As in most other European jurisdictions, members of the management board of Estonian companies are subject to registration in the commercial register. The legal standing of such registration has been the subject of considerable controversy.
The Supreme Court has recently offered some additional guidance on this. The entry of the member of the management board in the commercial register is only declarative. Its purpose is simply to give third parties notice of the existence of such relationship, but the entry does not create or terminate the legal relationship between the company and the member.
The Commercial Code stipulates a fixed-term requirement for the members of the management board, which aims, in the first instance, to protect the company and its shareholders. Thus, an appointment to the board is viewed by Estonian courts as similar to the fixed-term agency contract, which may be extended only by mutual consent. Accordingly, former members of the management board may not prevent the company from removing her/him from the board. By comparison, a member of the board is entitled to stop the company from renewing the term of office without her/his consent.
However, registration remains important since it allows third parties to establish which management board member is authorised to bind the company. If the term of office of a member of the management board has expired and thus ended, shareholders or the supervisory board do not need to decide on that separately, since this is a matter of fact and does not depend on their intent.
The company must then submit an application to the commercial register to remove a member of the management board from the files of the register. If a company has not timely submitted such application it may be subject to a fine. Importantly, members of the management board may not themselves submit formal application for their own removal, however, they have the right to submit an informative notice informing the registrar of the incorrect data in the register, upon which the registrar may make further enquiries to verify the correctness of the registered information. A further remedy is the right of the former member of the management board to submit a claim requesting the court to establish that her term of office has expired and, in addition or alternatively, to order the company to remove her from the files of the register.
Mariana Hagstrom is the partner Law Firm Teder, Glikman & Partnerid.
Teder Glikman & Partners, a member of Baltic Legal Solutions, a pan-Baltic integrated legal network of law firms which includes Kronbergs & Cukste in Latvia Jurevicius, Balciunas & Bartkus in Lithuania, dedicated to providing a quality 'one-stop shop' approach to clients' needs in the Baltics.
