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Amendments to the Commercial Code

23.04.2008

On 15 April, changes to the Commercial Code entered into force, harmonising Estonian law with the Directive 2006/68/EC of the European Parliament and of the Council amending Council Directive 77/91/EEC as regards the formation of public limited liability companies and the maintenance and alteration of their capital ("capital requirements directive").

Among others, the following changes have been made to the Code: Both private and public limited liability companies may now release certain objects of non-monetary contribution from mandatory evaluation by an auditor, but are required to comply with additional oblications regarding publication. Companies may now permanently own or take as security  their own shares only to the extent not exceeding 1/10 of the company's share capital. In addition to satisfaction of claims, a company's creditors may now require guarantee for their claims in case the share capital of the company is reduced.

Subsidiaries are now prohibited to give loans to their parent companies, shareholders of their parent companies and members of the same group if the loan's purpose is acquisition of shares of the company. Shareholders can now grant the company a right to acquire its own shares for a period of up to five years, instead of one year as was previously possible. At the same time, regulation for giving such a right has been elaborated, for example the minimum and maximum amounts payable for a share must also be determined by the shareholders.

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