. the net profit;

2. the transfers to legal reserve;

3. the transfers of profit to other reserves prescribed by law or the articles of association;

4. the share of profit to be paid to shareholders;

5. the use of profit for other purposes.

(4) The management board shall provide the shareholders with an opportunity to examine the annual report approved and signed pursuant to the provisions of § 25 of the Accounting Act for at least two weeks before the general meeting. [RT I, 25.05.2012, 8 - entry into force 04.06.2012]

333. Rights of supervisory board in preparation of reports

(1) The supervisory board shall review the annual report and shall prepare a written report concerning the annual report, which shall be presented to the general meeting. The supervisory board shall indicate in the report whether it approves the annual report prepared by the management board. In addition, the report shall indicate how the supervisory board has organised and managed the activities of the public limited company. [RT I 2009, 54, 363 - entry into force 01.01.2010]

(2) The supervisory board has the right to make amendments to the profit distribution proposal before its presentation to the general meeting.

334. Approval of annual report and submission to commercial register

(1) An annual report shall be approved by the general meeting. The shareholders whose shares represent at least one tenth of the share capital may request of the private limited company that the auditor who prepared the sworn auditor's report participate in the adoption of the resolution to approve the annual report, and provide explanations concerning the sworn auditor's report if the shareholders have submitted the corresponding written request at least five days before the general meeting. [RT I 2010, 9, 41 - entry into force 08.03.2010]

(2) The management board shall submit the approved annual report together with the proposal for the distribution of profit or the covering of loss, the division of the sales revenue and the sworn auditor's report to the commercial register within six months after the end of the financial year. Together with the submission of the annual report, the management board shall notify in what way specified in § 301 of this Code the general meeting have decided to cover the loss. [RT I 2010, 9, 41 - entry into force 08.03.2010]

(3) The division of the sales revenue shall contain information regarding the sales revenue for the accounting year in up to ten major areas of activity pursuant to the Classification of Economic Activities established on the basis of subsection 4 (6) of this Code. In case of the annual report of a consolidation group, the division of the sales revenue is submitted on the basis of the respective information in the unconsolidated income statement of the consolidating entity. [RT I 2009, 54, 363 - entry into force 01.01.2010]

335. Profit distribution resolution

(1) A profit distribution resolution shall be adopted by the general meeting on the basis of the approved annual report. [RT I 2009, 13, 78 - entry into force 01.07.2009]

(1.1) A parent undertaking who prepares the annual report of the consolidation group shall approve the profit distribution resolution based on the consolidated reports of the consolidation group. Profit as apparent from the consolidated reports shall not be distributed in so far as this would decrease the net assets of the parent undertaking to a level below the total of share capital and reserves which pursuant to law or the articles of association shall not be paid out to shareholders.

(2) A profit distribution resolution shall set out:

1. the amount of net profit;

2. the transfers to legal reserve;

3. the transfers to other reserves prescribed by law or the articles of association;

4. the share of profit to be distributed among the shareholders;

5. the use of profit for other purposes. [RT I 2005, 61, 478 - entry into force 01.12.2005]

(3) The management board shall submit the information regarding the profit distribution resolution specified in subsection (2) of this section to the commercial register together with the annual report if this information is not manifested by the annual report. If the profit distribution resolution is adopted after the submission of the annual report, the aforementioned information shall be submitted together with the next annual report. [RT I 2009, 54, 363 - entry into force 01.01.2010]

336. Formation of legal reserve

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

(2) The amount of legal reserve shall be prescribed in the articles of association and shall not be less than one-tenth of the share capital.

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

337. Use of legal reserve

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

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

Chapter 29 - ALTERATION OF SHARE CAPITAL

Division 1 - Increase of Share Capital

338. Methods of increase of share capital

(1) Share capital may be increased by the issue of new shares or the increase of the nominal value or book value of existing shares. [RT I 2010, 20, 103 - entry into force 01.07.2010]

(2) Share capital shall be increased with or without supplementary contributions.

(3) If the share capital is increased by issuing new shares without nominal value, the number of the shares shall be increased proportionally to the increase of the share capital. Any shares issued in violation of the requirement specified in the previous sentence shall be null and void. [RT I 2010, 20, 103 - entry into force 01.07.2010]

339. Notice calling general meeting

In order to increase share capital, the notice calling the general meeting shall set out:

1. the reason and method for the increase of share capital;

2. the new amount of share capital;

3. the number of new shares and their nominal value of shares with nominal value or the new nominal values of existing shares; [RT I 2010, 20, 103 - entry into force 01.07.2010]

4. the pre-emptive right to subscribe for new shares and the term for its exercise;

5. if share capital is increased by the issue of new shares, the term and place for subscription;

6. if a new class of shares is issued, the rights attaching to such shares.

340. Documents presented to special general meeting

If an increase of share capital is decided by a special general meeting, the management board shall present the preceding annual report, approved by the general meeting, and an overview of the economic activities of the public limited company for the current year to the general meeting. Clause 294 (4) 8) and subsection 294 (42) of this Code shall respectively apply to making the documents specified in the previous sentence available. [RT I 2009, 51, 349 - entry into force 15.11.2009]

341. Adoption of resolution to increase share capital

(1) A resolution on increase of share capital shall be adopted if at least two-thirds of the votes represented at the general meeting are in favour. The articles of association may prescribe a greater majority requirement.

(2) If the public limited company has several classes of shares, a resolution on increase of share capital shall be adopted if, in addition to the provisions of subsection (1) of this section, at least two-thirds of the votes represented of each class of shares at the general meeting are in favour. The articles of association may prescribe a greater majority requirement.

(3) If the articles of association must be amended due to the increase of share capital, amendment of the articles of association shall be decided before share capital is increased.

(4) A resolution on increase of share capital shall not be adopted before entry of the public limited company in the commercial register.

342. Resolution on increase of share capital

A resolution on increase of share capital shall set out:

1. the number of new shares and their nominal value of shares with nominal value, and also the amount of the increase of the share capital; [RT I 2010, 20, 103 - entry into force 01.07.2010]

2. the classes of shares to be issued if the public limited company has or issues several classes of shares;

3. the pre-emptive right to subscribe for new shares and the term for its exercise, and the date as of which shareholders have a pre-emptive right to subscribe;

4. the share subscription term;

5. the time and place for payment of shares, and whether and to what extent the shares shall be paid for by a monetary or non-monetary contribution; in the case of a non-monetary contribution, the item of the non-monetary contribution;

6. if the nominal values of shares are increased, the new nominal values of existing shares;

7. if shares are issued with a premium, the premium amount, which may be specified either as a specific amount or a minimum premium; the supervisory board may determine a higher premium until the subscription commences;

8. [Repealed - RT I 2005, 57, 449 - entry into force 01.01.2006]

9. in the case of a bonus issue, also reference to the underlying balance sheet and equity categories, and the amount of each equity category used to carry out the bonus issue.

343. Entry in commercial register

(1) If share capital is paid in full or a bonus issue is conducted, the management board shall submit a petition to the commercial register for entry of the increase of share capital in the commercial register. The following shall be appended to the petition:

1. the resolution of the general meeting;

2. the minutes of the general meeting;

3. the new text of the articles of association if the articles of association are amended;

4. upon an increase of share capital by new contributions, a bank notice concerning payment of the share capital;

5. upon a bonus issue, the annual report or interim balance sheet on which it is based;

6. upon payment by a non-monetary contribution, documents certifying the value of the contribution and its transfer;

6.1) a notice from the registrar of the Estonian Central Register of Securities confirming that the management board has informed the registrar of the increase in share capital;

7. other documents provided by law.

(2) [Repealed - RT I 2008, 16, 116 - entry into force 15.04.2008]

(3) The members of the management board shall certify the transfer of a non-monetary contribution by their signatures. If the non-monetary contribution is an immovable, an extract from the land register shall be appended to the petition.

(4) The management board shall submit a petition for entry of the increase of share capital in the commercial register within six months after adoption of the resolution on increase of share capital.

(4.1) In the case of increase of share capital by bonus issue, the petition submitted to the registrar shall include a confirmation that the members of the management board who signed the petition are not aware of a decrease to the assets of the public limited company, during the time between the date of preparation of the balance sheet which was the basis for the increase of the share capital and the date of submission of the petition to the registrar, to an extent which could hinder the adoption of the resolution on the increase of the share capital on the date of submission of the petition.

(4.2) The registrar need not check the conformity of the content of the balance sheet which was the basis for the increase of the share capital with the law.

(5) The share capital shall be deemed to be increased and the rights arising from the new shares, the increased nominal values of the shares or the increased book value of the shares without nominal value shall be deemed to have arisen as of the making of such entry in the commercial register. [RT I 2010, 20, 103 - entry into force 01.07.2010]

3431. Liability of members of management board upon entry of increase of share capital in register

(1) The members of the management board of a public limited company are solidarily liable for damage caused to the public limited company by submission of incorrect or inaccurate information or incorrect valuation of contributions upon the increase of the share capital unless a member of the management board proves that he or she was not aware and did not have to be aware of the circumstances which caused the damage.

(2) An agreement which derogates from the provisions of subsection (1) 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 of the public limited company.

(3) The claim provided in subsection (1) of this section expires after five years of the date on which the increase of the share capital was entered in the commercial register. [RT I 2005, 57, 449 - entry into force 01.01.2006]

344. Application of foundation provisions

The provisions for payment of contributions on the foundation of a public limited company and for the subscription of shares shall apply to an increase of share capital by contributions unless otherwise provided for in this chapter.

345. Pre-emptive right of shareholder

(1) A shareholder has a pre-emptive right to subscribe for the new shares in proportion to the sum of the nominal value or book value of the shareholder’s shares. The pre-emptive right of the shareholders may be barred by a resolution of the general meeting which receives at least three-quarters of the votes represented at the general meeting. The management board shall provide a written explanation to the shareholders in advance as to why it is necessary to bar the pre-emptive subscription right and shall also justify the issue price of shares. [RT I 2010, 20, 103 - entry into force 01.07.2010]

(1.1) A shareholder may transfer the shareholder’s pre-emptive right to subscribe for shares under the same terms and conditions as a transfer of shares.

(2) If a public limited company has several classes of shares and new shares of one or some classes are issued, the holders of the corresponding classes of shares have a pre-emptive right in the subscription of such shares before other shareholders.

