A bill aimed at simplifying investing in startups passed its first reading in the Riigikogu on Tuesday and Center Party MP Andrei Korobeinik said that the amendments will make the lives of startups easier.
The objective of the amendments is to make it easier for startups to involve investment, the Center Party said. At the moment, if an investor wants to invest in an Estonian company, their representative and all the shareholders of the startup company must meet a notary at the same time in the same place.
Korobeinik, a member of the Riigikogu's legal affairs committee, said: "However, this may not be easy. Especially in a situation where the investor is some foreign venture capital fund or several angel investors and the company has many shareholders."
The amendment would allow shareholders to choose whether they want notarization of the transactions or whether the decision of existing shareholders is sufficient to involve new shareholders.
"A similar approach is used in many other countries, such as Finland, Latvia and the United States," Korobeinik said. "For Estonia, this would be an opportunity to modernize the economic environment and improve the competitiveness of our companies," he added.
Korobeinik, who made a presentation before the plenary on behalf of the legal affairs committee, said that Estonia's competitiveness is being hampered by banks operating here that do not open accounts for foreign investors. As a result, several successful startups in Estonia have changed their jurisdiction and relocated to the United Kingdom or the United States, for example.
"With this, Estonia will lose tax revenue and take a blow to its reputation. According to the law amendments, foreign investors will no longer need to open accounts with Estonian banks or visit notaries in Estonia," Korobeinik added.
There are currently two bills in handling, one by the legal affairs committee and the other by the government. The first reading of both bills has been completed and a compromise between them will be sought by the committee between the first and second reading.
Editor: Helen Wright