Companies need to declare their actual beneficial owner
Uudiste lugemiseks eesti keeles palun kliki siia: In Estonian

  Karin Madisson
Karin Madisson
  Toomas Prangli
Toomas Prangli
  Piret Jesse
Piret Jesse
Dear reader,

Important news: All companies registered on the Estonian commercial register must declare their actual beneficial owner by the end of October 2018.

A GDPR update: companies that have designated a Data Protection Officer now have an easy digital way of notifying the Estonian Data Protection Inspectorate that they have done so.

We are pleased to invite you to the M&A event of the year – the Baltic M&A and Private Equity Forum 2018, to be held in Tallinn on 18-19 October 2018. The forum features personal stories from investors and entrepreneurs, as well as panels covering hot topics on the M&A and PE scene. Don’t miss this M&A must-attend-event!

The Baltic M&A market is booming and we invite you to read a new study that reveals M&A market trends.

Enjoy your reading!

Karin Madisson, Toomas Prangli, Piret Jesse

Obligation to declare actual beneficial owner

By the end of October 2018 companies registered on the Estonian commercial register must declare their actual beneficial owner. New companies must file data about their actual beneficial owner with the commercial register at the time of establishing the company along with their application for entry on the commercial register.

The beneficial owner is deemed to be a natural person who either directly or indirectly controls or otherwise exercises control over the company. Direct ownership implies that a natural person holds more than 25% of the shares or ownership of the company. Indirect ownership is considered to occur when a company owns more than 25% of the shares or ownership of another company that is under the control of a natural person. In addition, the actual beneficial owner of the company is considered to be a natural person who, no matter the amount of their shares or ownership, in some other way (eg, on the basis of a valid shareholders’ agreement or some other agreement) controls the company's important decisions (in particular the appointment of management bodies) and who has the right to effectively exercise voting rights greater than 50%.

Information about the actual beneficial owner must also be filed with the commercial register by non-profit organisations and foundations. By way of derogation, there is no obligation to publish data on the commercial register for apartment associations, building associations, stock companies and foundations whose business activities are aimed at holding or collecting assets for the benefit of the beneficiaries or persons specified in the articles of association and who do not carry out any other economic activities.

The obligation to file data with the commercial registry lies with the management board of the undertaking.

Moreover, details of any change in the data must be filed through the business register information system within 30 days from the date of change. If the data of the beneficial owner has not changed, the company or any other relevant organization confirms the accuracy of the data upon filing the annual report. In cases when the actual beneficiary cannot be identified and all reasonable measures have been taken to identify who they are, then the company must set the senior management body as the actual beneficiary.

By law, the sanction for failing to file details of the actual beneficial owner’s data or for providing incorrect and/or incomplete information, can be up to 300 fine units (up to EUR 1,200) for a natural person or up to EUR 32,000 for a legal person. The sanction for not conducting identification procedures is a fine up to 300 fine units or detention for a natural person and a fine up to 400,000 euros for a legal person.

Option to notify designation of a Data Protection Officer online via the Company Registration Portal

With the GDPR applicable from 25th May 2018, companies that have designated a Data Protection Officer (DPO) can conveniently notify the local supervising authority – the Estonian Data Protection Inspectorate – about designating a DPO via the Company Registration Portal online.

Not all companies are required to designate a DPO. However, this depends on the particulars of the personal data processing activities carried out. Controllers or processors should first carefully assess their data processing activities to determine whether or not a DPO must be appointed. Currently Estonia has not established any requirements additional to those in the General Data Protection Regulation (GDPR) on designating a DPO. It is also possible to designate a DPO voluntarily.

Baltic M&A deals are becoming truly pan-Baltic

The Baltic mergers and acquisitions (M&A) market is booming and deals are increasingly becoming truly pan-Baltic, involving targets operating in all three countries, as appears from the recent “Baltic M&A Deal Points Study 2018”. Almost 30% of Baltic M&A deals completed in 2016-2017 involved targets operating in each of the three Baltic states, which is almost double as much as in the period 2014-2015.

A typical Baltic M&A deal remains in the EUR 1-5 million bracket, while the number of EUR 5-10 million deals has also increased (from 18% to 27%).

The main industries of the target were the IT and technology (17%), energy (13%) and services (12%) sectors, while in 2014-2015 the most active sector was construction and real estate (29%).

Nearly half of buyers are from the Baltic states while the importance of US investors has also increased significantly (from 2% to 10 %). Both buyer and seller were from the Baltic states in a third of the total number of deals.

The study also indicates that courts are becoming a more popular choice among businesses as a dispute settlement venue, and local arbitration bodies less popular, with the exception of the Vilnius Court of Commercial Arbitration. This trend indicates that Estonian and Latvian arbitration institutions are considered unreliable by businesses. The main alternative seems to be the Arbitration Institute of the Stockholm Chamber of Commerce, but arbitration in Helsinki is also gaining popularity (growth from 2% to 8% respectively).

The “Baltic M&A Deal Points Study 2018” analyses M&A transactions completed in the Baltic States during 2016-2018 and covers 91 deals in the region. The survey was put together by law firms Sorainen, Cobalt, Ellex, Eversheds Sutherland, and TGS Baltic in cooperation with the Estonian, Latvian and Lithuanian Private Equity and Venture Capital Associations.

Turn peers into partners – attend the Baltic M&A and Private Equity Forum 2018

Offering the best insight into the challenges and opportunities of the Baltic M&A and private equity scene, the Baltic M&A and Private Equity Forum has become the main networking event for the Baltic M&A industry and market participants interested in the region.

The Forum gathers representatives of private equity and venture capital funds and investment banking, consultants, lawyers, investors, and other representatives of the financial sector, as well as interested business executives and owners.

The forum is organised by Sorainen and the Estonian business daily Äripäev, in partnership with the Baltic business dailies Verslo žinios (Lithuania) and Dienas bizness (Latvia), the Latvian, Lithuanian and Estonian Private Equity and Venture Capital Associations.

For more info and registration click HERE.

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