(3) The management board shall send the resolution of the general meeting to the shareholders who have the pre-emptive right of subscription and who did not participate in the general meeting. [RT I 2005, 57, 449 - entry into force 01.01.2006]

(4) The term for subscription of shares with a pre-emptive right shall be two weeks from the adoption of a resolution on increase of share capital unless the resolution of the general meeting prescribes a longer term.

346. Set-off of claim

A claim of a shareholder or of any other person who wishes to subscribe for share against the public limited company may, by a resolution of the general meeting, be set off against a payment for new shares if this does not damage the interests of the public limited company or of its creditors. A claim shall be valuated as a non-monetary contribution.

346.1. Oversubscription

(1) If upon an increase of share capital shares are subscribed for to the full extent of the increase of share capital, the supervisory board may decide to terminate the share subscription before the end of the term prescribed in the resolution on increase of share capital.

(2) If it becomes evident that shares are subscribed for in excess of the planned increase of share capital, the supervisory board shall decide on the distribution of shares based on the number of subscribed for shares and on the cancellation of oversubscribed shares unless the resolution on increase of share capital prescribes otherwise. Payments for oversubscribed shares shall be returned to the subscribers promptly at the expense of the public limited company.

347. Undersubscription

(1) A share subscription shall be deemed to be an undersubscription if all new shares are not subscribed for during the term indicated in the resolution on increase of share capital.

(2) Upon undersubscription, all rights of subscribers associated with the subscription shall terminate, and the increase of share capital shall not occur. The management board shall promptly refund the payments made by subscribers. The members of the management board shall be solidarily liable for the refund of payments.

(3) The management board may, by a resolution of the general meeting, be granted the right to extend a subscription term or to cancel shares which are not subscribed for during the subscription term. The management board may exercise such right within fifteen days after the end of the subscription term. If shares are subscribed for by the new due date provided by the management board, the subscription is deemed to be valid.

348. Participation in profit distribution

(1) A resolution on increase of share capital may prescribe a date as of which shares grant the right to receive a dividend. This right shall not arise later than for the financial year following the increase of share capital.

(2) If the date specified in subsection (1) of this section is not prescribed in a resolution on increase of share capital, the right to receive a dividend shall arise during the financial year in which the entry on increase of share capital is made.

349. Right of supervisory board to increase share capital

(1) The articles of association may grant the supervisory board the right to increase share capital by contributions for up to three years.

(2) The supervisory board may increase share capital to an amount prescribed in the articles of association. Share capital shall not be increased by more than one-half of the share capital which existed at the time the supervisory board received the right to increase share capital.

(2.1) The supervisory board shall have the rights specified in subsection 347 (3) of this Code.

(3) The supervisory board may pay for issued shares by a non-monetary contribution only if prescribed in the articles of association.

(4) The resolution of the supervisory board and the minutes of the meeting and, in the case provided for in § 323 of this Code, the record of voting, shall be appended to the petition submitted to the commercial register concerning the increase of share capital.

350. Bonus issue

(1) A public limited company may increase share capital from the shareholders’ equity of the public limited company without making contributions (bonus issue).

(2) After approval of the annual report and passing of the profit distribution resolution, the general meeting may decide on a bonus issue based on the annual report and the profit distribution resolution. A bonus issue may also be carried out on the basis of the interim balance sheet which must be prepared and approved pursuant to the procedure for the preparation and approval of the balance sheet included in the annual report. Increase of the share capital need not be entered in the commercial if the petition for increasing the share capital and the corresponding resolution are submitted to the registrar of the commercial register within eight months after the date as at which the annual report or interim balance sheet which was the basis for the share capital increase was prepared. [RT I 2005, 57, 449 - entry into force 01.01.2006]

(3) [Repealed - RT I 2005, 57, 449 - entry into force 01.01.2006]

(4) Upon a bonus issue, a shareholder’s part of the share capital shall increase in proportion to the nominal value or book value of the shareholder’s shares. Any resolution contrary to the above is void. [RT I 2010, 20, 103 - entry into force 01.07.2010]

(5) Own shares held by the public limited company shall also participate in the bonus issue.

(6) Share capital shall be increased by the bonus issue to the extent of the sum of the nominal values or book values of new shares or to the extent of the increase of the nominal value or book value of existing shares. [RT I 2010, 20, 103 - entry into force 01.07.2010]

351. Conditional increase of share capital

(1) If a public limited company issues convertible bonds (§ 241), the management board may increase share capital to the extent of the sum of the nominal values of the convertible bonds exchangeable for shares. The management board may also increase share capital to a greater extent if such possibility in prescribed in a resolution on a conditional increase of share capital and the difference between the nominal value of convertible bonds and nominal value or book value of shares is covered in money. [RT I 2010, 20, 103 - entry into force 01.07.2010]

(2) At the request of the holder of a bond, the management board shall issue shares and exchange them for bonds during the term specified in the bond.

(3) If the public limited company issues convertible bonds, the shareholders have the pre-emptive right to subscribe for them pursuant to the procedure provided for in § 345 of this Code.

(4) The general meeting may also decide on a conditional increase of the share capital to the extent of the performance of the subscription rights if this is necessary for preparing the concentration of the public limited company or for granting the subscription rights to the members or employees of the public limited company or a company related thereto. [RT I 2005, 57, 449 - entry into force 01.01.2006]

(5) A conditional increase of the share capital to an extent of more than one third of the share capital at the time of the adoption of the resolution is prohibited. [RT I 2005, 57, 449 - entry into force 01.01.2006]

(6) A resolution of the general meeting contrary to the conditional increase of share capital is void. [RT I 2005, 57, 449 - entry into force 01.01.2006]

(7) A resolution for conditional increase of share capital shall set out:

1. the objective of the conditional increase of share capital;

2. the set of persons entitled to participate in the conditional increase of share capital;

3. the issue price of shares or the bases for determination thereof;

4. the term for performing the subscription rights. [RT I 2005, 57, 449 - entry into force 01.01.2006]

(8) In the event of conditional increase of share capital, the shares shall be paid for only in money. [RT I 2005, 57, 449 - entry into force 01.01.2006]

351.1. Conduct of conditional increase of share capital

(1) The management board shall submit a petition for conditional increase of share capital to the commercial register.

(2) Shares shall not be issued based on a resolution on conditional increase of share capital before the conditional increase of share capital has been entered in the commercial register.

(3) Based on a resolution on conditional increase of share capital, the recipient of a share acquires the share in the same manner as in the event of share subscription, based on a declaration of intention. The management board shall issue the shares only based on a resolution of the general meeting and for compliance with such resolution, and not before the issue price of a share has been paid.

(4) In the event of the conditional increase of share capital, the share capital and number of shares is deemed to be increased as of the issue of the share. [RT I, 02.11.2011, 1 - entry into force 12.11.2011]

(5) Not later than within one month after the end of the financial year of the public limited company, the management board shall submit a petition to the registrar of the commercial register for entry in the register the number of shares issued based on a resolution on conditional increase of share capital and the corresponding increase of the share capital during the financial year. The members of the management board shall confirm in the petition that the shares were issued only based on a resolution on conditional increase of share capital and that they have been paid for in full. [RT I 2005, 57, 449 - entry into force 01.01.2006]

351.2. Conditional increase of share capital in case of issuing shares admitted for trading on regulated securities market and admittance of shares for trading on such market

(1) The general meeting may decide on the conditional increase of the share capital to the extent of the performance of the subscription rights also in case the shares issued upon the increase of the share capital are admitted for trading on a regulated securities market or an application for the admittance for trading on such market has been filed in respect to the shares.

(2) In the case specified in subsection (1) of this section the general meeting may decide on the conditional increase of the share capital to a greater extent than one third of the share capital at the time of the adoption of the resolution if at least three-fourths of the votes represented at the general meeting are in favour.

(3) Based on the resolution on the conditional increase of the share capital specified in subsection (1) of this section, the shares may be issued within two months following the adoption of the resolution of the general meeting and on the condition that the conditional increase of the share capital is entered in the commercial register and the issue price of the share is paid.

(4) Upon the conditional increase of the share capital in the case specified in subsection (1) of this section, the management board shall submit within 10 days following the issue of the shares to the registrar of the commercial register a petition for entry regarding the fact to what extent the shares have been issued and the share capital has increased on the basis of the resolution on the conditional increase of the share capital. The members of the management board shall confirm in the petition that the shares were issued only based on a resolution on conditional increase of share capital and that they have been paid for in full. [RT I, 02.11.2011, 1 - entry into force 12.11.2011]

(5) In this section, the regulated securities market shall denote the regulated securities market and multilateral trading facility for the purposes of the Securities Market Act. [RT I 2009, 12, 71 - entry into force 27.02.2009]

Division 2 - Reduction of Share Capital

352. Methods of reduction of share capital

(1) Share capital may be reduced by a reduction of the nominal value or book value of shares or by the cancellation of shares.

(1.1) If share capital is reduced by a reduction of the book value of shares, the book value of shares shall be reduced proportionately to the reduction of the share capital.

(2) The provisions of subsections 223 (1) and (2) of this Code shall be observed in a reduction of the nominal value or book value of shares. [RT I 2010, 20, 103 - entry into force 01.07.2010]

353. Extent of share capital reduction

(1) Share capital shall not be reduced below the amount of share capital specified in § 222 of this Code or any other minimum amount of share capital provided by law.

(2) Share capital shall first be reduced on account of own shares held by the public limited company.

(3) Share capital may be reduced by way of preferred shares only if dividends are paid in full to the holders of such shares. The provisions of the previous sentence shall not apply in case of shares without nominal value. [RT I 2010, 20, 103 - entry into force 01.07.2010]

(4) The provisions of subsection (1) of this section shall not apply if an increase of share capital at least to the amount of share capital specified in § 222 of this Code is decided concurrently with a reduction of share capital. The provisions of § 358 shall also not apply if an increase of share capital at least to the current size of the share capital is decided concurrently with a reduction of share capital. Shares which are issued concurrently with a decrease of the share capital shall only be paid for in money. A resolution on increase or reduction of share capital shall be entered in the commercial register. [RT I 2005, 57, 449 - entry into force 01.01.2006]

354. Notice calling general meeting

In order to reduce share capital, the notice calling the general meeting shall set out:

1. the reason and method for reduction of share capital;

2. the extent of the reduction of share capital;

3. in case of the cancellation of shares, the number and class of shares to be cancelled, and in case of the reduction of the nominal value of shares, the extent of the reduction of the nominal value of shares. [RT I 2010, 20, 103 - entry into force 01.07.2010]

355. Documents presented to special general meeting

If reduction of share capital is decided by a special general meeting, the management board shall present the preceding annual report, approved by the general meeting, and an overview of the economic activities of the public limited company for the current year to the special general meeting.

