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§ 434. Methods of division
- (1)
- Division shall be effected without a liquidation proceeding by distribution or separation.
- (2)
- Upon distribution, the company being divided shall transfer its assets to the recipient companies. A recipient company may be an existing or new company. Upon distribution, the company being divided shall be deemed to be dissolved.
- (3)
- Upon distribution, the partners or shareholders of the company being divided shall become partners or shareholders of a recipient company.
- (4)
- Upon separation, the company being divided shall transfer part of its assets to one or several recipient companies. A recipient company may be an existing or new company.
- (5)
- Upon separation, the partners or shareholders of the company being divided shall become partners or shareholders of a recipient company, or the company being divided shall become the sole shareholder.
- (6)
- Existing and new companies entered in the commercial register in Estonia may simultaneously be recipient companies.
- (7)
- Companies participating in a division may be of the same class or of different classes of companies unless otherwise provided by law.
§ 435. Division agreement
- (1)
-
In order to divide, the management boards of or the partners entitled to represent the companies participating in division shall conclude a division agreement. Rights and obligations shall arise from the division agreement after approval of the agreement pursuant to the procedure provided for in § 440 of this Code. The division agreement shall set out:
- 1)
- the business names and seats of the companies participating in division;
- 2)
- upon distribution or separation, the distribution and exchange ratio of shares to be transferred to the partners or shareholders of the company being divided, and the amount of additional payments, if additional payments are to be made, for the exchange of shares to the partners or shareholders of the company being divided;
- 3)
- upon distribution or separation, the terms and conditions of transfer of the shares of the recipient companies for the exchange of shares with the partners or shareholders of the company being divided;
- 4)
- the date as of which the transferred shares shall grant the right to a share of profit of the recipient companies;
- 5)
- the rights which the recipient companies will grant to the partners or shareholders of the company being divided, including the holders of preferred shares and convertible bonds;
- 6)
- a list of assets to be transferred to each recipient company;
- 7)
-
the consequences of division for the employees;
(28.05.96 entered into force 08.06.96 - RT I 1996, 40, 773)
- 8)
-
in the case of distribution, the date as of which the transactions of the company being divided shall be deemed to be undertaken by the recipient company (division 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 a division agreement which are to be paid by a recipient private limited company or public limited company to the partners or shareholders of the company being divided shall not exceed one-tenth of the sum of the nominal values of their exchanged shares.
- (3)
- A division agreement shall be notarised.
- (4)
- If an approved division 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 division agreement prescribes a shorter term for advance notice.
§ 436. Division report
- (1)
-
The management boards of or the partners entitled to represent the companies participating in a division shall prepare a written report (division report) in which the division and division agreement shall be explained and justified legally and economically. Upon distribution or separation whereby shares are exchanged with the partners or shareholders of the company being divided, the share exchange ratio and the amount of additional payments, if additional payments are to be made, shall be justified in the report. 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 division report need not be prepared upon separation by an exchange of shares with the company being divided, or if this is agreed to by all the partners or shareholders of the companies participating in division.
§ 437. Audit
- (1)
- An auditor shall audit a division agreement in the cases provided by law.
- (2)
- An auditor need not audit a division agreement upon separation by the exchange of shares with the company being divided, or if all partners or shareholders of the companies participating in division agree that an auditor need not audit the division agreement.
§ 438. Appointment of auditor
An auditor shall be appointed by the management board or managing partners of the company participating in a division. One auditor may be appointed for some or all of the companies participating in division.
(28.05.96 entered into force 08.06.96 - RT I 1996, 40, 773)
§ 439. Report and liability of auditor
- (1)
- The auditor shall prepare a written report concerning the results of the audit of a division agreement. The auditors who audit a division 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 division agreement are appropriate consideration for the partners or shareholders of the company being divided, and whether the division 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 division agreement.
§ 440. Division resolution
- (1)
- Rights and obligations shall arise from a division agreement if the division agreement is approved by all companies participating in the division. A division resolution shall be in writing.
