Adoption of Shareholder Resolutions in Post‑COVID Era. Example of Estonian Law Pages 445-458 | PDF

Andres Vutt, Dr. iur., Associate Professor
University of Tartu, Estonia

Margit Vutt, PhD (law), lecturer
University of Tartu, Estonia

Keywords: shareholder rights in a general meeting, general meeting of shareholders, Estonian Commercial Code, Estonian company law, company law, corporate law

In 2020, the COVID-19 pandemic forced the world to find the right balance between protecting health, minimizing economic and social disruption and retaining the rights of individuals. States imposed a number of restrictions in order to prevent the spread of the pandemic, including restrictions on the movement of persons and restrictions on gathering. Traditionally, shareholders' meetings of companies have been taken place in the form of physical meetings. Company law also been based on the assumption that meetings are held physically. In the new situation, it was no longer possible to hold meetings in this way, at least for some time. This forced companies to use digital solutions. The legislator was also faced with the question of how to resolve this situation.

Different countries reacted differently in order to find company law solutions. In Estonia, new rules were adopted in May 2020 that allowed legal persons to adopt decisions using digital solutions, among other things, it is allowed to make decisions in a full virtual meeting. The central question in the way companies make decisions is whether the use of virtual solutions is possible, but whether the law provides companies with sufficiently flexible options, which would enable decisions to be taken in the light of the specificities and needs of each company and whether such practices ensure the exercise of shareholders' rights. This article analyses whether and how these objectives have been achieved in Estonian law.

There are three ways to adopt company’s resolutions in Estonia: a meeting, a written resolution or a vote by letter. Meetings can take place physically, virtually or in a hybrid form. It is not possible to infringe the rights of the shareholder in making a written resolution, since if such a method is used, the resolution decision is adopted only if all shareholders agree. In the case of voting by letter, the law does not take into account the fact that in a shareholder of a public limited company has the right to receive information from directors only at the general meeting. Therefore, the future case-law must lay down the principles of communication between the shareholder and the public limited company in the situation when the resolution has been adopted by using such option. The law stipulates that if digital means are used to hold a meeting, shareholders must be guaranteed all the same rights as they have in the event of a physical meeting. Since these rules have been in force only for a short period of time, there are no court cases based on them. Although the legal literature has been expressed some views on the use of digital solutions, it is not yet known how the courts will resolve these issues if disputes arise.