356. Adoption of resolution on reduction of share capital

(1) A resolution on reduction of share capital shall be adopted if at least two-thirds of the votes represented at the general meeting are in favour. The articles of association may prescribe a greater majority requirement.

(2) If the public limited company has several classes of shares, a resolution on reduction of share capital shall be adopted if, in addition to the provisions of subsection (1) of this section, at least two-thirds of the votes represented of each class of shares at the general meeting are in favour. The articles of association may prescribe a greater majority requirement.

(2.1) If there is a wish to reduce the nominal values of shares or cancel shares other than proportionally from each class of shares in the course of a reduction of share capital, such a resolution shall be adopted if, in addition to the provisions of subsections (1) and (2) of this section, the shareholders whose shares are disproportionately cancelled or the nominal values of which are disproportionately reduced vote in favour of the resolution.

(3) If the articles of association must be amended due to the reduction of share capital, amendment of the articles of association shall be decided before the reduction of share capital, except if the share capital is reduced in the case specified in subsection 353 (4) of this Code.

357. Resolution on reduction of share capital

A resolution on reduction of share capital shall set out:

1. the reason for the reduction of share capital;

2. the extent and method of reduction of share capital;

3. the number and class of shares to be cancelled or, in case of shares with nominal value, the extent of the reduction of the nominal value of shares; [RT I 2010, 20, 103 - entry into force 01.07.2010]

4. [Repealed - RT I 2005, 57, 449 - entry into force 01.01.2006]

358. Notification of creditors

(1) The management board shall, within fifteen days after adoption of the resolution on reduction of share capital, send notice concerning the new amount of share capital to the known creditors of the public limited company who have claims against the public limited company which predate the adoption of the resolution on reduction of share capital.

(2)* The management board shall publish a resolution on reduction of share capital in the publication Ametlikud Teadaanded and invite all creditors to submit their claims. The notice shall indicate that creditors are to submit their claims within two months. [RT I 2006, 55, 412 - entry into force 01.01.2007]

(3) The public limited company shall secure the claims of creditors if they are submitted within two months after publication of the notice. If the due date for fulfillment of a claim has arrived or if a claim is not sufficiently secured, the creditor may demand satisfaction or securing the claim. The creditor may demand securing the claim if the creditor provides proof that decrease in the share capital endangers the satisfaction of the claim. [RT I, 02.11.2011, 1 - entry into force 12.11.2011]

359. Submission of petition to commercial register

(1) The management board shall submit a petition for entry of the reduction of share capital in the commercial register not earlier than three months after publication of the second reduction of share capital notice, except if the notice on reduction of share capital need not be published.. The following shall be appended to the petition:

1. the resolution of the general meeting;

2. [Repealed - RT I 2005, 57, 449 - entry into force 01.01.2006]

2.1) a notice from the registrar of the Estonian Central Register of Securities confirming that the management board has notified the registrar of the reduction of share capital;

2.2) reference to the dates on which notices to the creditors were published in the Ametlikud Teadaanded;

3. other documents provided by law.

(2) In the petition, the members of the management board shall confirm that the claims of creditors who submitted their claims during the term or who opposed the reduction are secured or satisfied.

(3) The share capital shall be deemed to be reduced as of the making of such entry in the commercial register.

360. [Repealed – RT I 2005, 57, 449 - entry into force 01.01.2006]

361. Payment to shareholders

(1) Payments may be made to the shareholders upon a reduction of share capital if prescribed in the resolution on reduction of share capital.

(2) The payments specified in subsection (1) of this section may be made no earlier than three months after entry of the reduction of share capital in the commercial register and on the condition that the claims of creditors submitted during the term are secured or satisfied.

362. Simplified reduction of share capital

(1) Share capital may be reduced in order to cover a loss of the public limited company without applying the provisions of § 358 of this Code (simplified reduction of share capital).

(2) A simplified reduction of share capital may be conducted if the reserve fund of the public limited company is insufficient to cover the loss and if the public limited company also does not have other reserves.

(3) The resolution on reduction of share capital shall indicate the loss for the coverage of which the share capital is being reduced.

(4) Available capital which arises upon a simplified reduction of share capital may only be used to cover the loss of the public limited company. If the amount of available capital which arises is greater than the loss, the amount exceeding the loss shall be transferred to the legal reserve.

363. Restriction on profit distribution

(1) In the case of simplified reduction of the share capital, no payments shall be made to the shareholders and no dividends shall be paid to the shareholders during the financial year on which the decrease of the share capital was decided and for the two subsequent financial years.

(2) The restriction specified in subsection (1) of this section shall not apply to preferred shares. [RT I 2005, 57, 449 - entry into force 01.01.2006]

Chapter 291 - TAKEOVER OF SHARES FOR MONETARY COMPENSATION

363.1. Application for takeover of shares

(1) Based on the application of a shareholder whose shares represent at least 9/10 of the share capital of a public limited company (majority shareholder), the general meeting of shareholders may decide in favour of the shares belonging to the remaining shareholders of the public limited company (minority shareholders) being taken over by the majority shareholder in return for fair monetary compensation.

(2) Upon determination of the size of the share capital represented by the shares of the majority shareholder, own shares of the public limited company shall not be taken into account. The shares of the majority shareholder within the meaning of subsection (1) of this section are also deemed to include the shares of its parent undertaking or subsidiary, provided the parent undertaking or subsidiary has granted its consent to this effect.

(3) The application specified in subsection (1) of this section shall be submitted to the management board of the public limited company. The documents specified in § 3634 of this Code shall be appended to the application. The management board is required to call a general meeting to decide on the takeover of shares.

(4) The application specified in subsection (1) of this section may not be withdrawn and its conditions may not be amended to the disadvantage of minority shareholders.

363.2. Determination of amount of compensation

(1) The majority shareholder shall determine the amount of compensation payable to minority shareholders. The amount of compensation shall be determined on the basis of the value of the shares to be taken over that these shares had ten days prior to the date on which the notice calling the general meeting was sent out. The management board shall provide the majority shareholder with all the necessary data and documents therefor and with information.

(2) [Repealed - RT I 2007, 58, 380 - entry into force 19.11.2007]

363.3. Notice calling general meeting

The notice calling the general meeting at which a resolution is to be adopted regarding the takeover of shares belonging to minority shareholders shall, in addition to the information specified in subsection 294 (4) of this Code, also set out:

1. the name, residence or registered office and address thereof, and the personal identification code or registry code of the majority shareholder;

2. the amount of compensation to be paid to minority shareholders per share.

3. [Repealed - RT I 2009, 51, 349 - entry into force 15.11.2009]

363.4. Takeover report and audit

(1) The majority shareholder shall submit a written report (takeover report) to the general meeting explaining and justifying the conditions of taking over shares belonging to minority shareholders and the bases for determining the amount of compensation payable for the shares.

(2) The takeover report shall be audited by an auditor. The auditor shall prepare a written report of the audit, stating in particular whether the amount of compensation determined by the majority shareholder meets the provisions of § 3632 of this Code. [RT I 2007, 58, 380 - entry into force 19.11.2007]

(2.1) Additionally, the auditor's report shall set out the method which was used upon determination of the amount of compensation, the difficulties relating to determination of the amount of compensation, whether the used method is appropriate for determination of the amount of compensation and other methods for determination of the compensation. If different methods are used upon determination of the amount of compensation, the amount of compensation in each method and the importance of results obtained on the basis of each method upon determination of the amount of compensation shall be set out.

(3) The majority shareholder shall appoint the auditor and cover the costs of the audit.

(4) The auditor shall be liable for any damage wrongfully caused by an inaccurate audit of the takeover report.

363.5. Preparation of general meeting

(1) At least one month before a general meeting to decide on the takeover of shares belonging to minority shareholders, the management board shall present the following to the shareholders for examination at the location of the public limited company:

1. the draft resolution of the general meeting to decide on the takeover of shares belonging to minority shareholders; [RT I 2009, 51, 349 - entry into force 15.11.2009]

2. the three preceding annual reports of the public limited company; [RT I 2009, 13, 78 - entry into force 01.07.2009]

3. the takeover report;

4. the auditor's report.

(11) Clause 294 (4) 8) and subsection 294 (42) of this Code shall respectively apply to making the documents specified in subsection (1) of this section available. [RT I 2009, 51, 349 - entry into force 15.11.2009]

(2) Copies of the documents specified in subsection (1) of this section shall be promptly given to a shareholder at the request of the shareholder. Clause 294 (4) 8) and subsection 294 (42) of this Code shall respectively apply to making the documents specified in the previous sentence available. [RT I 2009, 51, 349 - entry into force 15.11.2009]

363.6. Organisation of general meeting

The majority shareholder is required to explain to the minority shareholders at the general meeting the conditions of taking over the shares belonging to the minority shareholders and the bases for determining the amount of compensation payable for the shares.

363.7. Resolution of general meeting

(1) A resolution on the takeover of shares belonging to minority shareholders shall be adopted if at least 95/100 of the votes represented by shares are in favour.

(2) The minutes of a general meeting at which a resolution is adopted on the takeover of shares belonging to minority shareholders shall be attested by a notary.

363.8. Contestation of takeover resolution

(1) At the request of a shareholder, a court may declare a takeover resolution which is in conflict with law to be invalid if the request is submitted within one month as of the resolution being made.

(2) A takeover resolution shall not be declared invalid on the basis that the compensation payable to minority shareholders is set too low.

(3) If the compensation payable to minority shareholders is set too low, the court may, at the request of a minority shareholder, determine a fair rate of compensation.

(4) [Repealed - RT I 2007, 58, 380 - entry into force 19.11.2007]

(5) As of the adoption of the takeover resolution, the majority shareholder shall pay a fine for delay on unpaid compensation in the amount established by law. [RT I 2005, 57, 449 - entry into force 01.01.2006]

363.9. Transfer of shares

(1) Within one month as of the adoption of the resolution of the general meeting specified in § 3637 of this Code, the management board of the public limited company shall submit a petition to the registrar of the Estonian Central Register of Securities for the shares of minority shareholders to be transferred to the majority shareholder. A notarised copy of the resolution of the general meeting specified in § 3637 of this Code shall be appended to the petition. [RT I, 02.11.2011, 1 - entry into force 12.11.2011]

(2) The registrar of the Estonian Central Register of Securities shall arrange for the transfer of the shares to the account of the majority shareholder on the basis of a petition specified in subsection (1) of this section against payment the size of which corresponds to the compensation payable for the shares.

