List of shareholders and transfer of shares of a private limited company
Pursuant to the Commercial Code, a shareholder may transfer their share to another shareholder or to a third person.
It may be prescribed in the articles of association that the transfer of a share is permitted exclusively if an additional condition is fulfilled, primarily that a resolution of the other shareholders, the management board, the supervisory board, or another person is required to transfer a share. If the requirement of this resolution is required in the articles of association, you must first apply for this decision to be made, whereby you will be given consent or a refusal to transfer the share.
Upon transfer of a share to a third person, the other shareholders have the right of pre-emption for one month after presentation of the transfer agreement. The seller submits the sales contract to the management board of the company, which promptly notifies the other shareholders of entry into the sales contract. It may be prescribed in the articles of association that the right of pre-emption is not applied to the transfer of shares. A transaction constituting an obligation for the transfer of a share does not require a form, but a disposition must be notarially authenticated by an Estonian notary. The requirement of notarisation does not apply to the transfer of shares registered in the Estonian Register of Securities or if the formal requirement has been waived in the articles of association.
As an option to simplify the transfer, a private limited company can waive the formal requirement for a disposition via the articles of association. To do this, the share capital of the private limited company must be at least 10,000 euros and it must be fully paid. A corresponding amendment to the articles of association must then be made and entered in the business register, together with a note on the waiving of the formal requirement of the disposition. The articles of association can provide for a suitable form for the transfer of shares, which must at least be in a form that can be reproduced in writing.
Shares in a private limited company are recorded in a list of shareholders. There are three ways to keep a list of shareholders: 1. the list of shareholders is kept by the business register; 2. the list of shareholders is kept by the management board of the private limited company; 3. the shares are registered in the Estonian Register of Securities.
- Keeping a list of shares in the business register
As a general rule, the disposition of a transfer of a share must be notarised. In this case, the list of shareholders of the private limited company is kept in the business register. In such a case, the transfer of the share will be deemed to have been completed by registration. In order to prohibit the disposal of all or part of a share, a prohibition mark may be entered in the list of shareholders prohibiting entries in the list. An objection can also be entered in the register to secure a claim for amendment or deletion of an incorrect entry in the list of shareholders. The information in the business register is presumed to be correct for third parties and acquisition of a share in good faith is possible on the basis of the information in the register, unless an objection to the correctness of the information has been entered in the business register or the acquirer knew or ought to have known that the information in the business register was incorrect. If the list of shareholders is kept by the business register, a disposition for the pledge of a share must also be notarised and the pledge is entered in the register and is subject to the provisions of the register pledge.
- List of shareholders kept by the board
However, if a private limited company (with a share capital of at least 10,000 euros, fully paid) has waived the requirement for a notarial form in its articles of association, the list of shareholders is kept by the board of directors of the company. In such a case, the transfer of a share is deemed effected and a shareholder is deemed to have changed with respect to the private limited company after notifying the private limited company of the transfer of the share and certification of the transfer of the share.
- Registration of shares in the Estonian Register of Securities
If the private limited company decides to register the shares in the Estonian Register of Securities instead, the transfer or pledge of the shares is not subject to the requirement of a notarial form, and the list of shareholders is entered in accordance with the rules of the Estonian Register of Securities.
If only one shareholder remains in a private limited company as a result of a transfer of a share or if, in addition to one shareholder, only the private limited company itself has a share in the private limited company, the management board of the private limited company must submit a written notice to this effect to the registrar of the commercial register.
The share of a private limited company is inheritable. The transfer of a share to a successor may be excluded with the articles of association. The restriction of the transfer of a share to a successor does not apply unless the articles of association prescribe a term and procedure for the payment of an appropriate compensation to the successor.
A share may also be owned by several people at once (e.g. in the joint ownership of spouses). In such cases, these persons may exercise rights related to the share (incl. transfer the share) only jointly.
Transfer of shares of a public limited company
Shares shall be registered and entered in the Estonian register of securities. The rights attaching to a registered share belong to the person who is entered as the shareholder in the share register. The share register shall be maintained by the Estonian register of securities or another depository. Registered shares may be freely transferred, but the articles of association may prescribe that, upon transfer of shares to third persons, other shareholders have the right of pre-emption. The transactional acquisition of a share takes place pursuant to the provisions of the Securities Register Maintenance Act. A transaction constituting an obligation to transfer a share and a disposition required to transfer a share are made in a free format and the transfer of a share takes place as a transfer of securities with the securities account operator at the bank.
The transferee has the right to demand to be entered as a shareholder in the share register. For the purposes of the public limited company, the share is deemed transferred as of entry of the transferee in the share register. The management board of the public limited company shall ensure the timely submission of information to the person maintaining the share register.
Shares are inheritable and upon the death of a shareholder, their share is transferred to their successors.
A share may also be owned by several people at once (e.g. in the joint ownership of spouses). In such cases, these persons may exercise rights related to the share (incl. transfer the share) only jointly.
A distinction must be made between a so-called regular public limited company and a listed public limited company. A listed public limited company’s shares have been admitted for trading on a regulated securities market, i.e. in a trading environment with a stock exchange at its centre. The only regulated securities market in Estonia is the Nasdaq Tallinn Stock Exchange.
Compared to regular public limited companies, stricter requirements apply to listed public limited companies due to the need to ensure the transparency of their operations, their reliability, and fair treatment of those who invested in them. Therefore, listed public limited companies are subject to supervision by the Financial Supervision Authority.