The Estonian Commercial Code which is the main legislation regarding mergers and acquisitions allows for company reorganization between domestic companies or a local and a foreign company, also called cross-border mergers or acquisitions. As a member state of the European Union, cross-border mergers and acquisitions in Estonia benefit from fiscal neutrality.
According to the Commercial law, Estonian companies must follow the next steps in order to conclude a merger and acquisition transaction:
The first step when convening an M&A transaction in Estonia is to make a merger plan. The merger plan will usually contain the same provisions no matter the type of transaction, except for transnational transactions that must contain specifics about how the assets and liabilities were evaluated and information about the effects of the transaction on the creditors and employees. The decision of concluding a merger must be approved by two thirds of all the participants in the meeting. The employees must also be notified by a directors’ report 30 days prior to the shareholders’ meeting. Cross-border mergers must be published in the Official Gazette 30 days prior to the shareholders’ meeting. It is also required to be specified that independent experts will verify the fairness of the M&A transaction. The legislation also offers shareholders that do not agree with the merger the possibility of withdrawing and redemption of their shares from the Estonian company. The procedure will be concluded once the merger deed has been drafted and notarized. The merger deed will then be submitted with the Estonian Companies Register.
For detailed information about the legislation on mergers and acquisitions you can contact our law firm in Estonia.
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