363.10. Forwarding of takeover resolution to commercial register

The management board of the public limited company shall submit the notice specified in § 2891 of this Code to the registrar of the commercial register immediately after transfer of the shares to the account of the majority shareholder. The following shall be appended to the notice:

1. a notarised copy of the resolution of the general meeting specified in § 3637 of this Code; [RT I, 02.11.2011, 1 - entry into force 12.11.2011]

2. the takeover report;

3. the auditor's report provided for in subsection 3634 (2) of this Code;

4. a statement issued by the registrar of the Estonian Central Register of Securities regarding the transfer of the shares.

Chapter 30 - DISSOLUTION OF PUBLIC LIMITED COMPANY

364. Bases for dissolution of public limited company

A public limited company shall be dissolved:

1. by a resolution of the general meeting;

2. by a court decision;

2.1) by declaration of bankruptcy of the public limited company;

2.2) by abatement of the bankruptcy proceeding of the public limited company before declaration of bankruptcy;

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

4. on other bases prescribed by law or the articles of association. [RT I 2005, 57, 449 - entry into force 01.01.2006]

365. Resolution on dissolution of public limited company at general meeting

(1) A dissolution resolution shall be adopted if at least two-thirds of the votes represented at the 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, in order to adopt a dissolution resolution it shall also be necessary that at least two-thirds of the votes represented by shares of each class are in favour of the resolution unless the articles of association prescribe a greater majority requirement.

(2) If dissolution of the public limited company is decided by a special general meeting, the management board shall present the preceding annual report, approved by the general meeting, and an overview of the economic activities of the public limited company for the current year to the special general meeting. Clause 294 (4) 8) and subsection 294 (42) of this Code shall respectively apply to making the documents specified in the previous sentence available. [RT I 2009, 51, 349 - entry into force 15.11.2009]

(3) The overview of economic activities shall indicate the term during which the public limited company is able to satisfy the claims of creditors.

366. Compulsory dissolution

(1) A public limited company shall be dissolved by a court ruling if:

1. the general meeting does not adopt a dissolution resolution if its adoption is obligatory pursuant to law or the articles of association, the shareholders have not adopted any of the resolutions prescribed in § 301 or the general meeting has not been called to adopt such a resolution;

2. the general meeting has not been held during the last two financial years;

3. the term of office of the management board expired more than two years previously and a new management board has not been elected;

4. in other cases provided by law. [RT I 2005, 57, 449 - entry into force 01.01.2006]

(2) A petition for the compulsory dissolution of a public limited company may be submitted by the management board, the supervisory board, a member of the management board, a shareholder or other persons specified by law. Unless otherwise provided by law, a court may also decide on compulsory dissolution at its own initiative. [RT I 2005, 57, 449 - entry into force 01.01.2006]

(3) If the deficiency or other circumstance that provides the basis for compulsory dissolution can be evidently eliminated, the court shall previously establish a term for the public limited company for the elimination of the deficiency or circumstance. [RT I 2008, 59, 330 - entry into force 01.01.2009]

367. Petition for dissolution of public limited company

(1) The management board shall submit a petition for entry of the dissolution resolution of the public limited company in the commercial register. The resolution of the general meeting and the minutes of the general meeting shall be appended to the petition.

(2) If a public limited company is dissolved on the basis of a court decision, the court shall send the decision to the commercial register for entry.

(3) A public limited company is deemed to be dissolved as of the making of the entry on dissolution in the commercial register. Compulsory dissolution enters into force as of the entry into force of the court decision. [RT I 2005, 57, 449 - entry into force 01.01.2006]

368. Liquidation

A public limited company shall be liquidated (liquidation proceeding) upon dissolution unless otherwise provided by law.

369. Appointment of liquidators

(1) The liquidators of a public limited company shall be members of the management board unless the articles of association, a resolution of the general meeting or a court ruling prescribes otherwise. A natural person who is prohibited from acting as a member of the management board shall not be a liquidator. [RT I 2008, 59, 330 - entry into force 01.01.2009]

(2) The residence of at least one liquidator must be in Estonia.

(3) A court shall appoint the liquidators in a compulsory dissolution or if this is requested by shareholders whose shares represent at least one-tenth of the share capital. The court shall also specify the procedure for and amount of remuneration for the liquidators.

370. Removal of liquidators

(1) A liquidator who is a member of the management board, or who has been appointed in accordance with the articles of association or by a resolution of the general meeting can be recalled at any time by a resolution of the general meeting. In order to adopt such resolution, a majority of votes equal to the majority of votes necessary for appointment of a liquidator is needed.

(2) A court may recall a liquidator appointed by the court, and to appoint a new liquidator. At the request of the shareholders whose shares represent at least one tenth of the share capital, a court may also recall, for a good reason, a liquidator who is a member of the management board, or who has been appointed in accordance with the articles of association or by a resolution of the general meeting, and to appoint a new liquidator.

(3) A liquidator may resign for the same reasons and pursuant to the same procedure as a member of the management board. [RT I 2005, 57, 449 - entry into force 01.01.2006]

371. Entry of liquidator

(1) The management board shall submit a petition for entry of the first liquidators in the commercial register. A petition for entry in the commercial register of a change of liquidator or the right of representation of a liquidator shall be submitted by the liquidators. The resolution which constitutes the basis for the change of a liquidator or the right of representation of a liquidator shall be appended to the petition. All liquidators shall submit to the registrar a written confirmation concerning their right pursuant to law to act as liquidators.

(2) If a liquidator is appointed by a court decision, the court shall send the decision to the commercial register for entry.

(3) The names and personal identification codes of the liquidators shall be entered in the commercial register. [RT I 2006, 61, 456 - entry into force 01.01.2007]

372. Rights and obligations of liquidators

(1) Liquidators have the rights and obligations of the management board which are not contrary to the nature of liquidation. Liquidation does not affect the legal relationships between the shareholders or between the shareholders and the public limited company, or the rights of the supervisory board, unless otherwise provided by law and the nature of liquidation.

(2) The liquidators shall terminate the activities of the public limited company, collect debts, sell assets and satisfy the claims of creditors.

(3) The liquidators may only conclude transactions which are necessary for liquidation of the public limited company. The right of representation of liquidators is unrestricted with regard to third persons.

(4) The right of representation of liquidators who are members of the management board does not change upon liquidation unless the articles of association, a resolution of the general meeting or a court decision prescribes the changing of the right of representation into joint representation or sole representation. Liquidators appointed by a resolution of the general meeting or a court decision may represent the private limited company only jointly, unless the resolution of the general meeting or a court decision prescribe that all or some of the liquidators may represent the public limited company alone or together. A division of the right of representation which differs from the right of representation prescribed by law applies with respect to third persons only if it has been entered in the commercial register.

(5) During a liquidation proceeding, the notation “likvideerimisel” [in liquidation] shall be appended to the business name of the public limited company. [RT I 2005, 57, 449 - entry into force 01.01.2006]

373. Submission of bankruptcy petition

If the assets of a public limited company being liquidated are insufficient for satisfaction of all claims of creditors, the liquidators shall submit a bankruptcy petition.

374. Accounting during liquidation

(1) A public limited company undergoing liquidation shall organise its accounting pursuant to the procedure provided by the Accounting Act unless otherwise provided by the law or the nature of liquidation.

(2) Within three months after the date of the dissolution resolution, the liquidators shall prepare, taking account of the provisions concerning the balance sheet contained in the annual report, the opening balance sheet of the liquidation and a report explaining such balance sheet which shall contain the information subject to inclusion in the annexes of the annual accounts.

(3) With the adoption of the dissolution resolution, the current financial year of the public limited company shall end and a new financial year shall begin. The liquidators shall prepare the annual accounts of the public limited company as at the end of the financial year which ends at the time of dissolution of the public limited company and as at the end of every financial year following dissolution.

(4) The general meeting of shareholders shall approve the opening balance sheet of the liquidation and the annual report by a resolution. After approval, the opening balance sheet of the liquidation and the annual report shall be immediately submitted to the commercial register.

(5) A court may release a public limited company from the obligation to audit the opening balance sheet of the liquidation and the annual report if the financial situation of the public limited company is sufficiently clear and auditing is evidently not necessary in the interests of the shareholders and creditors. [RT I 2005, 57, 449 - entry into force 01.01.2006]

**375. Notification of creditors

(1) The liquidators shall promptly publish a notice of the liquidation proceeding of the public limited company in the official publication Ametlikud Teadaanded.

(2) The liquidators shall send a notice of liquidation to the known creditors.

(3) The notice of liquidation shall indicate that creditors are to submit their claims within four months after publication of the notice.

376. Submission of claims

The creditors shall notify the liquidators of all their claims against the public limited company within four months after publication of the notice. The notice shall set out the content, basis and amount of the claim, and documents substantiating the claim shall be appended thereto. Failure to notify of a claim on time does not affect the validity of the claim or restrict the right of the creditor to file an action with a court against the public limited company being liquidated. [RT I 2005, 57, 449 - entry into force 01.01.2006]

377. Satisfaction of claims

(1) Liquidators shall satisfy the claims of creditors of which the public limited company is aware regardless of whether or not notification of such claims has been given.

(2) If a creditor known to the public limited company has not filed a claim and the claim cannot be satisfied for reasons independent of the public limited company, the money which belongs to the creditor shall be deposited if the conditions for depositing exist.

(3) If an obligation cannot be performed during liquidation or if a claim is under dispute, the assets of the public limited company cannot be distributed between the shareholders unless the contested amount of money has been deposited and the creditor has been granted sufficient security. [RT I 2005, 57, 449 - entry into force 01.01.2006]

378. Final balance sheet

(1) After satisfaction of the claims of all creditors and the deposit of money, the liquidators shall prepare the final balance sheet and distribution plan for the assets remaining upon liquidation.

(2) An auditor shall audit the final balance sheet and asset distribution plan.

(3) The liquidators shall present the final balance sheet and asset distribution plan to all shareholders for examination at the registered office of the public limited company and shall notify the shareholders who hold registered shares thereof. If the public limited company has bearer shares, the liquidators shall publish a notice in a newspaper concerning the examination of the balance sheet and asset distribution plan.

