17
Thu, Oct
44 New Articles

Nove and Leadell Successful for Hotell Parnu in Estonian Supreme Court

Nove and Leadell Successful for Hotell Parnua in Estonian Supreme Court

Estonia
Typography

Nove has represented the Estonian company OU Hotell Parnu in the Supreme Court of Estonia in a dispute relating to the validity of transactions concluded by a member of its board.

According to Nove, the Estonian Supreme Court held that § 181 (3) of the Commercial Code of Estonia (which provides that a transaction concluded outside the everyday economic activities of a company between that company and a member of the board is void unless authorized by the shareholders also applies where a party to the transaction is a company controlled entirely by a member of the board and the spouse of that board member. According to Nove, "the Court pointed out that the requirement of shareholders’ consent to a transaction involving a board member was set out to avoid a conflict of interest, as the board member might be tempted to prefer in a transaction his own economic interests rather than act in the best interests of the company," and held that "a similar risk of conflict of interest occurs when the other side of a transaction is a company controlled entirely by a board member and the spouse of that board member."  

"By adopting that position," Nove reports, "the Supreme Court limited the possibilities of board members to divert assets without the consent of shareholders in a situation in which a board member is acting in a conflict of interest."

According to Nove, "the above means, inter alia, that minority shareholders are able to defend themselves more effectively against harmful transactions that a majority shareholder exerting control over the management board would conclude with himself or a company controlled by himself. It should be underlined that in deciding over the shareholder’s consent to the conclusion of a transaction with an involved person, the shareholder whose interest is affected by the transaction is not allowed to vote."

Nove Partner Urmas Volens and Leadell Attorney at Law Tambet Laasik acted for OU Hotell Parnu in the matter both in the court of appeal and the Supreme Court.

Estonian Knowledge Partner

COBALT is closely integrated alliance of top-tier law offices in Estonia, Latvia, Lithuania and Belarus, making us one of the largest law firms in the Baltic market. 

COBALT is a trusted partner for daily matters and complex large-scale transactions and disputes. The firm’s broad spectrum of expertise and established position as the market leader give a comprehensive basis for providing advice on special areas of business law.

We advise top international and regional businesses, financial institutions, state and local governments, and the region’s most promising start-ups. We offer leading-edge solutions in key industry sectors: Consumer Products, Trade & Distribution, Real Estate & Construction, Pharmaceuticals & Healthcare, Energy & Utilities, Communications, Media & Technologies, Financial Services, Transport & Logistics.

COBALT has been named Baltic Law Firm of the Year 6 times. We were recognized as the Most Innovative Law Firm of the Year 2019 in the Baltics at the IFLR European Awards in London. COBALT also won CEE Legal Matters Deal of the Year Award for Estonia, Latvia, and Lithuania, as well as the overall Baltic Deal of the Year, at the 2019 CEE Legal Matters Awards. We have received multiple awards from the Chambers Europe, IFLR, The Lawyer and Mergermarket and we are regularly listed amongst the top performing M&A legal advisors in the Bloomberg, Thomson Reuters and Mergermarket deal tables

More information on Cobalt can be found at www.cobalt.legal

All News about Cobalt can be found here.

 

Our Latest Issue