Estonia together with Latvia is part of the same ex-Soviet block and has undergone massive change in the early ‘90ies when the Company Law was also amended. In this economic context new patterns for company management emerged in Estonia. New companies such as semi-private structures have begun to play a major role in the country’s development. The main goal the Estonian government was focused on was to attract foreign investors that would lead to an ulterior economic enhancement. However, after 1993 privatization would encompass most of the previous state-owned Estonian companies, thus leading to an important change in the companies’ management structure.
In terms of company management, a company’s shareholders are considered the most important part in an enterprise. According to the Estonian Commercial Code the shareholders’ equality and equal treatment are guaranteed by the laws and a share means a vote. Shareholders are requested to assemble a general meeting at least once a year. The shareholders are allowed to make decisions about a company’s future only at the above mentioned general meetings. Shareholders in Estonian companies have preemptive rights when the shares are issued. The Commercial Code in Estonia states that foreign shareholders benefit from the same protection domestic shareholders do.
The Aktsiaselts or the management board of an Estonian company is formed by a managing director acting as a chairman of the board and his management team. The management board will represent a company in business relations with other companies. According to the latest European trends in corporate governance the management board will have a clearly distinct role from the supervisory board’s role. The Estonian Commercial Code states that a member of the management board cannot be part of the supervisory board, as well.
The supervisory board acts as the representative of the shareholders in Estonian companies. It is the main corporate governance body and it is in charge with defining investment strategies, priorities, approves the company’s budget and controls the management board. The supervisory board is usually composed of three highly experienced members that are not necessarily shareholders. Compared to other countries, Estonia does not have employees’ representatives in the supervisory board.
Corporate governance regulations and company management are quite simple and follow the OECD (Organization for Economic Cooperation and Development) model. Our Estonian law firm can provide all the details about company management. You can also contact us for details about company registration in Estonia.
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