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Senior associate Tambet Laasik successfully represented client in Supreme Court with regard to validity of transactions made by board member
Senior associate Tambet Laasik of the LEADELL Pilv successfully represented a client in the Estonian Supreme Court in case No. 3-2-1-26-17. This is a conceptual court ruling with regard to the assessment of validity of transactions made by a board member. The Supreme Court annulled the decisions of the County Court and District Court and returned the case to the proceeding of the same District Court.
The Supreme Court established that pursuant to Art 181 (3) of the Commercial Code, a transaction concluded by a member of the management board is void also in case this transaction was not made with the board member personally but with a private limited company controlled by the board member. Such transaction is deemed to be valid only if the shareholders or the supervisory board agreed to the transaction or if the transaction was concluded in the course of daily economic activities of the private limited company according to the market price of a service.
In the same resolution the Supreme Court also explained that a representative has the right to cancel a transaction that is against the interests of the represented body if the other party of the transaction is also aware of the violation of obligations by the representative. Upon assessing the transaction – in the given case a rental contract – it is not necessary to compare it with the previous contract but to analyse the compliance of the transaction with the market conditions at the time of concluding the contract.
The article is also published in Estonian in business news portal Delfi Ärileht.
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