Establishing a branch of a credit institution within the territory of another Member State - Estonia*
1. Submission of documents
According to Credit Institution Act (CIA) § 214 (1) a credit institution of a contracting state which wishes to found a branch in Estonia shall inform the Estonian Financial Supervision Authority (EFSA) thereof through the financial supervision authority of the contracting state. The Financial Supervision Authority shall be submitted the following information and documents:
1. The action plan of the branch which shall contain data on all the financial services which the branch proposes to offer in Estonia, and a description of the organisational structure of the branch
2. The address of the branch
3. Data relating to the managers of the branch, pursuant to the provisions of subsection 48 (7) of this Act.
The documents shall be submitted in Estonian or together with an official translation into Estonian. The action plan may be submitted in English or together with an official translation into English.
3. The name of the branch
According to Commercial Code § 14 the business name of the branch of a foreign company shall consist of the business name of the company and the words "Eesti filiaal" [Estonian branch].
A branch of a credit institution may add the place name of the administrative unit in which the branch is located or other place names to the business name of the credit institution.
A foreign credit institution may operate in Estonia under a business name which is registered in a state where the institution is founded (hereinafter home state) if the name is clearly distinguishable from other business names entered in the commercial register in Estonia. If there is any danger that a business name is not clearly distinguishable from the business names of other credit institutions operating in Estonia, the EFSA has the right to demand that such business name be accompanied by an attribute.
The business name of a credit institution shall not be such as to be confused for another credit institution or a state central bank.
There is no fee applicable to the establishment procedure. The branch of credit institution shall pay a supervision fee specified in Financial Supervision Authority Act.
Payment of the supervision fee shall be requested in a corresponding precept sent by the EFSA.
5. Requirements for the personnel
Requirements for the manager(s) of the branch are provided in CIA (§ 48 (7)) and in Commercial Code (§ 385).
A foreign company shall appoint a manager(s) for the branch. A manager must be a natural person with active legal capacity. The residence of at least one manager must be in Estonia, in other EEA Member State or in Switzerland. A person with respect to whom a court has, pursuant to § 49 of the Penal Code, imposed a prohibition on acting as a member of the management board of a legal person, a person who is prohibited from operating within the same area of activity as the branch, or a person who is prohibited to act as a member of the management board on the basis of an Act or a court decision shall not be a manager.
If several managers are appointed for a branch, each of them may represent the branch unless it is specified that the directors or some of them may represent the branch jointly.
In order to elect or appoint a manager of the branch, the written consent of the person to be elected or appointed is necessary. A person shall submit his or her written consent together with:
1. An overview of his or her education
2. An overview of the work experience
3. An overview of the engagement in enterprise and punishments entered in the punishment register, and
4. Confirmation concerning the absence of facts provided for in the CIA which preclude the right to be a manager of a credit institution.
The managers and employees of a branch of the credit institution are required to act with the prudence and competence expected of them and according to the requirements for their positions and the interests of the credit institution and the clients thereof.
The managers and employees of a branch of the credit institution are required to give priority to the economic interests of the credit institution and the clients thereof over their own personal economic interests.
6. Establishment procedure
EFSA makes, within two months after receipt of the aforementioned information in section 1, a decision which determines the requirements which the credit institution must comply with in Estonia. EFSA shall promptly inform the financial supervision authority of the contracting state, the credit institution or its representative of its decision.
A credit institution of a EEA state may found a branch and commence activities after receiving, through the financial supervision authority of its home country, the EFSA decision, or two months after the date on which the EFSA receives the documents and information specified in CIA § 214 (1).
The branch of the credit institution shall be entered in the commercial register of its location on the petition of the manager(s) of the branch. Confirmation from the EFSA concerning receipt of the information and documents specified in
CIA § 214 (1) and the decision of the EFSA specified above shall be submitted upon entry of a branch in the commercial register.
7. Changes in the information
The EFSA shall be informed of changes in the information and documents concerning the action plan of the branch, organisational structure, address of the branch and data relating to the managers of the branch at least one month in advance.
Branches of foreign credit institutions, which practise transactions and acts permitted for credit institutions as specified in the Estonian Credit Institutions Act § 6, shall follow the rules and requirements established by the Bank of Estonia. The branch of a foreign credit institution shall submit regular reporting electronically to the Estonian Financial Supervision Authority and to Eesti Pank in compliance with reporting deadlines.
Further information concerning the periodical reporting is available from email@example.com
* EFSA does not counsel the establisher of a branch of financial institution on business law (including establishment of a branch) or tax law. We recommend seeking the advice of legal experts on those matters.