(4) If the provisions of law or of the articles of association, or the resolutions of the general meeting are not observed in the preparation of a balance sheet or asset distribution plan, a court may, based on an action by the shareholders whose shares represent at least one tenth of the share capital, order preparation of a new balance sheet or asset distribution plan, or supplementary liquidation. Such action may be filed within two months after the date on which the shareholders were informed that the balance sheet and asset distribution plan are presented to the shareholders for examination. The public limited party is the defendant. [RT I 2005, 57, 449 - entry into force 01.01.2006]

379. Distribution of assets

(1) After satisfying or securing all the creditors' claims and depositing the money, the remaining assets shall be distributed among the shareholders according to the nominal value or book value of their shares pursuant to the asset distribution plan prepared by the liquidators unless the articles of association prescribe otherwise. [RT I 2010, 20, 103 - entry into force 01.07.2010]

(2) Assets may be distributed within six months after the entry of the dissolution of the public limited company in the commercial register and within two months after the date on which the shareholders were informed that the final balance sheet and asset distribution plan are presented to the shareholders for examination, except in the case where the balance sheet or asset distribution plan have been contested in court, the action has not been heard or has not been satisfied, or if the proceeding in the matter has been concluded. [RT I 2005, 57, 449 - entry into force 01.01.2006]

(3) A court may allow payments to shareholders within six months after publication of the notice of liquidation unless this damages the interests of the creditors.

(4) Payments shall be made in money unless the articles of association prescribe otherwise.

(5) The liquidators need not sell assets unless this is necessary for satisfaction of the claims of creditors, and if the general meeting consents thereto.

380. Continuation of activities of dissolved public limited company

(1) If dissolution of a public limited company is prescribed by the articles of association or is decided by a resolution of the general meeting, the general meeting may, until commencement of the distribution of assets among the shareholders, decide on continuation of the activities of the public limited company or on merger, division or transformation of the public limited company. A resolution on continuation of activities shall be adopted if at least two-thirds of the votes represented at the general meeting are in favour. [RT I 2009, 51, 349 - entry into force 15.11.2009]

(2) If continuation of activities is decided, the same resolution shall designate the new supervisory board and management board, and shall reduce the share capital to the value of the remaining assets. If the assets have decreased below the amount of share capital specified in § 222 of this Code, increase of share capital shall also be decided.

(3) The liquidators shall submit a petition for entry of the continuation of activities in the commercial register. The resolution on continuation shall enter into force as of its entry in the commercial register.

381. Deletion from commercial register and supplementary liquidation

(1) Liquidators shall submit a petition for deletion of a public limited company from the commercial register after the conclusion of the liquidation, however not earlier than six months after the entry of the liquidation of the public limited company in the commercial register and publication of the liquidation notice and after three months of the date on which the shareholders were informed that the final balance sheet and asset distribution plan are presented to the shareholders for examination, provided that the public limited company is not a party to any court proceedings currently conducted in Estonia. The final balance sheet and asset distribution plan shall be appended to the petition. The petition shall include a confirmation by all the liquidators that the final balance sheet and asset distribution plan have not been contested in court, or the action has been not been heard or has not been satisfied, or that the proceeding in the matter has been terminated and the claims of the creditors of the public limited company have been satisfied or that the assets necessary to satisfy the claims have been deposited and that the public limited company is not a party to any court proceedings currently conducted in Estonia.

(2) If, after the public limited company has been deleted from the register, it becomes evident that the public limited company has assets which were not distributed and that supplementary liquidation measures are necessary, a court may, at the request of an interested person, order a supplementary liquidation and restore the rights of the former liquidators or appoint new liquidators.

(3) After a public limited company has been deleted from the register, liquidation may be carried out at the request of a creditor only in the case where the creditor proves that the creditor's claim against the public limited company was not satisfied in the liquidation proceeding, that the creditor has no other possibility for the satisfaction of the claim and that, upon restoration of the liquidation proceeding, the claim could be satisfied, or that the public limited company should not have been deleted from the register because a dispute over the claim existed. Among other, a creditor's demand for supplementary liquidation shall not be satisfied if the creditor has failed, without good reason, to submit the creditor's claim to the liquidators on time. [RT I 2005, 57, 449 - entry into force 01.01.2006]

382. Preservation of documents

(1) The liquidators shall deposit the documents of a public limited company with a liquidator, a person maintaining an archive or another trustworthy person. If the liquidators have not appointed a depositary of documents, a court shall appoint one as necessary.

(2) The name, residence or registered office, and personal identification code or registry code of the depositary of documents shall be entered in the commercial register on the petition of the liquidators or, in the case of a court-appointed depositary, on the basis of the court ruling. The depositary of documents shall be exchanged and a new depositary shall be appointed based on a court ruling.

(3) The depositary of documents shall be responsible for the preservation, during the term prescribed for by law, of the documents deposited with the depositary.

(4) Shareholders and their legal successors have the right to examine the deposited documents. The creditors of the public limited company and persons with a legitimate interest in the matter may examine the documents with the permission of the court. [RT I 2009, 13, 78 - entry into force 01.07.2009]

383. Liability of liquidators

The liquidators shall be liable in the same manner as members of the management board for any damage caused.

Part VIII - BRANCH

384. Branch of foreign company

(1) If a foreign company wants to permanently offer goods or services in its own name in Estonia, it shall enter a branch in the commercial register.

(2) A branch is not a legal person. The company shall be liable for the obligations arising from the activities of the branch.

(3) In the cases provided by law, a company shall obtain a licence in order to found a branch in Estonia.

385. Director of branch

(1) A foreign company shall appoint a director or directors for the branch. A director must be a natural person with active legal capacity. 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 branch, 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 director. [RT I, 02.07.2013, 3 - entry into force 12.07.2013]

(2) A director shall direct and represent the branch and shall organise the accounting of the branch. A director may grant a procuration.

(3) If several directors are appointed for a branch, each of them may represent the branch unless it is specified that the directors or some of them may represent the branch jointly.

(4) A restriction on the right of a director to represent the branch shall not apply with regard to third persons.

(5) The provisions of §§ 310 and 312–315 of this Code shall apply to directors.

386. Entry of branch in register

(1) The branch of a foreign company shall be entered in the commercial register of its location on the petition of the director of the branch. The information provided for in § 387 of this Code shall be set out in the petition.

(2) The following shall be appended to the petition:

1. an official certificate concerning the existence of the company in its home country (extract from a commercial register or a copy of a registration certificate);

2. the permission to found the branch if this is provided by law;

3. an authorisation document certifying the authority of the director of the branch or a copy of a resolution appointing the director;

4. a copy of the articles of association or partnership agreement of the company, certified according to the laws of the home country, if submission of the articles of association or partnership agreement to a register is also required in the home country of the company;

4.1) information on the planned principal activity of the branch; [RT I 2006, 61, 456 - entry into force 01.01.2007]

5. data on the telecommunications of the company and the branch (telephone and fax numbers, e-mail and Internet home page address, etc.); [RT I 2006, 61, 456 - entry into force 01.01.2007]

6. [Repealed - RT I 2005, 57, 449 - entry into force 01.01.2006]

7. other documents provided by law.

(3) [Repealed - RT I 1998, 59, 941 - entry into force 10.07.1998]

(4) The petition for entry of a branch in the commercial register and other petitions submitted to the commercial register shall be signed by the director of the branch. If a branch has several directors, several directors shall sign the petition if they only have the right to represent the branch jointly.

(5) A branch shall be deemed to be founded as of its entry in the commercial register and dissolved as of its deletion from the commercial register.

387. Information to be entered in commercial register

The following shall be entered in the commercial register:

1. the business names of the branch and company;

2. the location and address of the branch and of the company;

3. [Repealed - RT I 2006, 61, 456 - entry into force 01.01.2007]

4. the register in which the company is entered and the registration number if entry in a register is prescribed by the law of the home country;

5. the legal form of the company;

6. the country under whose law the company operates in the home country;

7. the amount of share capital of the company if this is entered in a register of the home country of the company;

8. the date of adoption of the articles of association of the company and of amendments to the articles of association if these are entered in a register of the home country of the company;

9. [Omitted - RT I 1996, 40, 773 - entry into force 08.06.1996]

10. the names and personal identification codes of the managers of the branch; [RT I 2006, 61, 456 - entry into force 01.01.2007]

11. the directors who may represent the branch differently from the provisions of subsection 385 (3) of this Code;

11.1) the names and personal identification codes of the legal representatives of the foreign company and the time for creation and extinguishment of the right of representation; [RT I 2006, 61, 456 - entry into force 01.01.2007]

12. the beginning and end of the financial year of the company and whether the company must publish an annual report;

13. other information provided by law.

388. Accounting and submission of annual reports [RT I 2009, 54, 363 - entry into force 01.01.2010]

(1) A foreign company shall maintain separate accounts concerning the branch. Accounts concerning the branch shall be maintained pursuant to the requirements of the Accounting Act.

(2) The director of a branch of a foreign company shall submit the audited and approved annual report of the company to the commercial register of the registered office of the branch within one month after approval of the annual report of the company or seven months after the end of the financial year. The requirement for submission of reports does not apply to companies of the states which are Contracting Parties to the EEA Agreement if the legislation of the country of the registered office of the company does not require the annual report to be disclosed. [RT I 2009, 54, 363 - entry into force 01.01.2010]

(3) [Repealed - RT I 2009, 54, 363 - entry into force 01.01.2010]

(4) [Repealed - RT I 2009, 54, 363 - entry into force 01.01.2010]

(5) The report specified in subsection (2) of this section shall be prepared in compliance with the accounting frameworks specified in clause 17 (1) 2) of the Accounting Act. This requirement does not apply to companies of the Member States of the European Economic Area and the Organization for Economic Cooperation and Development (OECD). [RT I, 02.11.2011, 1 - entry into force 12.11.2011]

389. Bankruptcy or liquidation of company

Within fourteen days after commencement of bankruptcy proceedings or liquidation of the company, the director of the branch shall notify the registrar of the registered office of the branch, who shall make a corresponding notation in the commercial register.

390. Liquidation and deletion of branch from register

(1) A branch shall be deleted from the commercial register if:

1. the company is dissolved;

2. the company applies therefor;

3. the branch does not have a director and a director is not appointed within three months after a caution by the registrar;

4. the director of the branch does not submit the required annual report during the terms specified in § 388 of this Code and also does not do so during an additional term specified by the registrar. [RT I 2009, 54, 363 - entry into force 01.01.2010]

(2) A branch shall be deleted from the commercial register on the basis of a court ruling at the request of a person or agency entitled by law or any other interested person if the object of the activities or the activities of the branch are in conflict with the law, the constitutional order or good morals, or at the request of a creditor who proves that the creditor cannot satisfy the creditor’s claim which arises from operation of the company in Estonia by means of the assets of the company in Estonia, or on another basis provided by law. [RT I 2008, 59, 330 - entry into force 01.01.2009]

(3) After deletion of a branch from the register, the foreign company may continue its activities in Estonia as an undertaking only if it has a new branch entered in the register. Upon deletion of a branch from the register on the petition of a creditor, a new branch may only be entered in the register if the claim of the creditor is satisfied or if the written consent of the creditor for entry of the branch in the register is submitted.

