Opinion of the European Central Bank of 9 June 2006 at the request of the Estonian Ministry of Justice on a draft law amending the Commercial Code and some other legislation to facilitate euro introduction (CON/2006/28)
Date: 2006-06-09
Institutions: European Central Bank
Subjects: Estonia, euro, monetary integration, money, national law, share, share capital

EN 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 9 June 2006  

at the request of the Estonian Ministry of Justice  

on a draft law amending the Commercial Code and some other legislation to facilitate euro 

introduction  

(CON/2006/28) 

Introduction and legal basis 

On  11  April  2006  the  European  Central  Bank  (ECB)  received  a  request  from  the  Estonian  Ministry  of 

Justice for an opinion on a draft law amending the Commercial Code, the Law on the land register, the 

Law on commercial pledges, the Law on commercial associations and the Law on State fees (hereinafter 

‘the draft law’). 

The  ECB’s  competence  to  deliver  an  opinion  is  based  on  Article  105(4)  of  the  Treaty  establishing  the 

European  Community  and  the  first  and  sixth  indents  of  Article 2(1)  of  Council  Decision  98/415/EC  of 

29 June  1998  on  the  consultation  of  the  European  Central  Bank  by  national  authorities  regarding  draft 
legislative provisions1, as the draft law relates to currency matters and the stability of financial markets. 

In accordance with the first sentence of Article 17.5 of the Rules of Procedure of the European Central 

Bank, the Governing Council has adopted this opinion. 

1.  

Purpose of the draft law 

The  draft  law  provides  for  (i)  the  redenomination  into  euro  of  shares  and  share  capital  for  companies 

registered  in  Estonia;  and  (ii)  the  option  for  companies  to  issue  non-par  value  shares.  In  addition,  it 

amends  Estonian  law  to  allow  amounts  in  the  land  register  and  commercial  pledge  register  to  be 

expressed in euro. One purpose of the draft law is to reduce the costs and eliminate the state fees payable 

on share capital increases or decreases resulting from recalculations relating to the future introduction of 

the euro in Estonia.  

2. 

General observations  

2.1  The draft law introduces provisions regarding the methods and procedure for redenomination of the 

nominal values of shares and share capital into euro. The redenomination is based on the following 

principles: 

1  

OJ L 189, 3.7.1998, p. 42.  

 
 
 
 
 
                                                 
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minimum share values are to be rounded up to EUR 1 for unlimited partnerships and public 

limited  companies;  exceptionally,  public  limited  companies  established  before  1  July  2006 

may have share values of 50 euro cent or its multiple;  

-  

minimum  share  values  are  to  be  rounded  down  to  EUR  5  for  private  limited  companies 

established  until  1  July  2006  and  the  minimum  share  value  is  EUR  10  for  companies 

established after 1 July 2006; 

-  

the  minimum  share  capital  of  private  limited  companies  is  to  be  rounded  down  to 

EUR 2 500; 

-  

the  minimum  share  capital  of  public  limited  companies  is  to  be  rounded  down  to 

EUR 25 000,  the  minimum  amount  of  share  capital  required  by the  Second  Company  Law 
Directive2.  

2.2  The draft law also introduces in Estonian law the additional option for companies to have shares 

without a nominal amount. This would eliminate the need to increase or decrease share capital on 
conversion to the euro, thus introducing flexibility and simplicity3. This solution was recommended 
by  the  European  Commission4.  The  draft  law  is  also  in  line  with  the  Second  Company  Law 

Directive, which recognises and permits the use of either ‘nominal value of shares’ or ‘accountable 

par’. According to the draft law, the minimum amount of an accountable par share is EUR 1 (or 50 

euro cent for companies established before 1 July 2006) in order to avoid the emergence of penny-

stocks. 

3. 

Specific remarks 

3.1   The  ECB  generally  welcomes  early  preparation  for  the  introduction  of  the  euro.  However,  the 

current draft law (i) is scheduled to enter into force before the introduction of the euro in Estonia, 

namely  on  1 July  2006;  and  (ii)  applies  the  current  exchange  rate  between  the  euro  and  the 

Estonian kroon on the apparent assumption that it will be the same as the eventual conversion rate. 

3.2  With regard to the timing of the entry into force of the draft law, the ECB would like to stress that 

any  form  of  official  redenomination  (as  currently  provided  for  by  the  draft  law)  should  not  take 

place  before  the  date  of  the  introduction  of  the  euro,  following  the  Council’s  decision  on  the 

abrogation  of  Estonia’s  derogation  under  Article  122(2)  of  the  Treaty.  The  practice  of  other 

Member States has been that the official redenomination from the national currency into the euro 

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3  

4  

Second Council Directive 77/91/EEC of 13 December 1976 on coordination of safeguards which, for the protection of the 
interests  of  members  and  others,  are  required  by  Member  States  of  companies  within  the  meaning  of  the  second 
paragraph  of  Article  58  of  the  Treaty,  in  respect  of  the  formation  of  public  limited  liability  companies  and  the 
maintenance and alteration of their capital, with a view to making such safeguards equivalent (OJ L 26, 31.1.1977 p. 1). 
See  ECB  Opinion  CON/98/48  of  20  October  1998  at  the  request  of  the  Luxembourg  Minister  for  Relations  with 
Parliament,  the  Grand  Duchy  of  Luxembourg,  under  Articles 109l (2)  and  109f (6)  of  the  Treaty  establishing  the 
European Community and Article 5.3 of the Statute of the European Monetary Institute on a draft legislative proposal to 
facilitate the redenomination of the capital of corporations in euro and settle rounding problems in this connection. 
See  ‘The  Impact  of  the  introduction  of  the euro on  capital  markets’,  Commission  Communication  (Euro  Paper No  03, 
July 1997; available on the European Commission’s website at www.europa.eu.int), p. 3.  

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through  national  legislation  only  takes  place  upon  the  introduction  of  the  euro.  This  practice 

provides both clarity and legal certainty and is consistent with Community legislation. 

3.3 

In respect of the exchange rate for the redenomination of the nominal values of shares and share 

capital into euro, the ECB would like to recall that Article 123(5) of the Treaty provides that if the 

Council  decides  to  abrogate  the  derogation,  it  ‘shall  …  adopt  the  rate  at  which  the  euro  shall  be 

substituted for the currency of the Member State concerned’. Furthermore, Community secondary 

legislation  on  monetary  matters,  including  the  conversion  rates  adopted  in  accordance  with 

Article 123(5) of the Treaty, is directly applicable in the Member States. Official redenomination 

should  therefore  only  take  place  on  the  basis  of  the  adopted  conversion  rate  and  it  cannot  be 

assumed that the current exchange rate between the euro and the Estonian kroon will be the same 

as the eventual conversion rate. 

3.4  

In view of the above comments, the ECB is of the opinion that the date of entry into force of the 

draft law (currently 1 July 2006) should relate to the date when Estonia’s derogation is abrogated 

and the Council has adopted the rate at which the euro will be substituted for the Estonian kroon. 

This opinion will be published on the ECB’s website.  

Done at Frankfurt am Main, 9 June 2006. 

[signed] 

The President of the ECB 

Jean-Claude TRICHET 

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