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Company Management in Estonia

Company Management in Estonia

Estonia and Latvia are part of the same ex-Soviet block and has undergone massive change in the early ‘90ies when the Company Law was also amended. In this economic context new patterns for company management emerged in Estonia. New companies such as semi-private structures have begun to play a major role in the country’s development. The main goal the Estonian government was focused on was to attract foreign investors that would lead to an ulterior economic enhancement. However, after 1993 privatization would encompass most of the previous state-owned Estonian companies, thus leading to an important change in the companies’ management structure.

Shareholder protection in Estonia

In terms of company management, a company’s shareholders are considered the most important part in an enterprise. According to the Estonian Commercial Code the shareholders’ equality and equal treatment are guaranteed by the laws and a share means a vote. Shareholders are requested to assemble a general meeting at least once a year. The shareholders are allowed to make decisions about a company’s future only at the above mentioned general meetings. Shareholders in Estonian companies have preemptive rights when the shares are issued. The Commercial Code in Estonia states that foreign shareholders benefit from the same protection domestic shareholders do.

The management board of Estonian companies

The Aktsiaselts or the management board of an Estonian company is formed by a managing director acting as a chairman of the board and his management team. The management board will represent a company in business relations with other companies. According to the latest European trends in corporate governance the management board will have a clearly distinct role from the supervisory board’s role.  The Estonian Commercial Code states that a member of the management board cannot be part of the supervisory board, as well.

The supervisory board in Estonian companies

The supervisory board acts as the representative of the shareholders in Estonian companies. It is the main corporate governance body and it is in charge with defining investment strategies, priorities, approves the company’s budget and controls the management board. The supervisory board is usually composed of three highly experienced members that are not necessarily shareholders. Compared to other countries, Estonia does not have employees’ representatives in the supervisory board.

Business owners who wish to remain in Estonia for short- or long-term purposes can discuss their options with our team. A special temporary residence permit in Estonia for business is in place for major investors or those who invest a minimum capital in an Estonian company, however, we can also give you details if you plan on remaining in the country to work as an appointed company manger. 

Corporate governance regulations and company management are quite simple and follow the OECD (Organization for Economic Cooperation and Development) model. Our Estonian law firm can provide all the details about company management. You can also contact us for details about company registration in Estonia.

As a foreign company manager in Estonia, an individual will most likely be interested in obtaining permanent residency. Once he or she has resided in the country for at least eight years, out of which at least five were spent on the ground of permanent residence, one can apply for citizenship in Estonia. Other mandatory conditions apply and we advise those interested to talk to our experts. 

Immigration to Estonia can be of interest to some company managers who came to the country to fill this position as a foreign employee. If this is your case, you should know that you can apply for the right of permanent residence after five years if you are an EU/EEA citizen, and for a long-term residence permit if you are a non-EU/EEA citizens (also after five successive years).