(4) Before deletion of a branch from the register, the branch shall be liquidated, to which the provisions of §§ 369–372, 374–377, subsections 378 (1) and (2) and §§ 381–383 of this Code shall apply. After satisfaction of the claims of all creditors and the deposit of money, the liquidators shall prepare the final balance sheet, which shall be appended to the petition for deletion of the branch from the register.

Part IX - MERGER, DIVISION AND TRANSFORMATION

Chapter 31 - MERGER

Division 1 - General Provisions

391. Methods of merger

(1) A company (company being acquired) may merge with another company (acquiring company). The company being acquired shall be deemed to be dissolved.

(2) Companies may also merge such that they form a new company. In this case, the merging companies shall be deemed to be dissolved.

(3) Merger shall be effected without a liquidation proceeding.

(4) The assets of a company being acquired, including its obligations, shall transfer to the acquiring company upon merger. Upon foundation of a new company, the assets of the merging companies, including their obligations, shall transfer to it.

(5) The partners or shareholders of a company being acquired shall become partners or shareholders of the acquiring company upon merger. Upon foundation of a new company, the partners or shareholders of the merging companies shall become its partners or shareholders.

(6) Merging companies may be of the same class or of different classes of companies entered in the commercial register in Estonia unless otherwise provided by law.

392. Merger agreement

(1) In order to merge, the management boards of or the partners entitled to represent the companies shall enter into a merger agreement. Rights and obligations shall arise from the merger agreement after approval of the agreement pursuant to the procedure provided for in § 397 of this Code. A merger agreement shall set out:

1. the business names and registered offices of the companies;

1.1) an agreement to transfer all the assets of the company being acquired to the acquiring company in exchange for a transfer of shares of the acquiring company; [RT I 2005, 57, 449 - entry into force 01.01.2006]

2. the share exchange ratio for the companies and the amount of additional payments if additional payments are made;

3. the terms and conditions of transfer of the shares of the acquiring company;

4. the date as of which the transferred shares shall grant the right to a share of profit of the acquiring company and the special conditions affecting this right; [RT I, 02.11.2011, 1 - entry into force 12.11.2011]

5. the rights which the acquiring company will grant to the partners or shareholders of the company being acquired, including the holders of preferred shares and convertible bonds of a public limited company;

6. the consequences of merger for the employees of the company being acquired;

7. the date as of which the transactions of the company being acquired shall be deemed to be undertaken by the acquiring company (merger balance sheet date);

8. the remuneration paid to the auditor who audits the merger agreement and the advantages granted in connection with the merger to the members of the management boards and supervisory boards of the companies or the partners entitled to represent the companies.

(2) The sum of additional payments prescribed in the merger agreement which are to be paid by an acquiring private limited company or public limited company to the partners or shareholders of the company being acquired shall not exceed one-tenth of the sum of the nominal values or book values of their exchanged shares. [RT I 2010, 20, 103 - entry into force 01.07.2010]

(3) If all shares of a company being acquired are held by the acquiring company, the merger agreement need not indicate the information specified in clauses (1) 2)–4) of this section.

(4) A merger agreement shall be notarised.

(5) If an approved merger agreement is conditional and a condition is not met within five years after conclusion of the agreement, a company may terminate the agreement by giving at least six months’ advance notice of termination unless the merger agreement prescribes a shorter term for advance notice.

393. Merger report

(1) The management boards of or the partners entitled to represent the merging companies shall prepare a written report (merger report) which shall explain and justify legally and economically the merger and merger agreement, including the share exchange ratio and amount of additional payments if additional payments are to be made. Difficulties relating to valuation shall be referred to separately in the report.

(2) A merger report need not be prepared if the only share or all the shares of the company being acquired are held by the acquiring company, or if this is agreed to by all the partners of the merging company or all the shareholders of the merging public limited companies. [RT I, 02.11.2011, 1 - entry into force 12.11.2011]

(3) Merging companies may prepare a joint merger report. [RT I 2005, 57, 449 - entry into force 01.01.2006]

(4) If the acquiring company belongs to a group, the merger report shall also set out information necessary for the merger concerning the other companies belonging to the group. [RT I 2005, 57, 449 - entry into force 01.01.2006]

(5) A merger report need not set out information, publication of which may result in significant damage to a company being acquired or a company belonging to the same group with such company. In such case, the reason for failure to submit the information shall be set out in the report. [RT I 2005, 57, 449 - entry into force 01.01.2006]

394. Audit

(1) An auditor shall audit a merger agreement in the cases provided by law.

(2) An auditor need not audit a merger agreement if all shares of the company being acquired are held by the acquiring company, or if all the partners of the merging company or all the shareholders of the merging public limited companies agree that an auditor need not audit the merger agreement. [RT I, 02.11.2011, 1 - entry into force 12.11.2011]

395. Appointment of auditor

An auditor shall be appointed by the management board or the managing partners of the merging company. One auditor may be appointed for some or all of the merging companies.

396. Report and liability of auditor

(1) The auditor shall prepare a written report concerning the results of the audit of a merger agreement. The auditors who audit a merger agreement may prepare a joint report for the companies.

(2) A report shall indicate whether the share exchange ratio and additional payments indicated in the merger agreement are appropriate consideration for the partners or shareholders of the company being acquired, and whether the merger may bring about damage to the interests of the creditors of the company.

(2.1) Additionally, the auditor's report shall set out the method which was used upon determination of the exchange ratio of shares of the companies, the difficulties relating to determination of the exchange ratio, whether the used method is appropriate for determination of the exchange ratio and other methods for determination of the exchange ratio. If different methods are used upon determination of the exchange ratio, the exchange ratio in each method and the importance of results obtained on the basis of each method upon determination of the exchange ratio shall be set out.

(2.2) An auditor's report need not set out information, publication of which may result in significant damage to a company being acquired or a company belonging to the same group with such company. In such case, the reason for failure to submit the information shall be set out in the report.

(3) An auditor shall be liable, in the same manner as upon auditing an annual report, for the damage caused by inaccurate auditing of the merger agreement to the company, its shareholders or creditors.

(4) An auditor has the same rights and obligations upon auditing a merger agreement as upon auditing an annual report. An auditor also has the right to obtain information necessary for auditing from other companies which belong to the same group with the company being acquired. [RT I 2005, 57, 449 - entry into force 01.01.2006]

397. Merger resolution

(1) Rights and obligations shall arise from a merger agreement if the merger agreement is approved by all merging companies. A merger resolution shall be in writing.

(2) The partners or shareholders shall be provided with the opportunity to examine the merger agreement, merger report and auditor’s report at least two weeks before deciding on approval of the merger agreement unless otherwise provided by law.

(3) A partner or shareholder may demand a copy of the merger agreement or resolution.

(4) The management boards of or the partners entitled to represent the merging companies, prior to deciding on the approval of the merger agreement, shall notify the partners or the general meeting of all material changes in the assets of the company which occur in the interim between the entry into the merger agreement and deciding on the approval of the merger agreement. The management boards of or the partners entitled to represent the merging companies shall notify of the changes specified in the previous sentence also the management boards of or the partners entitled to represent the other merging companies, who shall notify of the above changes the partners or the general meeting of their companies. [RT I, 02.11.2011, 1 - entry into force 12.11.2011]

(5) The obligations specified in subsection (4) of this section need not be performed if the only share or all the shares of the company being acquired are held by the acquiring company, or if this is agreed to by all the partners or shareholders of the merging company. [RT I, 02.11.2011, 1 - entry into force 12.11.2011]

398. Contestation of merger resolution and compensation for damage

(1) At the request of a partner, shareholder or member of the management board or supervisory board, a court may declare invalid a merger resolution which is in conflict with the law, the partnership agreement or the articles of association if the request is submitted within one month after the resolution is made.

(2) The merger resolution of a company being acquired shall not be declared invalid on the basis that the share exchange ratio is fixed too low.

(3) If the share exchange ratio is fixed too low, a partner or shareholder may demand a refund from the acquiring company which may exceed the amount specified in subsection 392 (2) of this Code.

(4) The acquiring company shall pay a fine for delay on an unpaid refund in the amount provided by law as of entry of the merger in the register of the registered office of the acquiring company. The above does not preclude or restrict the right to file a claim for compensation of damages exceeding the amount of the fine for delay. [RT I 2005, 57, 449 - entry into force 01.01.2006]

399. Protection of creditors

(1) Immediately after a merger has been entered in the commercial register of the registered office of the acquiring company, the acquiring company shall publish a merger notice to the creditors of the merged companies in the publication Ametlikud Teadaanded, informing them of the possibility to submit, within six months after the publication of the notice, their claims to the acquiring company in order to receive a security.

(2) The acquiring company shall secure the claims submitted by the creditors of the companies being acquired within six months after the publication of the notice specified in subsection (1) of this section, if the creditors have no possibility to demand satisfaction of the claims and they prove that the merger may endanger the fulfillment of the claims. [RT I 2005, 57, 449 - entry into force 01.01.2006]

400. Submission of petition to commercial register

(1) The management board of or the partners entitled to represent a merging company shall submit, nor earlier than after one month of the approval of the merger resolution, a petition for entry of the merger in the commercial register. The following shall be appended to the petition:

1. a notarised copy of the merger agreement;

2. the merger resolution;

3. the minutes of the meeting of the partners or shareholders if the merger resolution is made at a meeting;

4. the permission for merger, if required;

5. the merger report or the agreements not to prepare one;

6. the auditor's report, if required, or the agreements not to prepare one;

7. the final balance sheet of the company being acquired if the company being acquired submits the petition;

8. [Repealed - RT I 2005, 57, 449 - entry into force 01.01.2006]

9. resolution of the Competition Board to grant permission for a concentration if the obligation to request such permission arises from the Competition Act;

10. if the shares of a merging company are registered in the Estonian Central Register of Securities, the confirmation of the registrar of the Estonian Central Register of Securities that the management board of the merging company has informed the registrar of the merger; [RT I 2006, 55, 407 - entry into force 01.01.2007]

11. the interim balance sheet or the agreements not to prepare one. [RT I, 02.11.2011, 1 - entry into force 12.11.2011]

(2) A registrar may enter a merger in the register only if the final balance sheet of the company being acquired is prepared as at a date not earlier than eight months before submission of the petition to the commercial register. The final balance sheet is prepared pursuant to the requirements established for the balance sheet that constitutes part of the annual report, and the approval of the final balance sheet and conducting the audit thereof is governed by the provisions concerning the approval of the annual report and conducting an audit. The final balance sheet shall be prepared using the same accounting policies and presentation which were used in the preparation of the balance sheet that constitutes part of the latest annual report. The final balance sheet shall be prepared as at the day preceding the merger balance sheet date. [RT I, 02.11.2011, 1 - entry into force 12.11.2011]

(3) In a petition, the members of the management board of or the partners entitled to represent the company shall confirm the merger resolution is not contested, or that a corresponding petition has been denied, or that the adoption of the merger resolution was not required. [RT I, 02.11.2011, 1 - entry into force 12.11.2011]

(4) The members of the management board of or the partners entitled to represent the acquiring company may also submit a petition for entry of the company being acquired in the commercial register.

