Equitable treatment of shareholders among state-owned enterprises

As described in the landscape section of this document, Estonia follows a decentralised ownership model, where nine ministries currently exercise ownership rights over 36 SOEs. Of the 36 SOEs, 30 are fully controlled by the state, while six have nongovernment shareholders, with non state ownership ranging from 11 per cent to 84 percent.

Guideline III.A: “The co-ordinating or ownership entity and SOEs should ensure that all shareholders are treated equitably.” The Commercial Code applies to all shareholders regardless of the ownership structure. This piece of legislation protects minority shareholders in SOEs, and privately owned companies, as well as listed companies. There are no additional legal safeguards for minority shareholders in SOEs. There was however, one exception in the SOE sector which did affect minority shareholders’ rights, where different classes of shares were not treated equally. In State-owned companies, the State had sole right to receive the minutes of supervisory board meetings. This right did not apply to private shareholders. However, the State Assets Act enacted in 2009 (described above in Section 1.3 on “The legal and regulatory framework for SOEs”) corrects this asymmetry, allowing all shareholders to access this information.

Furthermore, there are no golden shares in Estonian SOEs. In two cases where the state has majority control, it is minority shareholders who possess blocking power, with certain decisions requiring 2/3 majority support. In one of the two companies (Levira, 51 per cent owned by the State) the articles of association state that “a resolution is adopted if over 2/3 of the votes of all votes on the general meeting are in favour.” For the other SOE (Eesti Metsataim, 60 per cent owned by the State), the articles of association state 2/3 of the votes are needed for decisions “on amendments in the articles of association, increasing or decreasing share capital, issuing convertible bonds or options, purchasing treasury shares, paying dividends, dissolving, merger, division of transformation of the company or submitting petition of debtor”.

Minority shareholders can turn to the court system to seek indemnification, as would any shareholder regardless of the ownership structure of the company. Therefore, minority shareholders in SOEs are protected in the same way and by the same regulations as minority shareholders in private companies.

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