The draft of the Commercial Code and the Law of Property Act amendment act has been prepared in cooperation of the Development Fund and the Ministry of Justice, with which the regulation of the Commercial Code concerning companies is wished to be changed to correspond to the needs of startups.
The amendments of the law should make the Estonian business environment significantly more attractive for foreign investors and concurrently the amount of investments into Estonian startups would increase.
How will the business environment of startups improve?
The planned changes affect all companies, but primarily starting companies and potential investors.
For startups thanks to the legislative amendments involving financing will become significantly faster and simpler. The planned amendments give startups broadened opportunities for the involvement of capital in Estonia. Starting businesses are thereby wished to be motivated to stay in Estonia.
More important changes for a company
1. Facilitating the conditional increase of share capital and the issuing of convertible debt security.
Thanks to the given amendment it will be easier for startups to involve capital in the future.
2. Giving the management or the supervisory board the right to increase capital
In the future shareholders can give the management or the supervisory board the increase of share capital in a specified amount. This amendment allows the governing bodies of the company to react to the capital’s needs quicker and more effectively.
3. Alleviation of the restrictions regulating obtaining of own shares
As a result of the given amendment the allowed limit of obtaining own shares would increase to 1/3 instead of the current 1/10 share capital.
4. The specification of the regulation on special rights in relation to shares
On the draft coming into force the shareholders of the company can in the future agree on special rights for specific shareholders in the articles of association. Such special rights would for example be a right of veto in making decisions or preferential rights on receiving dividends.
5.Simplification of the decisions regulating the holding of a supervisory board meeting and adoption of decisions
The members of the supervisory board could also hold the meetings when in different locations where necessary, by participating in the meeting through means of communication.
When is the draft planned to come into force?
The amendments concerning companies are planned to be brought into force on the 1st of July 2015.
To get additional information contact the lawyers of 1Office Estonia
on the number +372 631 1118 or write to contact@1office.ee
