Justice minister Andres Anvelt gave entrepreneurs two weeks to solve a bulky legal problem behind which the latter smell a will to rewrite the entire Commercial Code – their faithful servant for two decades.
On November 20th justice minister sent dozens of organisations related to entrepreneurship and legislation an over 150 pages of «Corporate Law Codification Basic Problem Project» (Ühinguõiguse kodifitseerimise lähteülesande projekt). The reply was expected by ministry by December 8th already. However, on Friday Mr Anvelt signed a new document asking for feedback by January 5th.
The thick document compiled by the ministry’s private law department advisor Külliki Feldman says that the Commercial Code created some twenty years ago and repeatedly amended is now in need of a thorough overhaul.
As a good prerequisite to tackle a job so vast, they cite the financing offered from Europe: for the legislation process costing €1.9m, close to €1.6m will be covered by European Social Fund. Justice ministry did not specify how much of that would be receivable to update the Commercial Code.
At that, Estonia’s currently most influential business organisations Chamber of Commerce and Industry and Estonian Employers Confederation begged to sharply differ.
«It is not clear to us what justice ministry is aiming at,» said Toomas Luman, the chamber’s president and head of a top Estonian construction company Nordecon. «One can’t help but think the sole goal being to get the EU money, as there’s no financing to the specific amendments that are actually needed.»
The entrepreneurs do not believe that the code will turn out ideal and problems-free. «Over 95 percent of existing enterprises has no problems with the current commercial code,» said commerce and industry chamber’s director-general Mait Palts. «As any analysis would quite definitely result in a new code, that would unavoidably also affect all those who are having no problems today.»
«Brakes should be applied to the changing of Commercial Code as law should not be changed just for the sake legislative drafting as such,» said Employers Confederation head Toomas Tamsar.
Even the Bar Association which ought to rejoice over law increasingly improved, is a bit upset.
The association’s commercial law committee chairman Karin Madisson, a sworn lawyer at Sorainen Law Office, admitted it is impossible to read through such a vast amount of materials containing opposing options, to thereafter analyse and present arguments.
«Instead of sending a long 150 page plan containing all kinds of ideas to get opinions, one ought to first invite the interest groups around a table to clarify the tough spots,» said Ms Madisson.
Even so, the Bar Association is in favour of a thorough analysis of the Commercial Code. «I deem the Commercial Code reform as necessary, to fix the many holes which have appeared over the two decades,» added Ms Madisson.
An overhaul of the Commercial Code is forcefully supported by Estonian development Fund and entrepreneurs seeking risk investments vital for start-ups.
«The Development Fund, indeed, is an engine for change,» admitted the fund’s CEO Pirko Konsa. «We cannot ignore the vast amount of entrepreneurs after whose interests the current commercial code has been compiled, but it has become obsolete and does not correspond to the requirements of increasingly globalising business.»
In the opinion of the Development Fund, even Finnish and Latvian commercial codes favour the new generation investors more than Estonian law. «Risk investors seeking for successful start-ups go to Latvia or Finland or force our companies to move their headquarters to neighbouring countries,» observed the fund’s chairman Ville Jehe.
Justice ministry, however, insists they are not in overmuch hurry at all. «This current code has had more than a hundred amendments which makes it patchy,» said the ministry’s private law department head Indrek Niklus. «We have only raised the issue whether to proceed with amendments or start to more thoroughly change.»
According to Mr Niklus, the short notice given to interest groups was only in order to reach essential discussions this real already.
«Should it be decided that there will be a revision of the Commercial Code, it will take two months just to form a committee and, thereafter, the committee will need the next up to two months to compile their action programme,» explained Mr Niklus.
«Should somebody file their proposals later, not by the 5th but, let’s say, by 10th of January, we will receive such proposals as well,» added Mr Niklus.
Leon Glikman, sworn lawyer
As several of the provisions in the current Commercial Code are obsolete, and some outright idiotic, changes are badly needed. A large problem is lack of protection for minority investors. Thus, a board under majority owner control may simply peculate assets out of the company and the minority holder’s options to block such activity are near zero.
One vital issue is the lack of privacy law, scaring away foreign investors. Naturally, the register needs to show things like persons with right of representation, but not board member fees which are subject to privacy protection, and the dividends paid to shareholders. In this, Estonia, true to herself, has been «a better believer than the Pope» and therefore here there are more options to fumble in other people’s purses than required by EU directives.