- (2)
- A partner or shareholder may demand a copy of the division agreement or resolution.
- (3)
- The partners or shareholders shall be provided with the opportunity to examine the division agreement, division report and auditors report at least two weeks before deciding on approval of the division agreement unless otherwise provided by law.
§ 441. Contestation of division 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 division 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 division resolution of a company being divided 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 recipient company which may exceed the amount specified in subsection 435 (2) of this Code.
- (4)
- Interest shall be paid on an unpaid refund in the amount provided by law as of entry of the division in the register of the seat of the company being divided.
§ 442. Protection of creditors
- (1)
- The management board or managing partners of a company participating in a division shall, within fifteen days after adoption of the division resolution, send written notice concerning the division to the known creditors of the company who have claims against the company which predate the adoption of the division resolution.
- (2)
-
The management board or managing partners of the company shall publish two notices concerning the division resolution with at least a fifteen day interval in the official publication Ametlikud Teadaanded, calling on creditors to submit their claims. 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 due date for fulfilment of a claim has arrived or if a claim is not sufficiently guaranteed, the creditor may demand satisfaction of the claim.
- (4)
- The creditor of a recipient company may demand a guarantee or satisfaction of the creditors claim only if the creditor proves that the division endangers fulfilment of the creditors claim, except if the due date for fulfilment of the creditors claim has arrived.
§ 443. Submission of petition to commercial register
- (1)
-
The management board of or the partners entitled to represent a company participating in a division shall submit a petition for entry of the division in the commercial register of the seat of the company not earlier than three months after publication of the second division notice. The following shall be appended to the petition:
- 1)
- a notarised copy of the division agreement;
- 2)
- the division resolution;
- 3)
- the minutes of the meeting of partners or shareholders if the division resolution is made at a meeting;
- 4)
- the permission for division, if required;
- 5)
- the division report or the agreements not to prepare one;
- 6)
- the auditors report, if required, or the agreements not to prepare one;
- 7)
- upon distribution, the final balance sheet of the company being divided if the company being divided submits the petition;
- 8)
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references to issues of Ametlikud Teadaanded in which notices specified in subsection 442 (2) of this Code are published.
(06.06.2001 entered into force 07.07.2001 - RT I 2001, 56, 336)
- (2)
- A registrar may enter a distribution in the register only if the final balance sheet of the company being divided 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 division are guaranteed or satisfied, and that the division 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)
§ 444. Business name of recipient company
- (1)
- Upon distribution, one recipient company may continue activities under the business name of the company being divided.
- (2)
- If a partner or shareholder of the company being divided is a natural person who no longer participates in the recipient company, the recipient 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.
§ 445. Division entry
- (1)
- A division shall be entered in the commercial register of the seat of the company being divided if it is entered in the commercial registers of the seats of all recipient companies. Entries in the commercial registers of the seats of the recipient companies shall indicate that the division shall be deemed to be effected as of entry in the commercial register of the seat of the company being divided.
- (2)
- The registrar of the commercial register of the seat of the company being divided shall notify the registrars of the seats of the recipient companies of entry of the division in the commercial register and shall send an extract from the commercial register to them. Upon receipt of notification, the registrar shall make a notation in the commercial register regarding when the division was entered in the commercial register of the seat of the company being divided.
§ 446. Legal effect of entry
- (1)
-
All assets of a company being divided or, upon separation, the separated assets, shall transfer to the recipient companies pursuant to the distribution prescribed in the division agreement as of entry of the division in the commercial register of the seat of the company being divided. After entry of the division in the commercial register of the seat of the company being divided, entries regarding the transfer of assets shall be made in registers on the petitions of the management boards of or the partners entitled to represent the recipient companies.
(28.05.96 entered into force 08.06.96 - RT I 1996, 40, 773)
- (2)
-
Upon distribution, the company being divided shall be deemed to be dissolved as of entry of the division in the commercial register of the seat of the company being divided. The registrar shall delete the company being divided from the commercial register.
