The restrictions of movement during the corona crisis have not only rock people’s everyday lives and economies in the larger sense, but also created a very peculiar problem for execution important and occasionally also legally mandatory business decisions, since the decision-making bodies were simply prevented to meet face-to-face due to the public restrictions on movement. Hence at the height of the pandemia, the Estonian legislator swiftly introduced new remedies in order to cure the situation.
The law on legal entities decision-making processes used to be scattered in Estonia to say the least. For some legal entities like private limited companies (OÜs in Estonian) the law was more generous – the written voting and decision-making was already fully acceptable. Additionally, OÜ’s and public limited companies could benefit from the option of electronic voting before and during the shareholders’ meeting, however subject to certain conditions – respective regulations in the article of association and electronically signing the votes. Whereas other legal persons, like non-profit organizations’ or foundations’, decision—making process was basically limited to convening physical meetings.
Despite that the technology for video and audio conferences (Teams, Zoom, GoToWebinar etc.) were available and heavily used during the pandemic period, there was no legal framework to consider corporate or organizational decision-makings via such channels as official. That was the case until the end of May 2020 when the relevant changes to the law were adopted. According to new regulations a member of a body of any legal entity person may participate in a meeting and exercise its voting rights via electronic means, without being physically present at the meeting when having recourse to two-way real-time communication or to other similar electronic means, which allows the person to speak, hear and vote. Henceforth the opportunity to participate via electronic means applies for all legal entities in Estonia unless it is prohibited by the law or articles of association of the legal entity. The requirement for electronically signing the votes has also been removed from the new legislation.
Even though it is not legally required to regulate the electronic meetings and voting rules in the articles of association, it might nevertheless be advisable to specify the practical rules concerning electronic meetings as these are not provided for in the law e.g. the criteria and selection of the platform, signing of the minutes and list of participants.
Also the companies whose articles of associations already state the rules for electronic voting based on the previous law, are strongly advised to review the said clauses and reconsider whether to continue with the more stringent rule of signing the votes electronically or adopt more lenient procedures for voting as nowadays permitted.
Estonian legislator has also made changes regarding share transfers of private limited companies. Read more in our blog: Legislative changes in share transfers in Estonia.