Category: Estonia

Ellex Raidla has advised the Atomico investment firm on its participation in Katana’s USD 11 million series A funding round.

Katana is an Estonian startup that has built manufacturing-specific enterprise resource planning software for SMBs.

According to Ellex, “leading the round is European venture capital firm Atomico, with participation from angel investors Ott Kaukver (Checkout.com CTO), Sten Tamkivi (CPO Topia, formerly Skype), Sergei Anikin (CTO, Pipedrive) and Kairi Pauskar (former TransferWise HR Architect). Previous backer 42Cap also followed on, bringing the total investment raised by the company to date to USD 16 million.”  

Ellex Raidla’s team was led by Counsel Antti Perli.

Ellex could not provide additional information on the deal.

Editor’s note: After this article was published, Ellex informed CEE Legal Matters that Sheridans had served as lead counsel to Atomico.

The Tallinn office of Sorainen has advised Skoda on its agreement to sell six trains to Eesti Liinirongid, operating under the Elron brand name, with an additional option to buy ten more in coming years. Eesti Liinirongid was advised on the procurement process by Blessner.

Eesti Liinirongid is a state-owned company organizing railway transportation, including passenger transportation and the provision of other accompanying services as well as repairs of railway rolling stock.

According to Sorainen, “the trains are two-system and therefore able to service the new electrified route, but also the older contact system routes. The new trains are part of the modernization of the Estonian train fleet. The six trains will cost EUR 55.2 million in total, which includes the cost of building the trains, as well as the cost of providing a package of spare parts and materials for the first five years of working life for the trains.”

‘‘The new trains will contribute greatly to increasing the environmental friendliness of our transport connections,” commented Merike Saks, Chairman of the Board at Elron, “and launching those trains will hopefully also alleviate the current load on one of the most popular railway lines in Estonia.”

Sorainen’s team included Partner Carri Ginter, Senior Associates Kadri Harginen and Kaido Kunnapas, and Associates Gerli Helene Gritsenko and Mario Sorm.

Blessner’s team included Lawyer Alar Urm.

Sorainen has advised Finnish state-owned company Vapo on the sale of its Nevel subsidiary to French private investment company Ardian.

Nevel is a provider of district heating and industrial energy solutions, owning and operating more than 130 heat and power plants. Nevel is also responsible for the operation of more than 40 district heating networks in Finland, Sweden, and Estonia. 

Ardian is a private investment house with assets of US 100 billion managed or advised in Europe, the US, Asia, and the Middle East.

Sorainen’s team included Partner Paul Kunnap, Senior Associates Kaspar Endrikson and Mirjam Vichmann, and Associate Andra Grunberg.

Sorainen did not reply to our inquiry on the matter.

TGS Baltic has successfully represented entrepreneur Toomas Tamm, the former owner of Kivioli Keemiatoostus in a dispute involving a guarantee issued by OU AP-Terminaal.

Kivioli Keemiatoostus, which is a member of the Alexela Group, is active in the oil shale extraction and the production of shale oil, thermal energy, and power sectors. According to TGS Baltic, “the main legal issue concerned a debt relationship between different parties: a letter of guarantee was issued to ensure the satisfaction of the client’s claim arising from a loan agreement concluded between the client and the principal debtor. Before court proceedings started, bankruptcy of the principal debtor was declared and complicated court proceedings for the declaration of the surety’s bankruptcy were in progress; therefore, the only possibility to satisfy the claim was to demand performance from OU AP-Terminaal as the guarantor on the basis of the letter of guarantee.”

According to the firm, “the parties argued, inter alia, over the validity of the letter of guarantee regarding the client as the creditor. Active work in court proceedings on proving the legal position and conducting negotiations made it possible to conclude a compromise on extremely favourable terms for Mr. Tamm: OU AP-Terminaal undertook to pay EUR 170,000, which constitutes almost 92% of the claim first submitted to the court.”

