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Taking counsel

  • 2005-03-16
  • By Justina Gutauskaite, an associate at Sorainen Law Offices in Vilnius
What information can shareholders receive in the Baltics?

Information on the company is essential to shareholders in order to exercise their rights, such as the right to sell shares, to vote at the shareholders' meetings or to bring suits against the company's management in a reasonable way. The courts consider the infringement of the shareholder's right to information as one of the gravest infringements of the shareholder's legal rights.

Lithuanian, Latvian and Estonian laws provide shareholders of a private limited liability company (hereinafter 's the "company") with the right to access different information about the company. However, the extent of this right differs in each Baltic state.

Unlike Latvian and Estonian legislation, Lithuanian laws treat minority shareholders and major shareholders differently in respects to their right to information. Only the holder of more than half of the company's share capital is entitled to access all information on the company in Lithuania. Several shareholders jointly holding more than half of the company's share capital, may also enjoy the same right. Further, the company's articles of association may provide for the smaller shareholding needed in order to get all information on the company. Other shareholders have access only to corporate information explicitly listed in the laws, which, to a large extent, is public.

According to court practice, in exceptional cases the managing bodies of a Lithuanian company may refuse information to a shareholder if there is reasonable suspicion that the disclosure of certain information could harm the company's interests.

Latvian and Estonian laws do not establish any limitations to the shareholders' right to receive such information. However in certain cases, they provide the bodies of the company with the right to set such limitations.

A Latvian company's shareholder meeting may decide to restrict the shareholder's right to information if there is justified suspicion that the latter may use the obtained information in a way contrary to the company's interest, thus causing significant harm to the company, its group companies, or a third person.

In Estonia, the management board of the company is granted the right to refuse the corporate documents and other information to a shareholder in case its provision might cause significant damage to the interests of the company. The threat of "significant damage to the company's interest" is determined individually in each case.

In each of the Baltic states, shareholders are entitled to challenge the court's refusal to provide them with information. It should be noted that, irrespective of any restrictions set to this right, each shareholder, as well as any third person, may receive all information kept in the company's corporate file with the Commercial Register, including articles of association, annual reports, etc.

Information on the company may sometimes include commercial secrets. The shareholders of Lithuanian companies, who have access to all company information, must sign the confidentiality undertaking prior to obtaining information, which is not accessible to other shareholders.

Latvian and Estonian laws do not provide for specific regulation on the protection of a company's commercial secrets from disclosure. However, the company's management bodies could limit shareholder access to commercial secrets in the same way they could set restrictions on the availability of information in particular cases.

In summary, though shareholders in all three Baltic states have the right to receive information about a company, Lithuanian laws set certain statutory restrictions on this right, whereas Latvian and Estonian laws leave the possibility to limit this right within the competence of the company's management bodies.