401. Business name of acquiring company

(1) An acquiring company may continue activities under the business name of the company being acquired.

(2) If a partner or shareholder of the company being acquired is a natural person who no longer participates in the acquiring company, the acquiring company may continue to use his or her name in the business name only with the written consent of him or her, or of his or her successors.

402. Merger entry

(1) A merger shall be entered in the commercial register of the registered office of the acquiring company if it is entered in the commercial registers of the registered offices of all companies being acquired. Entries in the commercial registers of the registered offices of the companies being acquired shall indicate that the merger shall be deemed to be effected as of entry in the commercial register of the registered office of the acquiring company.

(2) The petitions related to merger shall be joined in one proceeding, which shall be processed by one registrar. If necessary, the registrar of the other registered office shall make the necessary documents available to the registrar processing the petitions. [RT I, 18.12.2012, 3 - entry into force 19.12.2012]

(3) If the shares of a company being acquired are registered with the Estonian Central Register of Securities, the registrar of the commercial register shall promptly notify the registrar of the Estonian Central Register of Securities of the merger. [RT I, 18.12.2012, 3 - entry into force 19.12.2012]

403. Legal effect of entry and compensation for damage caused by merger

(1) The assets of a company being acquired shall transfer to the acquiring company as of entry of the merger in the commercial register of the registered office of the acquiring company. After entry of the merger in the commercial register of the registered office of the acquiring company, entries regarding the transfer of assets shall be made in the registers on the petition of the acquiring company.

(2) A company being acquired shall be deemed to be dissolved as of entry of the merger in the commercial register of the registered office of the acquiring company. The registrar shall delete the company being acquired from the commercial register.

(3) The partners or shareholders of the company being acquired shall become partners or shareholders of the acquiring company as of entry of the merger in the commercial register of the registered office of the acquiring company, and their shares shall be exchanged for shares of the acquiring company. The rights of third persons with regard to the exchanged shares shall remain valid with regard to the shares of the acquiring company.

(4) The shares of a company being acquired which are held by the acquiring company or by the company being acquired itself, or by a person acting in his or her own name but at the expense of the company shall not be exchanged and shall become invalid.

(5) A merger shall not be contested after its entry in the commercial register of the registered office of the acquiring company.

(6) The members of the management board and supervisory board, or the managing partners of a merging company shall be solidarily liable to the company, the partners or shareholders, or the creditors of the company for any damage wrongfully caused by the merger. The provisions of the first sentence do not apply to damage, which is caused by the preparation and conducting of the merger to the shareholders of the public limited company being acquired by the members of the management board or supervisory board of the public limited company being acquired, if all the shares of the public limited company being acquired are held by the acquiring public limited company. [RT I, 21.03.2014, 3 - entry into force 31.03.2014]

(7) The limitation period for a claim specified in subsection (6) of this section shall be five years from entry of the merger in the commercial register of the registered office of the acquiring company. [RT I 2005, 57, 449 - entry into force 01.01.2006]

404. Compensation upon merger of different classes of companies

(1) Upon merger of companies of different classes, a partner or shareholder of the company being acquired who opposes the merger resolution may, within two months after entry of the merger in the commercial register of the registered office of the acquiring company, demand that the acquiring company acquire the exchanged share or shares of the partner or shareholder for monetary compensation. The monetary compensation shall be equal to the sum of money which the partner or shareholder would have received from the distribution of remaining assets upon liquidation of the company if the company had been liquidated at the time the merger resolution was made.

(2) The provisions of clauses 162 (2) 11) and 283 (2) 2) of this Code shall not apply to acquisition of shares by a company on the bases specified in subsection (1) of this section.

(3) The names of partners or shareholders who oppose the merger resolution and who wish to exercise the rights specified in this section shall be appended to the merger resolution. Opposition to the merger resolution shall be confirmed by each partner or shareholder by the signature of the partner or shareholder.

(4) If the acquiring company is a general partnership or limited partnership, the compensation specified in subsection (1) of this section may be demanded by a partner who departs from the company.

(5) An acquiring company shall pay a fine for delay on compensation in the amount provided by law as of entry of the merger in the commercial register of the registered office of the acquiring company.

(6) If a partner or shareholder who opposes the merger resolution does not demand the compensation specified in this section, the partner or shareholder may transfer a share or shares within two months regardless of the restrictions on disposal provided by law or prescribed by the articles of association. [RT I 2005, 57, 449 - entry into force 01.01.2006]

405. Merger whereby new company founded

(1) The provisions of this chapter together with amendments prescribed by law shall apply to a merger whereby a new company is founded.

(2) The provisions regarding a company being acquired shall apply to the merging companies, and the provisions regarding an acquiring company shall apply to the company being founded. The companies shall be deemed to be merged as of entry of the new company in the register.

(3) In the foundation of a new company, the foundation provisions for the class of company shall apply unless the provisions of this chapter provide otherwise. The founders shall be the merging companies.

(4) In addition to the provisions of subsection 392 (1) of this Code, the merger agreement shall set out the business name and registered office of the new company. The articles of association or partnership agreement of the company being founded, which shall be approved by the merger resolution, shall be appended to the merger agreement.

(5) The management board of or the partners entitled to represent a merging company shall submit a petition for entry of the merger in the commercial register. [RT I, 18.12.2012, 3 - entry into force 19.12.2012]

(6) The management boards of or the partners entitled to represent the merging companies shall submit a joint petition for entry of the new company in the commercial register of its registered office.

Division 2 - General Partnership or Limited Partnership as Merging Company

406. Meaning of contribution

For the purposes of this chapter, the contribution of a partner of a general partnership or limited partnership shall be deemed to be a share.

407. Content of merger agreement

(1) If the acquiring company is a general partnership or limited partnership, the merger agreement shall, in addition to subsection 392 (1) of this Code, set out with regard to each partner or shareholder of the company being acquired whether the partner or shareholder will become a general partner or limited partner of the acquiring company and the amount of the contribution of the partner or shareholder.

(2) A limited partner of a limited partnership, a shareholder of a private limited company or a shareholder of a public limited company being acquired who opposes the merger resolution shall become a limited partner of the acquiring company.

408. Merger report

A merger report need not be prepared if the partners of a merging general partnership or limited partnership are managing partners of the company.

409. Merger resolution

(1) A merger resolution shall be adopted if all the partners vote in favour.

(2) A partnership agreement may prescribe that the merger resolution shall be adopted if more than two-thirds of the partners vote in favour. If a partner of a general partnership or a general partner of a limited partnership being acquired opposes the merger resolution, the partner or general partner shall become a limited partner of the acquiring company.

(3) If a merger resolution may be made by a majority vote pursuant to the partnership agreement, a partner may demand an audit of the merger agreement at the expense of the company.

410. Liability of partners

(1) If a general partnership or limited partnership merges with a limited partnership, private limited company or public limited company, a general partner shall be liable for the obligations of the company being acquired for which the due date for performance has arrived or will arrive within five years after entry of the merger in the commercial register of the registered office of the acquiring company.

(2) If a general partnership or limited partnership merges with a limited partnership in which a general partner of the company being acquired is to become a general partner, the liability restriction prescribed in subsection (1) of this section shall not apply with regard to the general partner.

Division 3 - Private Limited Company as Merging Company

411. Audit of merger agreement

A shareholder of a merging private limited company may demand an audit of the merger agreement at the expense of the private limited company. The corresponding written request shall be submitted within ten days as of providing the opportunity to examine the documents specified in subsection 397 (2) of this Code. [RT I, 02.11.2011, 1 - entry into force 12.11.2011]

412. Merger resolution

(1) A merger resolution shall be adopted if at least two-thirds of the votes represented at the meeting of shareholders are in favour, and the articles of association do not prescribe a greater majority requirement.

(2) If a merger resolution is made pursuant to the procedure provided for in subsection 173 (2) of this Code, the resolution shall be adopted if at least two-thirds of the votes of the shareholders are in favour unless the articles of association prescribe a greater majority requirement. [RT I 2005, 57, 449 - entry into force 01.01.2006]

(2.1) If the special rights of a shareholder in managing a company are damaged or restricted by a merger, the consent of such shareholder is necessary for adopting the merger resolution. [RT I 2005, 57, 449 - entry into force 01.01.2006]

(2.2) If the acquiring company is a private limited company, the contribution for which shares has not been completely paid, the consent of all the partners or shareholders of the company being acquired is necessary for the adoption of the merger resolution. If the company being acquired is a private limited company, the contribution for which shares has not been completely paid, the consent of all the partners or shareholders of the acquiring company is necessary for the adoption of the merger resolution. [RT I, 02.11.2011, 1 - entry into force 12.11.2011]

(3) If at least nine-tenths of the share capital of a private limited company or of the share capital of a public limited company being acquired is held by the acquiring private limited company, approval of the merger agreement by a merger resolution of the acquiring private limited company shall not be required for merger. The own shares of the company being acquired shall not be taken into account in the determination of representation. The acquiring private limited company at least two weeks before deciding on the approval of the merger agreement by the company being acquired or, if the merger agreement need not be approved at the meeting of shareholders or the general meeting of the company being acquired, at least two weeks before the creation of the rights and obligations arising from the merger agreement shall perform the disclosure obligations specified in subsection 397 (2) of this Code. A merger resolution is necessary if this is demanded within the term specified in the previous sentence by shareholders of the acquiring private limited company whose shares represent at least one-twentieth of the share capital and unless the articles of association prescribe a lower representation requirement. [RT I, 02.11.2011, 1 - entry into force 12.11.2011]

(4) If the only share of the private limited company being acquired is held by the acquiring private limited company or public limited company, the approval of the merger agreement by the merger resolution of the private limited company being acquired is not required for the merger. The own share of the private limited company being acquired shall not be taken into account in the determination of representation. [RT I, 02.11.2011, 1 - entry into force 12.11.2011]

413. Increase of share capital of acquiring company

(1) Upon an increase of share capital of an acquiring private limited company in connection with merger, other shareholders shall not have the pre-emptive right to the acquisition of shares (§ 193).

