company set-up and management key challenges sutherland | 03 may 2017 | establishment of a company...

Company set-up and management – key challenges

3 May 2017

Maivi Ots

Partner, Eversheds Sutherland Ots & Co

Peter Salovaara

Partner, Eversheds Finland

Eversheds Sutherland | 03 May 2017 |

Aktsiaselts (AS, public limited company)

▪ Minimum capital: EUR 25 000

▪ Management Board and Supervisory Board mandatory

▪ Shares electronically registered

▪ Shares with or without nominal value

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Main legal forms of legal entities

Osaühing (OÜ, private limited company)

▪ Minimum capital: EUR 2500

▪ Management Board mandatory, Supervisory Board optional

▪ Shares could be electronically registered at discretion of the company, automatically not registered electronically

▪ Each shareholder has only one share

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Establishment of a company

▪ Notarised application or establishment agreement and the Articles of Association

▪ Via state portal www.rik.ee –

▪ available for e-residents

▪E-residency: https://e-estonia.com/e-residents/about/

▪ Company is established as of its entry into the Commercial Register

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http://www.rik.ee/

https://e-estonia.com/e-residents/about/


Requirements relating to residency of Management and Supervisory Board members

▪ There could be only Finnish Management and Supervisory Board members.

▪ If at least half of the Management Board members are not EU, EEA or Swiss residents, a contact person must be appointed.

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Division of main tasks

Corporate Governance

▪ Key tasks of the Management Board (min 1 person)• Unlimited representation

• Daily management

▪ Key tasks of the Supervisory Board (min 3 persons)• Supervision of the activities

• Approval of the transactions beyond daily scope of activities (list can be elaborated in the Articles of Association)

▪ Key tasks of the shareholders• AS – limited to the items listed in the law

• OÜ – competence can be elaborated in the Articles of Association

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Short comparison to Finland

Corporate Governance

▪ Board of Directors (min 1 ordinary and 1 deputy)• Unlimited representation, save for matters that require shareholders meeting decision

▪ Managing Director• Daily management

• Not an employee but a corporate organ

▪ Key tasks of the shareholders• No actual obligations towards the company (report update of contact info)

• Articles of Association can give obligations and state requirements

• By Shareholders Agreement obligations etc. can be agreed upon

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Methods for ensuring control over the activities of the Management Board

▪ Management Board vs. managing director working under employment contract, acting on the basis of Power of Attorney

▪ joint representation, entered into the Commercial Register, power of attorney for specific tasks

▪ Procurator- right to represent in commercial contracts, save for sale of real estate

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Methods for ensuring control over the activities

▪ Board vs. Managing Director

▪ Representation rights to be entered into trade register

▪ cannot register for specific tasks

▪ according to Articles of Association

▪ Procurator - general right to represent the company, certain limitations re real estate

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Short comparison to Finland


Shareholders Agreement

▪ AS- simple written format

▪ OÜ- simple written format or notarised format• Notarised format required, if shares are not

electronically registered and provisions regarding transfer of shares are included. If not followed –contract is null and void

▪ Mandatory provisions of the Estonian Commercial Code will apply regardless of contractual arrangements between the parties

▪ Examples:• Drag-along/tag-along

• Corporate bodies and competencies of different bodies

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Shareholders Agreement

▪ If all shareholders are Finnish? Can you make a Finnish form SHA?

▪ No, risk that contract is null and void

▪ Consider mandatory Estonian provisions

▪ Seek local advice

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Personal liability of the Management Board and the Supervisory Board in front of the Company

▪ Members of the board who cause damage to the company by violation of their obligations shall be solidarily liable for compensation for the damage caused. A member of the board is released from liability if he or she proves that he or she has performed his or her obligations with due diligence.

▪ The limitation period - five years

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Liability in front of the creditors of the Company

▪ Affects Management Board members

▪ Breach by the Management Board member:• Breach of provisions of the law, envisaged for

protection of the creditor

• Wilful breach of good morals

▪ Damages caused: increase of debt attributable to the Management Board members

▪ The limitation period – 3 years

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Methods for mitigating personal liability risks

▪ Division of tasks within board members

▪ Resignation – valid as of its delivery

▪ D&O insurance (not widely used)

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Methods for mitigating personal liability risks

▪ Same methods as in Estonia

▪ Liability cases have increased, not a theoretical risk in Finland

▪ Liability insurance widely used

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eversheds-sutherland.comThis information pack is intended as a guide only. Whilst the information it contains is believed to be correct, it is not a substitute for appropriate legal advice. Eversheds Sutherland (International) LLP can take no responsibility for actions taken based on the information contained in this pack.

© Eversheds Sutherland 2017. All rights reserved.

Maivi Ots

Tel.: +372 622 9990E-mail: [email protected]

Peter Salovaara

Tel.: +358 40 507 6317E-mail: [email protected]

company set-up and management key challenges sutherland | 03 may 2017 | establishment of a company...

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