Commercial Code Brought in Line with Capital Requirements Directive
- Estonia
- 09/01/2008
- Raidla Lejins & Norcous
On 20 March 2008, the Estonian Parliament (Riigikogu) passed the Act Amending the Commercial Code and the Council Regulation (EC) No 2157/2001 on the Statute for a European company (SE) Implementation Act. The aim of the act is to bring Estonian law into compliance with the provisions of the current EU capital requirements directive. The main changes pertain to provisions regulating the use of securities as items of non-monetary contribution. Under the new regulation companies may forgo a mandatory audit of certain items of non-monetary contribution. Namely, an auditor need not audit the valuation of a non-monetary contribution of securities if they have been valued on the basis of their weighted average price, which has been used in trading the securities on one or several regulated securities markets during the last three months. The company must meet additional disclosure requirements in this case, by publishing a relevant notice in the State Gazette and forwarding it to the commercial register within one month. The amendments also bring the Commercial Code provisions applying to the acquisition and transfer of shares and the acquisition of assets from a shareholder in line with the capital requirements directive. Provisions concerning prohibited loans are also amended to make clear that companies are not under any circumstances allowed to grant or guarantee loans for acquisition of their own shares or the shares of their parent companies. Further, the period for which the general meeting may grant permission to acquire own shares is extended from one year to five years. The amendments entered into force on 14 April 2008.
