To provide companies with legitimate options to carry out their daily management, the Estonian Bar Association, the Estonian Insurance Association, Nasdaq Tallinn, the Estonian Private Equity and Venture Capital Association, FinanceEstonia, the Chamber of Notaries and the Estonian Employers’ Confederation approached the Legal Affairs Committee of the Riigikogu and the Justice Minister on 27 March 2020 with a proposal to allow digital meetings and extending the deadline for filing 2019 annual reports.
Today, most joint-stock companies in Estonia are facing a situation where they are unable to pass resolutions in cases when the decision-making power lies with the general meeting, such as extending the mandate of acting supervisory board members or electing new ones. This may in turn produce a situation where extending the mandates of acting managing board members or appointing new board members when their mandates expire becomes nothing short of impossible, so that the company’s daily operations become challenged.
In addition, many types of company face a situation where they find it impossible to, for example, guarantee that annual reports are approved and filed on time.
Currently, Estonian law does not allow meetings of shareholders, stockholders and members to be held via digital means. Shareholders, stockholders and members should be enabled to attend meetings personally or via an authorised representative. While companies may allow for the option to vote digitally or by post in their statute, this will not exempt the company from the obligation to physically conduct meetings. The only exception is passing resolutions in written form, if consensually approved by all shareholders or stockholders.
The current situation requires that all companies should be allowed the option to conduct digital meetings of their governing bodies. In addition, the right to pass resolutions without convening a meeting ‒ currently available only to limited-liability companies and co-operative housing associations ‒ should be extended to all companies. The option to cast digital votes should also be made more flexible, allowing it by default for all companies.
Additionally, it is important to extend the deadline for filing 2019 annual reports, since many companies are currently unable to hold the meetings required to approve the documentation due to the state of emergency.
Based on the 27 March 2020 proposal, the Business Law Commission of the Estonian Bar Association has additionally prepared and submitted to the Legal Affairs Committee of the Riigikogu and the Justice Minister a draft law amending the Commercial Code, the Non-profit Associations Act, the Foundations Act and the Commercial Associations Act, as well as a draft explanatory memorandum, so as to expedite and facilitate drafting legislation.
Sorainen has been contributing to the initiative through partner Piret Jesse, who serves on the Estonian Bar Association’s board and Business Law Commission as well as the Justice Ministry’s Corporate Law Audit Commission.
