Estonia: Estonian National Sustainable Development Plan Adopted

On 14 September 2005 the Estonian Parliament (Riigikogu) adopted a resolution approving the Estonian National Sustainable Development Strategy "Sustainable Estonia 21".up to 2030. The strategy pursues a holistic approach to society and does not deal with problems in specific areas. It seeks to balance sustainable development, preservation of identity, with competing in the global setting. In addition to defining the development goals of society, the strategy lists the major assumptions about and factors that may affect Estonia’s development in the coming decades. The resolution of the Riigikogu approving the development strategy entered into force on 15 September 2005.

On 28 June 2005 the Riigikogu passed the Act Amending the Local Government Council Election Act. The amendments specify how elections should be organized, and grant the voters the right to vote electronically. The President of the Republic at first refused to proclaim the act and requested that the Supreme Court to declare the act unconstitutional. The Supreme Court declined to do so. In line with the amended act, vot3ers may cast ballots electronically already during the upcoming local government council elections on 16 October 2005 and during any subsequent elections. The amendments entered into force on 18 September 2005.

On 5 September 2005 the Minister of Finance adopted Regulation Nr. 61, establishing the requirements for a code of conduct to be established by credit and financial institutions, for internal audit rules to monitor compliance with the code of conduct and for the application of such documents. The regulation was issued on the basis of subsection 13(6) of the Money Laundering and Terrorist Financing Prevention Act. The regulation prescribes the procedure for identifying, verifying, preserving and updating relevant data. The regulation also sets forth measures for preventing money laundering and terrorist financing and internal audit rules for monitoring compliance with the code of conduct. Credit and financial institutions must bring their activities and documents in line with the requirements of the regulation by 1 January 2006 at the latest. The regulation entered into force on 18 September 2005.

In September 2005 the Financial Supervision Authority adopted Corporate Governance Recommendations. Most European countries have established similar rules. In Estonia these recommendations have now been established for the first time. Corporate Governance Recommendations constitute rules and practices to be observed mostly by companies whose shares have been admitted for trading on a regulated market. Other companies may also choose to comply with these recommendations. The Corporate Governance Recommendations are more stringent than the provisions of law. The companies must proceed from the underlying "comply or explain" principle in their activities. If the management board of an undertaking has not followed the Corporate Governance Recommendations, it has to explain the reasons for non-compliance in the particular case. Under the recommendations companies shall also prepare a Corporate Governance Recommendations Report as a separate chapter of its Annual Report. The report must describe the activities of the management board and the significant events and developments of the company. Special attention is paid to access to information and transparency of activities, including disclosure of company information on its website. As a new requirement the recommendations establish the obligation to disclose the remuneration received by individual members of management, as well as the requirement for independent supervisory board members. The aim of the Corporate Governance Recommendations is to increase the transparency of the activities and management of companies, as well as their reliability and reputation. Companies that follow the recommendations should find it easier to resolve conflicts of interest, ensure equal treatment of shareholders and resist pressures that various stakeholders can exert on the management of the company. The Corporate Governance Recommendations should reflect best management practices and all companies should aim towards implementing these recommendations. The Corporate Governance Recommendations shall enter into force on 1 January 2006.

On 7 July 2005 the Government of the Republic issued Regulation Nr. 155 amending its earlier regulation that established limits for compensating business travel expenses and daily allowances, and the conditions and procedure for the payment thereof. There are several changes. First, the provisions of the regulation now also apply to creative persons dispatched by artistic associations. The regulation also provides that tax-exempt business travel expenses can be compensated by either the employer or by a third party. The regulation also changes the maximum rates for tax-exempt daily allowances and accommodation costs both for domestic and foreign business travel. The new rules are applicable retroactively as of 1 July 2005.

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