Estonia 104 - Managing a Business
Next up in our overviews of the legal environment of Estonia, we describe managing a business in Estonia.
Members of Management and Supervisory Board
Members of management and supervisory boards must be natural persons with active legal capacity. They are required to perform their obligations with the diligence normally expected from a member of a directing body and to be loyal to the company.
Right of Representation
The management board is the legal representative of the company. The company may be represented individually by each member of its management board unless the law or the articles of association prescribe that the company may only be represented jointly by members of the management board.
Liability of Members of Management and Supervisory Board
Members of a management or supervisory board who cause damage to the company by violation of their duties (e.g. by breaching their duty of care) are jointly and severally liable to the company. A member of a management or supervisory board will not suffer liability if he or she acts pursuant to a lawful resolution of the general meeting or any other competent body or if he or she proves that he or she performed his or her obligations with due diligence. A claim for payment of compensation to the company for damage may also be submitted by a creditor of the company if the assets of the company are not sufficient to satisfy the claims of the creditor.
Liability of Shareholders
A shareholder may be liable for damage caused to the company, another shareholder or third persons by carelessness, gross negligence or an intentional act. A shareholder is not liable for any damage caused if the shareholder did not participate in the adoption of the respective resolution or if the shareholder voted against the resolution. If the shareholders adopt a resolution on a matter that would normally be in the capacity of the management or supervisory boards, they may be liable as if they were members of the management or supervisory board.
Liability for Influencing the Activities of the Company
A person who influences a member of a management or supervisory board to act in a manner that is contrary to the interests of the company, may be liable for compensation of damages.
An annual report which consists of a management report and annual accounts and which has been approved by the shareholders must be submitted to the Commercial Register together with a profit distribution proposal and auditor’s report, if compulsory, not later than 6 months after the end of the financial year.last edited by
Information posted above is intended as a general guide and does not constitute legal advice.