Conversion of the share capital into euro as of 2012; use of shares without nominal value
Jurisdiction – ESTONIA
Although no final deadline has been established for converting capital into euros, it should be kept in mind that starting from 2012 changes regarding the company’s articles of association or amount of share capital can be entered in the commercial register only if the capital of a company is registered in euros. The state duty payable for the capital conversion is EUR 17,89.
Although a year has passed since the euro was adopted as Estonia’s currency, a significant part of companies registered in the Estonian Commercial Register have not yet converted their share capital into euros. In case of public limited liability (AS) type of companies it is worthwhile to consider the possibility to use shares without nominal value. This enables to change the current share capital to the minimum extent while maintaining the existing shareholding proportion. The part of the share capital corresponding to one share without nominal value (book value of the share, min 10 cents) shall be established by dividing the share capital by the number of shares. The two types of shares (with and without nominal value) cannot be used simultaneously.
Up until the recent amendments to the Commercial Code (which entered into force 12 November 2011), there was a gap in law with regard to increasing the share capital in companies that use shares without nominal value. Until recently the law stipulated that the articles of association must foresee the exact number of shares without nominal value. This meant that in practice it made pointless to use such simplified alternatives for increasing share capital, whereby the share capital increase could under certain circumstances be initiated by the supervisory board or the management board. In such cases the general meeting would have had to change the number of shares in the articles of association prior to the increase of share capital. Now this gap has been removed and the law states that the number of shares without nominal value may be specified as certain number or as minimum and maximum number.
When considering the means of capital conversion, AS type of companies (especially companies with several owners and one type of shares) should consider the use of shares without nominal value. If this alternative is chosen, it is practical to specify the minimum and maximum number of shares, not a certain number. Since capital conversion into new currency involves amendment of the articles of association in any case, it is also recommendable to consider whether any other amendments to the articles should be introduced at the same time.