(28.05.96 entered into force 08.06.96 - RT I 1996, 40, 773)
- (3)
- The partners or shareholders of the company being divided shall become partners or shareholders of the recipient companies pursuant to the division agreement as of entry of the division in the commercial register of the seat of the company being divided, except if the company being divided, upon separation, becomes the sole shareholder of the recipient company.
- (4)
- Upon division, the shares of the partners or shareholders of the company being divided shall be exchanged for shares of the recipient companies. The rights of third persons with regard to exchanged shares shall remain valid with regard to the shares of the recipient company.
- (5)
- The shares held by a recipient company or by the company being divided itself, or by a person acting in his or her own name but at the expense of the company shall not be exchanged upon division and shall become invalid, except if the company being divided, upon separation, becomes the sole shareholder of the recipient company.
- (6)
- Assets which are not divided upon distribution shall be divided among the recipient companies in proportion to their shares in the divided assets.
- (7)
- A division shall not be contested after its entry in the commercial register of the seat of the company being divided.
§ 447. Liability for obligations of company being divided and compensation for damage caused by division
- (1)
- Companies participating in a division shall be solidarily liable for the obligations of the company being divided which arise before entry of the division in the commercial register of the seat of the company being divided. In relations between solidary debtors, only a person to whom obligations are designated by the division agreement shall be an obligated person.
- (2)
- A company participating in a division to whom obligations are not designated by the division agreement shall be liable for the obligations of the company being divided if the due date for their performance arrives within five years after entry of the division in the commercial register of the seat of the company being divided.
- (3)
- The members of the management board and supervisory board, or the managing partners of a company participating in a division shall be solidarily liable to the company, the partners or shareholders, and their creditors for any damage wrongfully caused by the division.
- (4)
- The limitation period for a claim specified in subsection (3) of this section shall be five years from entry of the division in the commercial register of the seat of the company being divided.
§ 448. Compensation upon participation of different classes of companies in division
- (1)
-
Upon participation of companies of different classes in a division, a partner or shareholder of the company being divided who opposes the division resolution may, within two months after entry of the division in the commercial register of the seat of the company being divided, demand that the recipient company acquire the exchanged share or shares of the partner or shareholder for monetary compensation. The monetary compensation shall be equal to the 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 division resolution was made.
(28.05.96 entered into force 08.06.96 - RT I 1996, 40, 773)
- (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 division resolution and who wish to exercise the rights specified in this section shall be appended to the division resolution. Opposition to the division resolution shall be confirmed by each partner or shareholder by the signature of the partner or shareholder.
- (4)
- If a recipient 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)
- A recipient company shall pay interest on compensation in an amount provided by law as of entry of the division in the commercial register of the seat of the company being divided.
- (6)
- If a partner or shareholder who opposes the division 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.
§ 449. Division whereby new company founded
- (1)
- The provisions of this chapter together with amendments prescribed by law shall apply to a division whereby a new company is founded.
- (2)
- The provisions regarding recipient companies shall apply to companies being founded.
- (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 founder shall be the company being divided.
- (4)
- Upon division whereby a new company is founded, the management board of or the partners entitled to represent the company being divided shall draft a division plan which shall substitute for the division agreement. In addition to the provisions of subsection 435 (1) of this Code, the division plan 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 division resolution, shall be appended to the division plan.
- (5)
- The management board of or the partners entitled to represent the company being divided shall submit a petition for entry of the new companies in the commercial registers of their seats and for entry of the division in the commercial register of the seat of the company being divided.
- (6)
- The registrar of the commercial register of the seat of each new company shall notify the registrar of the seat of the company being divided of entry of the new company in the commercial register. Upon receipt of notification concerning all the new companies, the registrar of the commercial register of the seat of the company being divided shall enter the division in the commercial register, shall notify the registrar of the seat of each new company of the entry and shall send an extract from the commercial register to them. Upon receipt of notification, the registrar shall make a notation in the commercial register regarding when the division was entered in the commercial register of the seat of the company being divided.
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