The Transfer of a Share is Now Allowed Without a Notary
This new change simplifies the transfer of shares a lot for the Estonian private limited companies. It will help companies to onboard new investors and shareholders.
Before the 1st of August 2020, it was necessary to visit the notary or use the e-notary services regarding selling and buying the shares of Estonian companies. On August 1, amendments to the Commercial Code entered into force, which in some cases allow transferring the shares of a limited liability company without a notary. The transfer can be made online through the Company Portal.
In most cases, one of the main requirements for transferring the shares is that the disposition for the transfer of a share must be notarized. That means the notary authenticates a disposition for the transfer of a share and sends a notice concerning the transfer of the share to the registrar of the commercial register.
It is not obligatory to follow these requirements if the following two conditions are met:
1. The share capital of a private limited company must be at least 10,000 euros and fully paid in
To transfer shares without the notary, the share capital of a private limited company is at least 10 000 euros and fully paid in. The Articles of Association of a private limited company must allow the share transfer to be performed in a form that can be reproduced in writing (e-mail, message, etc).
2. The waiver of the notarial form must be provided for in the Articles of Association
The changes of Estonian Commercial Code that entered into force on 1st of August allow this formal requirement to be waived in the Articles of Association. All shareholders of a private limited company must be in favour of the decision to approve or amend the Articles of Association in this way.
Nominal value of the share
The minimum nominal value of a share used to be one euro but from the 1st of August, this amount is one cent. The number of votes of a shareholder is proportional to the number of the shares unless the Articles of Association defines it differently.
Changes in shareholder information must be notified
In addition to easing the formal requirements for private limited companies, other amendments to the Commercial Code entered into force. The shareholder has an obligation to immediately notify the management board of any changes in the shareholders’ data.
The management board of a private limited company is now also required to immediately notify the commercial register of any changes in the information of shareholders.
The management board does not have to notify the commercial register only if the same information reaches the commercial register in another way. For example, a notary sends a notice regarding a change of shareholder data, or unless the shares of the private limited company are registered with the Estonian CSD (central securities depositary).
It is still the safest to enter into a transaction in a notarized form, as notaries with long-term experience know best how to draft correct contracts in accordance with the applicable law. The notary also verifies the contract by proving all the relevant facts, thus mitigating the risk that someone will be deceived.