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§ 391. Methods of merger
- (1)
- A company (company being acquired) may merge with another company (acquiring company). The company being acquired shall be deemed to be dissolved.
- (2)
- Companies may also merge such that they form a new company. In this case, the merging companies shall be deemed to be dissolved.
- (3)
- Merger shall be effected without a liquidation proceeding.
- (4)
-
The assets of a company being acquired, including its obligations, shall transfer to the acquiring company upon merger. Upon foundation of a new company, the assets of the merging companies, including their obligations, shall transfer to it.
(17.06.98 entered into force 10.07.98 - RT I 1998, 59, 941)
- (5)
- The partners or shareholders of a company being acquired shall become partners or shareholders of the acquiring company upon merger. Upon foundation of a new company, the partners or shareholders of the merging companies shall become its partners or shareholders.
- (6)
- Merging companies may be of the same class or of different classes of companies entered in the commercial register in Estonia unless otherwise provided by law.
§ 392. Merger agreement
- (1)
-
In order to merge, the management boards of or the partners entitled to represent the companies shall conclude a merger agreement. Rights and obligations shall arise from the merger agreement after approval of the agreement pursuant to the procedure provided for in § 397 of this Code. A merger agreement shall set out:
- 1)
- the business names and seats of the companies;
- 2)
- the share exchange ratio for the companies and the amount of additional payments if additional payments are made;
- 3)
- the terms and conditions of transfer of the shares of the acquiring company;
- 4)
- the date as of which the transferred shares shall grant the right to a share of profit of the acquiring company;
- 5)
-
the rights which the acquiring company will grant to the partners or shareholders of the company being acquired, including the holders of preferred shares and convertible bonds of a public limited company;
(28.05.96 entered into force 08.06.96 - RT I 1996, 40, 773)
- 6)
- the consequences of merger for the employees of the company being acquired;
- 7)
-
the date as of which the transactions of the company being acquired shall be deemed to be undertaken by the acquiring company (merger balance sheet date).
(17.06.98 entered into force 10.07.98 - RT I 1998, 59, 941)
- (2)
- The sum of additional payments prescribed in the merger agreement which are to be paid by an acquiring private limited company or public limited company to the partners or shareholders of the company being acquired shall not exceed one-tenth of the sum of the nominal values of their exchanged shares.
- (3)
-
If all shares of a company being acquired are held by the acquiring company, the merger agreement need not indicate the information specified in clauses (1) 2)-5) of this section.
(17.06.98 entered into force 10.07.98 - RT I 1998, 59, 941)
- (4)
- A merger agreement shall be notarised.
- (5)
- If an approved merger agreement is conditional and a condition is not met within five years after conclusion of the agreement, a company may terminate the agreement by giving at least six months advance notice of termination unless the merger agreement prescribes a shorter term for advance notice.
§ 393. Merger report
- (1)
-
The management boards of or the partners entitled to represent the merging companies shall prepare a written report (merger report) which shall explain and justify legally and economically the merger and merger agreement, including the share exchange ratio and amount of additional payments if additional payments are to be made. Difficulties relating to valuation shall be referred to separately in the report.
(28.05.96 entered into force 08.06.96 - RT I 1996, 40, 773; 17.06.98 entered into force 10.07.98 - RT I 1998, 59, 941)
- (2)
-
A merger report need not be prepared if all the shares of the company being acquired are held by the acquiring company, or if this is agreed to by all the partners or shareholders of the merging company, unless the net turnover of the merging companies for the financial year exceeds one hundred million kroons or the merging companies account for more than 40 per cent of the market.
(11.03.98 entered into force 01.10.98 - RT I 1998, 30, 410)
§ 394. Audit
- (1)
- An auditor shall audit a merger agreement in the cases provided by law.
- (2)
- An auditor need not audit a merger agreement if all shares of the company being acquired are held by the acquiring company, or if all partners or shareholders of the merging company agree that an auditor need not audit the merger agreement.
§ 395. Appointment of auditor
An auditor shall be appointed by the management board or the managing partners of the merging company. One auditor may be appointed for some or all of the merging companies.
(28.05.96 entered into force 08.06.96 - RT I 1996, 40, 773)
§ 396. Report and liability of auditor
- (1)
- The auditor shall prepare a written report concerning the results of the audit of a merger agreement. The auditors who audit a merger agreement may prepare a joint report for the companies.
- (2)
- A report shall indicate whether the share exchange ratio and additional payments indicated in the merger agreement are appropriate consideration for the partners or shareholders of the company being acquired, and whether the merger may bring about damage to the interests of the creditors of the company.
- (3)
- An auditor shall be liable for any damage wrongfully caused by an inaccurate audit of a merger agreement.
§ 397. Merger resolution
- (1)
- Rights and obligations shall arise from a merger agreement if the merger agreement is approved by all merging companies. A merger resolution shall be in writing.
