Procuration in Estonian Company and What is a Procuration?

The Problem

As a rule, a company is represented by the management board members but in some cases (board members are away from the location of the company, etc.) it is advisable to give the right to represent the company to somebody who is not a board member.

What is a Procuration

This right to represent the company is called “procuration”. It is a special authorisation which gives a person the right to represent the company in ALL transactions related to economic activities, however the procurator may transfer or encumber an immovable of the company only if the company grants this right to him in the procuration, and this is noted in the commercial register.

Procuration is subject to the provisions on representation established by the Law on the General Part of the Civil Code, unless otherwise provided by the Commercial Code.

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How it actually works?

Procuration may only be granted to a natural person and the company may have one or several procurators. Procuration in some cases may be granted to several persons in such a manner that all or some of the procurators are only entitled to represent the company jointly (joint procuration) or in such a manner that the procurator may represent the company only jointly with a member of the management board.

Main rules you should know about Procuration

• The procuration is formalized by authorisation, and the powers of the procurator are established by law.
• A procurator shall sign such that he adds the word “prokurist” [procurator] or the abbreviation “p.p.” (per procura) to his signature.
• A procurator is prohibited to transfer the procuration.
• The company may terminate a procuration at any time.
• The procurator may demand the termination of the procuration from the company in the event of the termination of the legal relationship that serves as the basis for the procurator.
• The procurator's office does not end with the death of an entrepreneur who was a natural person.

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The authorisation process

The record about the procurator is entered into the commercial register on the basis of the entrepreneur's (company's) application. In cases with commercial partnerships, the resolution of the body that appointed the procurator is also attached to the application.

The name and personal identification code of the procurator shall be indicated in the record of the procurator. If a procuration has been issued to several procurators, the record must indicate whether the joint procuration has been issued and to which of them it has been issued.