TGS Baltic’s team included Senior Partner Paul Varul and Associate Maris Vutt.

Cobalt has advised the shareholders of Kids Network Television OU, including its management, on the sale of the business to MM Grupp OU. The deal is contingent on the approval of the Estonian Competition Authority.

Kids Network Television is a media company that broadcasts television programs in the Baltic States, the Middle East, and North Africa. The Kids Network’s portfolio includes several specialized TV channels, including TV programs for children and young people and TV series and movies aimed at viewers of all ages.

The portfolio of the MM Grupp, which was established by UP Invest OU, includes the general interest channel Kanal 2 and specialized TV channels Kanal 11, Kanal 12, MyHits, Eesti Kanal, and Eesti Kanal+.

Cobalt’s team included Partner Peeter Kutman, Senior Associate Madis Reppo, and Associate Tiit-Gregor Mets.

Ellex Raidla has advised United Utilities on its sale of its 35.3% stake in AS Tallinna Vesi to the City of Tallinn and Utilitas for a cash consideration of EUR 100.2 million. Triniti advised the buyers on the deal. 

Completion of the transaction is expected by April 2021, subject to the approval of the governing body of the City of Tallinn and merger control approval from the Competition Authority in Estonia. As a result of the sale, the City of Tallinn will hold a total of 52.35% and Utilitas will hold 17.6% of the stake in AS Tallinna Vesi.

United Utilities became the Estonian company’s major shareholder when it was privatized in 2001 and a key partner in delivering an investment program to upgrade the city’s fresh water supplies, sewage pumping stations, and sludge treatment facilities. 

Utilitas is an Estonian district heating company and producer of renewable energy. The company administers 550 km of district heating pipeline and provides heat to 174,000 private households in eight Estonian cities and towns – Tallinn, Maardu, Keila, Rapla, Haapsalu, Kardla, Jogeva, and Valga. 

According to Ellex, the “proceeds of the sale will support United Utilities in taking further steps to improve services for customers and communities in the north west of England, helping to drive a green recovery for the region.” 

Ellex Raidla’s team included Partners Sven Papp and Martin Maesalu and Senior Associate Gerda Liik. 

Triniti’s team consisted of Partner Ergo Blumfeldt, Senior Associates Ain Kalme, Sten Veidebaum, and Mikk Pold, and Associate Martin Jarve.

TGS Baltic has successfully represented Dubai-based La Campana General Trading in a dispute with Cryotech Nordic AS regarding claims arising from an exclusive distribution agreement. The case was heard by Estonia’s Harju County Court.

According to TGS Baltic, the dispute revolved around refund claims for a EUR 80,000 advance paid to Cryotech Nordic AS under the distribution agreement and Cryotech Nordic’s claim for payment of EUR 235,000 for an additional order made by La Campana General Trading.

On January 20, 2021, TGS Baltic reported, the court awarded La Campana General Trading approximately EUR 87,000 and dismissed Cryotech Nordic’s counterclaim of EUR 235,000.

TGS Baltic’s team consisted of Associate Partner Chirag Mody and Associate Maris Vutt.

TGS Baltic has represented Juri Roosa and Freddy Tomingas, members of the Estonian punk rock band Vanemode Veljo Vingissar, in a dispute over the band’s name with former member Andrus Kerstenbeck. The case was heard by the Harju County Court.

According to TGS Baltic, Andrus Kerstenbeck started performing under the name Vanemode several years ago. The firm reported that the court found that by considering how active the band was in the 1980s, the “Vanemode” mark is well-known and that the right to its name does not belong to any one of its members. In addition, TGS Baltic reported, the court found that it is “misleading to the audience and to the public when the plaintiff alone performs as band Vanemode with outsiders by discarding other founders and later members of [the] band.”

Finally, the firm reported, the Harju County Court ruled that Kerstenbeck has no right to prevent other members of the band from registering Vanemode as a trademark.

