Corporate and M&A

Attorney-at-law and partner Pirkka-Marja Põldvere is writing in the news portal Postimees.ee about the topic “Can private limited company reclaim the fee paid to a member of management board?”.

Mister X has been elected as a member of the management board of a private limited company. The member is satisfied – elected for 3 years and the parties have agreed to pay him as a member of the management board a significant amount of fee. However, one day the shareholders unexpectedly submit a claim for the repayment of the fee. Unprecedented? Not really.

The Estonian Supreme Court in its recent decision (3-2-1-44-17) took a standpoint that if shareholders determine a fee for a member of management board which fails to be in accordance with Art 1801 (2) of the Commercial Code, the company has the right to claim the repayment of the excessive fee by the board member. According to the Commercial Code, the shareholders or the supervisory board shall ensure that the total amount of the payments made by the private limited company to the members of the management board are in reasonable proportion to the duties of the members of the management board and the economic situation of the private limited company.

Read the entire article.