The special measures put in place due to coronavirus and the resulting restrictions of movement in Estonia have created a situation where it is difficult for companies to hold shareholders’ meetings in the manner provided in their articles of association.
Usually, in order to adapt a valid resolution of the shareholders companies have a requirement in the articles of association to hold a general meeting, which are normally held in person. Thus only a few companies have included an option of a virtual shareholders’ general meeting – e.g. using an instant messaging service or electronic voting application.
Rules must be followed to adapt resolutions
In order to avoid later disputes and to ensure that the resolutions of the shareholders are valid, the requirements set out in the articles of association and law must be followed and complied with, regardless of the emergency situation.
The Commercial Code lays down specific rules for organizing the general meetings and adopting the resolutions of the shareholders, which, in certain cases, may be set out differently in the articles of association. If the requirements set out in law or articles of association are violated when adopting a shareholders’ resolution, the resolution may be invalid or revoked.
Resolutions can be adapted without calling the meeting of shareholders
According to the law, shareholders can adopt resolutions without calling a meeting. In this case, the resolutions must be in writing and signed by all the shareholders. It is required that every shareholder agrees with the resolution. If not, then this resolution can’t be adopted without calling a general meeting.
If the company has large number of shareholders, other shareholders may authorize one shareholder to represent their interests, in which case the ones in the meeting will be the authorized shareholder and the recording secretary. In other words, in the emergency situation, it is possible to hold a general meeting and also adopt valid resolutions.
We recommend the companies to make the necessary amendments to their articles of association so that general meetings could be held in any situations and without the physical presence of a shareholder, e.g. using virtual space and solutions.
If you need any help drafting the necessary amendments to the articles of association or any advice on commercial law, please feel free to contact our legal manager Kristel Tiits: firstname.lastname@example.org.