- (2)
- The partners or shareholders shall be provided with the opportunity to examine the merger agreement, merger report and auditors report at least two weeks before deciding on approval of the merger agreement unless otherwise provided by law.
- (3)
- A partner or shareholder may demand a copy of the merger agreement or resolution.
§ 398. Contestation of merger resolution and compensation for damage
- (1)
-
On the petition of a partner, shareholder or member of the management board or supervisory board, a court may declare invalid a merger resolution which is in conflict with the law, the partnership agreement or the articles of association if the request is submitted within one month after the resolution is made.
(28.05.96 entered into force 08.06.96 - RT I 1996, 40, 773)
- (2)
- The merger resolution of a company being acquired shall not be declared invalid on the basis that the share exchange ratio is fixed too low.
- (3)
- If the share exchange ratio is fixed too low, a partner or shareholder may demand a refund from the acquiring company which may exceed the amount specified in subsection 392 (2) of this Code.
- (4)
- The acquiring company shall pay interest on an unpaid refund in the amount provided by law as of entry of the merger in the register of the seat of the acquiring company.
§ 399. Protection of creditors
- (1)
- The management board or managing partners of each merging company shall, within fifteen days after adoption of the merger resolution, send written notice concerning the merger to the known creditors of the company who have claims against the company which predate the adoption of the merger resolution.
- (2)
-
The management board or managing partners of the company shall publish two notices concerning the merger resolution with at least a fifteen day interval in the official publication Ametlikud Teadaanded. The notice shall indicate that creditors are to submit their claims within two months.
(20.06.2000 entered into force 12.07.2000 - RT I 2000, 55, 365)
- (3)
- The company shall guarantee the claims of creditors if they are submitted within two months after publication of the last notice. If the term for fulfilment of a claim has expired or if a claim is not sufficiently guaranteed, the creditor may demand satisfaction of the claim.
- (4)
-
A creditor of an acquiring company may demand a guarantee or satisfaction of the creditors claim only if the creditor proves that the merger endangers fulfilment of the creditors claim, except if the due date for fulfilment of the creditors claim has arrived.
(28.05.96 entered into force 08.06.96 - RT I 1996, 40, 773)
§ 400. Submission of petition to commercial register
- (1)
-
The management board of or the partners entitled to represent a merging company shall submit a petition for entry of the merger in the commercial register of the seat of the company not earlier than three months after publication of the second merger notice. The following shall be appended to the petition:
- 1)
- a notarised copy of the merger agreement;
- 2)
- the merger resolution;
- 3)
- the minutes of the meeting of the partners or shareholders if the merger resolution is made at a meeting;
- 4)
- the permission for merger, if required;
- 5)
- the merger report or the agreements not to prepare one;
- 6)
- the auditors report, if required, or the agreements not to prepare one;
- 7)
- the final balance sheet of the company being acquired if the company being acquired submits the petition;
- 8)
-
references to issues of Ametlikud Teadaanded in which notices specified in subsection 399 (2) of this Code are published;
(06.06.2001 entered into force 07.07.2001 - RT I 2001, 56, 336)
- 9)
-
confirmation from the Competition Board of receipt of all necessary information concerning the merger, if the net turnover of the merging companies for the financial year exceeds one hundred million kroons or the merging companies account for more than 40 per cent of the market.
(11.03.98 entered into force 01.10.98 - RT I 1998, 30, 410)
- 10)
-
confirmation from the registrar of the Estonian Central Register of Securities attesting receipt of the notice specified in subsection 402 (3) of this Act, if the shares of the merging company are entered in the Estonian Central Register of Securities.
(14.06.2000 entered into force 01.01.2001 - RT I 2000, 57, 373)
- (2)
- A registrar may enter a merger in the register only if the final balance sheet of the company being acquired is prepared as at a date not earlier than eight months before submission of the petition to the commercial register. The provisions for preparation and approval of an annual report shall apply to the preparation and approval of a final balance sheet.
- (3)
-
In a petition, the members of the management board of or the partners entitled to represent the company shall confirm that the claims of creditors who submitted their claims during the term or who opposed the merger are guaranteed or satisfied, and that the merger resolution is not contested, or that a corresponding petition has been denied.
(28.05.96 entered into force 08.06.96 - RT I 1996, 40, 773)
§ 401. Business name of acquiring company
- (1)
- An acquiring company may continue activities under the business name of the company being acquired.
- (2)
- If a partner or shareholder of the company being acquired is a natural person who no longer participates in the acquiring company, the acquiring company may continue to use his or her name in the business name only with the written consent of him or her, or of his or her successors.
§ 402. Merger entry
- (1)
- A merger shall be entered in the commercial register of the seat of the acquiring company if it is entered in the commercial registers of the seats of all companies being acquired. Entries in the commercial registers of the seats of the companies being acquired shall indicate that the merger shall be deemed to be effected as of entry in the commercial register of the seat of the acquiring company.
