- Company hijacking prevented
- June 13, 2008 | Author: Maksim Greinoman
- Law Firm: Advokaadibüroo Greinoman & Co - Tallinn Office
Hijacking a company by an outsider is a well-known problem in all jurisdictions. This is illegal and constitutes a criminal offence.
However, until recently a shareholder having at least one place on the management board in Estonia may have easily done the same, yet absolutely legally. All she needed was to convey a repeated meeting of shareholders, which does not attract quorum requirement and change the whole board by at least one vote. If done quickly or using a vague agenda or both that prevented the other shareholders from blocking this tactics.
The things changed when the National Court satisfied a cassation appeal by Greinoman & Co this April.
The Court held that any resolution passed by a shareholders meeting, without that agenda item stated with a sufficient degree of clarity in the notice of the shareholder meeting, would be null and void. The Court further held that calling a repeated meeting where the majority shareholder advised the board she would be unable to attend, may have been a violation of good faith. All resolutions passed will be then null and void. The Court has also construed the statutory notice period for the repeated shareholder meetings in the way, that all notices must be received seven days in advance in order for the resolutions of the meeting to be valid.
Hopefully, this decision of the court will drastically decrease hijacking of Estonian companies in cases of a Russian roulette and abusive minority shareholders.