Shareholders’ agreements for an Estonian OÜ

How does a shareholders’ agreement relate to the articles of association?

Under the Commercial Code, these need to be in the articles: extra conditions for transferring a share, such as consent (ÄS § 149(3)); a pre-emption right that also covers transfers between shareholders (§ 149(2)); special rights attached to shares (§ 154¹); a dividend split that is not proportional to shareholdings (§ 157(2)); a different number of votes per share (§ 169); and a higher majority for resolutions (§ 174(1), § 175(1)).

If such a rule appears only in the shareholders’ agreement, a voting commitment or veto binds the signatories and nobody else. A breach leaves the others with contractual remedies, such as damages or a contractual penalty (VÕS § 158). Aligning the two documents is the first thing to check.

Amending the articles needs at least two-thirds of the votes unless the articles require more, and the amendment takes effect when entered in the Commercial Register (ÄS § 175).

What are the share capital rules for an OÜ?

Share capital is stated in euros (§ 136). A share gives the right to take part in management and in the distribution of profit and of remaining assets on liquidation (§ 148(5)). No securities may be issued for shares (§ 148(6)).

Low capital has consequences. No distributions may be made if net assets are, or would become, lower than the share capital plus non-distributable reserves (§ 157(3)). According to the Ministry of Justice and Digital Affairs, if share capital is below €2,500 and bankruptcy proceedings end without a declaration of bankruptcy, a court may order shareholders to pay the difference up to €2,500 where the interim trustee’s fees and costs cannot otherwise be covered.

Use the agreement to say who funds the company beyond its share capital. A shareholder cannot be made to contribute more than the nominal value and premium of their share without their consent (§ 154(2)), so every funding commitment must be accepted by the shareholder concerned.

Check these clauses in your own contract – free summary →

How do share transfers and pre-emption rights work?

The transfer itself must be notarised (§ 149(4)) and takes effect when entered in the shareholders’ list (§ 149(4¹)). If the share capital is at least €10,000 and fully paid, the articles can waive the notarial form with the consent of all shareholders. A form that can be reproduced in writing is then enough (§ 149(6)).

The articles may add conditions, such as consent from the other shareholders or the board. A transfer that ignores such a condition is void, although a shareholder can demand consent if there is good reason (§ 149(3)). Shares pass to heirs unless the law or the articles provide otherwise. A restriction on inheritance in the articles is invalid unless it sets the term and procedure for paying the heir fair compensation (§ 153).

Drag-along and tag-along rights are not in the Commercial Code. They are contractual promises to sell, or to be included in a sale, and bind only the signatories. The transfer they lead to still needs the statutory form, so have an Estonian lawyer or notary check how the mechanism will be completed.

How do you handle deadlock in a 50/50 company?

Common tools are a list of reserved matters that need unanimous consent, escalation to a cooling-off period and then mediation, and, as a last resort, a buy-sell clause. Under a buy-sell clause, one shareholder names a price and the other must either buy or sell at that price. It ends in a share transfer, so check it against the pre-emption and form rules.

Know the voting rules the agreement sits on. In a vote without a meeting, a shareholder who does not answer in time counts as voting against (§ 173(2)). A resolution signed by all shareholders does not need the meeting procedure (§ 173(7)). Dissolving the company needs at least two-thirds of the votes (§ 202(1)). A resolution can be challenged in court within three months of its adoption (§ 178(1)).

How do vesting and leaver clauses work in an OÜ?

The agreement must spell out which events make someone a good or bad leaver, how many shares they sell, to whom, at what price and by when, and how the notarised transfer happens if the leaver does not cooperate. A contractual penalty can add pressure (VÕS § 158), but a court may reduce an excessive one (§ 162).

Do not confuse this with exclusion by a court. A court can exclude a shareholder who, despite a written warning, has without good reason materially failed to perform their obligations or materially damaged the company. The action needs shareholders holding more than half of the share capital, and the excluded shareholder’s share is sold (ÄS § 167). A leaver clause is a separate, contractual route; have an Estonian lawyer check the price and trigger wording.

What duties do management board members (juhatus) have?

A board member must be a natural person with active legal capacity and need not be a shareholder (§ 180(2)–(3)). Each member can represent the company in all transactions unless the articles require joint representation. Joint representation is effective against third parties only once entered in the Commercial Register (§ 181(1)–(2)). A transaction between the company and a board member is void without the shareholders’ (or supervisory board’s) consent, except everyday transactions at market price (§ 181(3)).

Board members are elected for an unspecified term unless the articles set one, and they can be removed regardless of the reason (§ 184). Without consent, they may not compete with the company in its field of activity (§ 185), and they must keep its business secrets (§ 186). The Employment Contracts Act does not apply to a board member’s contract (TLS § 1(5)). If the company becomes permanently insolvent, the board must file for bankruptcy without delay and within 20 days at the latest (§ 180(5¹)).