- (2)
- The registrar of the commercial register of the seat of the acquiring company shall notify the registrars of the seats of the companies being acquired of entry of the merger in the commercial register. Upon receipt of notification, the registrar shall make a notation in the commercial register regarding when the merger was entered in the commercial register of the seat of the acquiring company. The registrar of the company being acquired shall send the documents of the company held by the registrar to the registrar of the seat of the acquiring company.
- (3)
-
If the shares of a company being acquired are entered in the Estonian Central Register of Securities, the registrar of the commercial register of the seat of the company being acquired shall promptly notify the registrar of the Estonian Central Register of Securities of the receipt of the notice specified in subsection (2) of this section.
(14.06.2000 entered into force 01.01.2001 - RT I 2000, 57, 373)
§ 403. Legal effect of entry and compensation for damage caused by merger
- (1)
-
The assets of a company being acquired shall transfer to the acquiring company as of entry of the merger in the commercial register of the seat of the acquiring company. After entry of the merger in the commercial register of the seat of the acquiring company, entries regarding the transfer of assets shall be made in registers on the petition of the management board of or of the partners entitled to represent the acquiring company.
(28.05.96 entered into force 08.06.96 - RT I 1996, 40, 773)
- (2)
- A company being acquired shall be deemed to be dissolved as of entry of the merger in the commercial register of the seat of the acquiring company. The registrar shall delete the company being acquired from the commercial register.
- (3)
- The partners or shareholders of the company being acquired shall become partners or shareholders of the acquiring company as of entry of the merger in the commercial register of the seat of the acquiring company, and their shares shall be exchanged for shares of the acquiring company. The rights of third persons with regard to the exchanged shares shall remain valid with regard to the shares of the acquiring company.
- (4)
- The shares of a company being acquired which are held by the acquiring company or by the company being acquired itself, or by a person acting in his or her own name but at the expense of the company shall not be exchanged and shall become invalid.
- (5)
- A merger shall not be contested after its entry in the commercial register of the seat of the acquiring company.
- (6)
- The members of the management board and supervisory board, or the managing partners of a merging company shall be solidarily liable to the company, the partners or shareholders, or their creditors for any damage wrongfully caused by the merger.
- (7)
- The limitation period for a claim specified in subsection (6) of this section shall be five years from entry of the merger in the commercial register of the seat of the acquiring company.
§ 404. Compensation upon merger of different classes of companies
- (1)
- Upon merger of companies of different classes, a partner or shareholder of the company being acquired who opposes the merger resolution may, within two months after entry of the merger in the commercial register of the seat of the acquiring company, demand that the acquiring company acquire the exchanged share or shares of the partner or shareholder for monetary compensation. The monetary compensation shall be equal to the sum of money which the partner or shareholder would have received from the distribution of remaining assets upon liquidation of the company if the company had been liquidated at the time the merger resolution was made.
- (2)
- The provisions of clauses 162 (2) 2) and 283 (2) 2) of this Code shall not apply to acquisition of shares by a company on the bases specified in subsection (1) of this section.
- (3)
- The names of partners or shareholders who oppose the merger resolution and who wish to exercise the rights specified in this section shall be appended to the merger resolution. Opposition to the merger resolution shall be confirmed by each partner or shareholder by the signature of the partner or shareholder.
- (4)
- If the acquiring company is a general partnership or limited partnership, the compensation specified in subsection (1) of this section may be demanded by a partner who departs from the company.
- (5)
- An acquiring company shall pay interest on compensation in the amount provided by law as of entry of the merger in the commercial register of the seat of the acquiring company.
- (6)
- If a partner or shareholder who opposes the merger resolution does not demand the compensation specified in this section, the partner or shareholder may transfer a share or shares within two months regardless of the restrictions on disposal provided by law or prescribed by the articles of association.
§ 405. Merger whereby new company founded
- (1)
- The provisions of this chapter together with amendments prescribed by law shall apply to a merger whereby a new company is founded.
- (2)
- The provisions regarding a company being acquired shall apply to the merging companies, and the provisions regarding an acquiring company shall apply to the company being founded. The companies shall be deemed to be merged as of entry of the new company in the register.
- (3)
- In the foundation of a new company, the foundation provisions for the class of company shall apply unless the provisions of this chapter provide otherwise. The founders shall be the merging companies.
- (4)
- In addition to the provisions of subsection 392 (1) of this Code, the merger agreement shall set out the business name and seat of the new company. The articles of association or partnership agreement of the company being founded, which shall be approved by the merger resolution, shall be appended to the merger agreement.
- (5)
- The management board of or the partners entitled to represent a merging company shall submit a petition for entry of the merger in the commercial register of the seat of the company.
- (6)
- The management boards of or the partners entitled to represent the merging companies shall submit a joint petition for entry of the new company in the commercial register of its seat.
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