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Legal Newsletters - Archive

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Including: Legal form and licensing; Financial supervision; Other requirements.

The Supreme Court recently highlighted an Estonian regulation related to loans granted to natural persons which is often forgotten or overlooked by creditors. Agreements for such loans are common. However, if they contain a jurisdiction clause under which all disputes arising between the parties in relation to such agreement must be settled in a specific court in Estonia, this clause may turn out to be void.

Under Estonian law, a guarantee is an independent obligation, the validity of which is not influenced by the validity of the obligations secured by it. The aim of the guarantee is to provide comfort; the beneficiary under the guarantee may enforce the guarantee once an obligor has failed to perform its obligations as secured by the guarantee. The Supreme Court has recently ruled on this issue.

In a recent ruling the Supreme Court provided important standpoints in connection with obligations secured under a security agreement. In its judgment, the court clarified the meaning of a 'global security arrangement'. The court found that global security arrangements are not always permissible and in some cases can be void. This ruling will have an impact on banks as lenders, as well as on borrowers.

The Estonian Central Bank and the Financial Supervision Authority often cooperate with their Scandinavian colleagues. Amendments to the Credit Institutions Act recently entered into force, introducing a new regulation on cross-border banking supervision and cooperation between financial supervision authorities. The amendments facilitate tighter cooperation between the financial authorities of EU member states.

The Parliament is in the process of drafting a law that will give the Financial Supervisory Authority (FSA) authorisation to impinge on banking secrecy when investigating alleged misdemeanours, an offence punishable by a fine or detention. The current Credit Institutions Act, which governs banking secrecy regulations, allows the FSA impinge on banking secrecy only in case of criminal offences.

The Estonian Supreme Court recently analysed a problem which emerged in conjunction with a decrease in the value of pledged shares upon a change in share capital, and explicitly confirmed that the value of a shareholding is also influenced by attached voting rights. Such decisions demonstrate the importance of the quality of collateral, with those that borrow against esoteric collateral, such as shares, likely to be penalised.

More updates >

Capital Markets


Including: Securities Market Regulation; Supervision

The call for tighter financial regulation can be heard everywhere - Estonia is no exception. The Financial Supervision Authority recently issued an advisory guideline to investment funds specifying the requirements for internal rules regarding risk management. The guideline, entitled "Requirements for the Management of Risks Related to the Investment of the Assets of a Fund", will enter into force on February 15 2010.

Competition & Antitrust


After conducting a thorough analysis of the directory media market, the Competition Board has unconditionally cleared a merger between two leading Estonian directory media companies which will result in a joint market share of 66%. The decision is significant because of the issues surrounding the board's market definition and its consideration of the Internet as a valuable alternative to traditional information sources.

The Competition Board recently fined Narva Elektrijaamad AS, a subsidiary of the state-owned electricity monopoly Eesti Energia, Ekr250,000 for an abuse of its dominant position. This is one of the biggest fines to be imposed in the board's history, confirming that the board is taking serious action against dominant companies that abuse their dominant position.

The Competition Board has initiated investigations into the local water supply and wastewater discharge services market in order to verify its compliance with competition laws. The main reason behind the investigations is the dramatic increase in the prices charged for water supply and wastewater discharge services in Estonia over the last three years.

The Ministry of Justice has drafted amendments to the Penal Code, the Code of Criminal Procedure and the Competition Act regarding the introduction of a leniency programme designed to assist in the battle against cartels. The amendments were presented to the public at the beginning of 2009.

In the past the Competition Board has been accused of being too passive and ignoring severe competition law infringements. The board is eager to disprove these accusations and has thus taken on a more active investigatory role. Since the beginning of 2008 the Competition Board, along with the Public Prosecutor's Office, has commenced six criminal cases investigating cartel infringements.

The Competition Board recently issued a precept to AS Narva Elektrijaamad regarding abuse of its dominant position in the wholesale electricity market. Two small undertakings engaged in the sale of electricity had filed a complaint against Narva Elektrijaamad regarding the termination of a provision of a fixed supply of electricity.

More updates >

Projects & Procurement


Several amendments to the Public Procurement Law recently came into force. Most of them resulted from the implementation of the Remedies Directive into national law. Independently, the locus of supervisory powers was moved so that, as of July 1, the independent Public Procurement Agency ceased to exist. Rather, supervisory tasks are now carried out by a public procurement unit within the Ministry of Finance.