From the above it becomes evident why there is a vocal opposition to the earlier share transfer rules had been gathered. So, in the beginning of August 2020, the long-awaited legal change concerning share transfers entered into force.
One of the improvements to the law is that the agreements to the effect of stipulating future terms and conditions for share transfers that is, to use formal legal definition - the transaction constituting an obligation do not anymore require a notarized format. In practice this leniency concerns quite a wide range of corporate and M&A arrangements such as the shareholders’ agreements, option agreement, investment agreements, debt to equity conversion agreements.
Under the amended law, the notarized form is however continually foreseen for the actual transfer of the ownership or pledge of share (disposition for the transfer). There are, however, the following important exceptions to the rule:
Private limited company should have least EUR 10 000 paid- in share capital at
Respective provision in the articles of association
Consent of all shareholders for waiving the notarized format of share transfers i.e. for the respective amendment of the articles of association.
All in all, the above legal change could be considered as good news. However, in order to fully implement the waiver of the notarized format the shareholders should consider whether it would be worthwhile to change the articles of association combined with an increase in paid-in share capital above the EUR 10 000 threshold.
The other legislative change handles e-meetings. Read more in our blog: Formal recognition of e-meetings as a corporate meeting forum in Estonia.