(2) In addition to the documents specified in subsection 196 (1) of this Code, notarised copies of the merger agreement and the merger resolutions of the merging companies shall be appended to the petition for entry of the increase of share capital in the commercial register.

(3) In case of the increase of the share capital of the acquiring private limited company, the merger shall not be entered in the register of the registered office of the acquiring private limited company before the increase of the share capital has been entered in the commercial register. [RT I, 02.11.2011, 1 - entry into force 12.11.2011]

(4) The acquiring private limited company shall not increase the share capital for conducting the merger to the extent to which the shares of the company being acquired are held by the acquiring private limited company or by the company being acquired itself, or by a person acting in his or her own name but at the expense of the company. [RT I, 02.11.2011, 1 - entry into force 12.11.2011]

414. Transfer of shares upon merger

(1) An acquiring private limited company shall first transfer its own share of the acquiring private limited company to the partners or shareholders of the company being acquired in the exchange of their shares.

(2) If the own share of an acquiring private limited company is transferred to the partners or shareholders of the company being acquired, it may be divided without observing the restrictions on transfer provided by law and the articles of association and without taking account of the minimum permitted nominal value of a share. [RT I 2005, 57, 449 - entry into force 01.01.2006]

415. [Repealed – RT I 2007, 65, 405 - entry into force 15.12.2007]

416. Valuation of assets to be transferred

(1) If the acquiring company is a private limited company whose share capital is to be increased in connection with the merger or if a new private limited company is to be founded upon merger, the procedure prescribed for valuation of a non-monetary contribution of a private limited company (§ 143) shall be used to assess whether the assets of the companies being acquired are sufficient for the increase of share capital or for the share capital of the private limited company being founded. Documents certifying the valuation of the assets shall be submitted to the commercial register together with the merger petition. [RT I, 02.11.2011, 1 - entry into force 12.11.2011]

(2) The provisions of subsection (1) of this section shall not apply if the merger agreement is audited by an auditor. In auditing the merger agreement, the auditor shall also provide the assessment of the fact whether the assets of the merging companies are sufficient for increasing the share capital or for the share capital of a private limited company being founded. [RT I, 02.11.2011, 1 - entry into force 12.11.2011]

417. Merger whereby new private limited company founded

(1) The provisions of § 138 shall not apply to a merger of companies whereby a new private limited company is founded.

(2) Upon a merger whereby a new private limited company is founded, the merger agreement shall, in addition to the provisions of subsections 392 (1) and 405 (4) of this Code, set out the amount of share capital and the members of the management board of the private limited company being founded. If a supervisory board is to be formed, the members of the supervisory board shall also be set out.

Division 4 Public Limited Company as Merging Company

418. Audit

Upon merger of a public limited company, an auditor shall audit the merger agreement.

419. Preparation of general meeting

(1) At least one month before the general meeting to decide on merger, the management board shall present the following to the shareholders for examination at the registered office of the public limited company:

1. the merger agreement;

2. the three preceding annual reports of the merging companies; [RT I 2009, 13, 78 - entry into force 01.07.2009]

3. the merger reports of merging companies; [RT I, 02.11.2011, 1 - entry into force 12.11.2011]

4. the sworn auditor's reports of merging companies. [RT I, 02.11.2011, 1 - entry into force 12.11.2011]

(2) At the request of a shareholder, he or she shall be immediately provided free of charge either complete or partial copy, based on the shareholder's wish, of the documents specified in subsections (1) and (3) of this section. Upon the shareholder's consent, the copy may be sent to his or her e-mail address. [RT I, 02.11.2011, 1 - entry into force 12.11.2011]

(2.1) If a public limited company pursuant to § 63 of this Code has provided to the registrar its homepage address, to fulfill the requirements specified in subsections (1) and (2) of this section it may publish the documents on its homepage in a way which provides the opportunity for saving and printing these. The documents shall be available on the homepage of the public limited company within one month prior to the general meeting and until the end of the general meeting. [RT I, 02.11.2011, 1 - entry into force 12.11.2011]

(3) If the latest annual report of a merging public limited company is prepared in respect to financial year, which ended earlier than six months prior to the entry into the merger agreement, the balance sheet (interim balance sheet) compliant with the requirements established for the balance sheet that constitutes part of the annual report shall be prepared as at no earlier than the first day of the third month preceding the entry into the merger agreement. The interim balance sheet shall be prepared using the same accounting policies and presentation which were used in the preparation of the balance sheet that constitutes part of the latest annual report. The interim balance sheet shall be submitted to shareholders for examination pursuant to the procedure specified in subsections (1)–(21) of this section. The interim balance sheet need not be prepared if all the shareholders of the merging public limited companies agree thereto. Instead of the interim balance sheet, the half-yearly report disclosed pursuant to § 18411 of the Securities Market Act may be submitted to shareholders for examination. [RT I, 02.11.2011, 1 - entry into force 12.11.2011]

(4) At least one month prior to the general meeting deciding on the merger, the management board shall submit the merger agreement to the registrar of the commercial register or disclose it on the homepage of the public limited company. Upon the disclosure of the merger agreement on the homepage of the public limited company, it shall be available to the public free of charge until the end of the general meeting. In addition, the management board shall publish in the official publication Ametlikud Teadaanded a notice concerning the entry into the merger agreement. The notice shall indicate where or at which homepage address it is possible to examine the merger agreement and other documents specified in subsection (1) of this section and receive copies of these documents. Upon the disclosure of the merger agreement on the homepage of the public limited company, the notice shall also indicate the disclosure date of the merger agreement. [RT I, 02.11.2011, 1 - entry into force 12.11.2011]

(5) If the public limited company is required to make public the regulated information in the central recording system for information specified in subsection 1846 (5) of the Securities Market Act, the merger agreement may be disclosed in such system instead of the homepage of the public limited company. In the remaining part, subsection (4) of this section shall apply. [RT I, 02.11.2011, 1 - entry into force 12.11.2011]

420. Organisation of general meeting

(1) At the general meeting, the management board shall explain the legal and economic consequences of the merger, including the exchange of shares.

(2) At the general meeting, the supervisory board shall present its opinion concerning the merger.

(3) At the general meeting, information concerning circumstances related to other merging companies shall also be given to a shareholder at the request of the shareholder.

421. Merger resolution

(1) A merger resolution shall be adopted if at least two-thirds of the votes represented at the general meeting are in favour, and the articles of association do not prescribe a greater majority requirement.

(2) If a public limited company has several classes of shares, the merger resolution shall be adopted if, in addition to the provisions of subsection (1) of this section, at least two-thirds of the holders of each class of shares vote in favour of the resolution, and the articles of association do not prescribe a greater majority requirement. If a resolution is made pursuant to the procedure provided for in subsection 297 (2), at least two-thirds of the votes represented of each class of shares at the general meeting must vote in favour of the resolution unless the articles of association prescribe a greater majority requirement.

(3) If the acquiring company is not a public limited company, the holders of preferred shares and convertible bonds of the public limited company being acquired shall participate in the determination of representation and in voting on the same bases as the shareholders.

(4) If at least nine-tenths of the share capital of a private limited company or of the share capital of a public limited company being acquired is held by the acquiring public limited company, approval of the merger agreement by a merger resolution of the acquiring public limited company shall not be required for merger. The own shares of the company being acquired shall not be taken into account in the determination of representation. The acquiring public limited company at least one month before deciding on the approval of the merger agreement by the company being acquired or, if the merger agreement need not be approved at the meeting of shareholders or the general meeting of the company being acquired, at least one month before the creation of the rights and obligations arising from the merger agreement shall perform the disclosure obligations specified in § 419 of this Code. A merger resolution is necessary if this is demanded within the term specified in the previous sentence by shareholders of the acquiring public limited company whose shares represent at least one-twentieth of the share capital and unless the articles of association prescribe a lower representation requirement. [RT I, 02.11.2011, 1 - entry into force 12.11.2011]

(5) If all the shares of the public limited company being acquired are held by the acquiring private limited company or public limited company, the approval of the merger agreement by the merger resolution of the public limited company being acquired is not required for the merger. The own shares of the public limited company being acquired shall not be taken into account in the determination of representation. The public limited company being acquired shall at least one month before the creation of the rights and obligations arising from the merger agreement perform the disclosure obligations specified in subsections 419 (4) and (5) of this Code. [RT I, 02.11.2011, 1 - entry into force 12.11.2011]

421.1. Takeover of shares for conducting merger

(1) If the acquiring public limited company holds at least nine-tenths of the share capital of the public limited company being acquired, the general meeting of the public limited company being acquired, on the application of the majority shareholder, may decide within three months as of the entry into the merger agreement on the takeover of the shares held by the minority shareholders of the public limited company being acquired by the majority shareholder pursuant to the procedure specified in §§ 3631–36310 of this Code taking into account the peculiarities provided for in this section.

(2) In the determining the amount of the share capital represented by the majority shareholder's shares, the second sentence of subsection 3631 (2) of this Code shall not apply.

(3) A resolution on the takeover of shares belonging to minority shareholders shall be adopted if at least nine-tenths of the votes represented at the general meeting by shares are in favour.

(4) The merger agreement shall state that due to the merger the takeover of the shares held by the minority shareholders of the public limited company being acquired is taking place.

(5) The merger agreement shall be submitted to shareholders for examination pursuant to the procedure specified in § 3635 of this Code.

(6) A notarised copy of the merger agreement shall be enclosed to the notice specified in § 36310 of this Code. [RT I, 02.11.2011, 1 - entry into force 12.11.2011]

422. Increase of share capital of acquiring public limited company

(1) Upon an increase of share capital of an acquiring public limited company in connection with a merger, other shareholders shall not have the pre-emptive right to the acquisition of shares (§ 345).

(2) In addition to the documents specified in subsection 343 (1) of this Code, notarised copies of the merger agreement and the merger resolutions of the merging companies shall be appended to the petition for entry of the increase of share capital in the register.