TGS Baltic’s team consisted of Partner Peeter Viirsalu, Senior Associate Nigul Saar, and Associate Silvia Urgas.

Walless has helped Funderbeam obtain an investment firm license from the Estonian Financial Supervision Authority, allowing the company to continue operations in the European Economic Area after Brexit.

Funderbeam is a global equity funding and trading platform that connects an investor network with what Walless describes as “highly vetted growth companies across international markets and, through the marketplace, allows private investments to be traded.” Funderbeam serves investors in 134 countries around the world and businesses in Europe and Asia.

Walless’s team included Partner Andres Siigur, Senior Associate Piret Luiga, and Junior Associate Kaisa Saarmann.

Despite the shocking and unanticipated effects of the first pandemic wave in spring 2020, the focus has shifted, now that the second wave is rolling in, from supporting affected individuals with state salary supplements and banking-sector-provided grace periods to the necessity for a more holistic view in order to help affected industries survive.

Therefore, it is essential to focus on finding opportunities, which can, when accompanied by adaptability, communication, technology, and creativity, alter the future. A great example on how to turn adverse impacts to future benefits is the AML Bridge Estonia project. This project, currently in a pilot phase, represents cooperation between four Estonian large banks, technology wizards from anti-money laundering start-up SALV, and experts from the Estonian Financial Supervisory Authority, Financial Intelligence Unit, and Data Protection Inspectorate. The aim of this project is to show that joint crime-fighting in banking is the finest method to combat financial crime.

Even though the Money Laundering and Terrorist Financing Prevention Act encourages sharing relevant data to fight crime, the requirements of banking secrecy and data protection have held the leash in effectuating this. However, this is gradually changing, as the relevant technology is continuously improving – both the centralized X-road Estonia e-platform, which permits the secure exchange of or access to the originator’s data, and privacy-enhancing technologies that allow for the extracting of and sharing of data while protecting the privacy and security of sensitive information have proven to work solidly. All this has paved the way for the AML Bridge Estonia project, which leverages these synergies with the aim of showing results and possible scalability beyond local market as soon as April 2021. 

Another change in the same field, which will become effective on January 1, 2021, involves the separation of the current Estonian Financial Intelligence Unit from the police and its establishment as a new authority under the government of the Ministry of Finance.” The government considers the prevention and fight against money laundering and terrorist financing a priority, and with this move, it aims to achieve more cooperation and clearer connections with the Estonian Financial Supervisory Authority, the Estonian Tax and Customs Board, and the Ministry of Finance, to develop an effective strategic analysis function to swiftly spot anomalies and address risks.

When it comes to combating money-laundering and protecting non-sophisticated investors, the state authorities are increasingly shifting their focus to FinTechs and virtual currency service providers. In March 2020, the national rules governing the provision of virtual currency services were tightened. Among other things, capital requirements of service providers were increased and a requirement was introduced that the registered seat, the seat of the management board, and the place of business of the undertaking applying for the licence have to be in Estonia (or a foreign company has to operate in Estonia via a branch that is registered in the Estonian commercial register and that has a local place of business and local seat of the head of the branch). It has been reported that the regulatory changes have helped to tidy the market considerably, as approximately 1300 activity permits were repealed by the end of August.

Along the same lines, especially due to a few scam allegations that were brought to light this year, there have been calls to address the crowdfunding market to protect non-sophisticated investors from misleading campaign statements and fraudulent activities of crowdfunding platform providers and project owners. As the European Union Crowdfunding Regulation no. 2020/1503, which will apply to investment- and business-loan-based crowdfunding service providers, was published in October 2020, the government is preparing for its implementation. However, as the regulation does not cover crowdfunding platforms that facilitate consumer lending, a bespoke national regime will be put in place. The government is currently preparing a new special act to encompass both crowdfunding as well as virtual currency service providers and the draft law is expected to be published in December 2020.

By Merit Lind, Partner, and Kristin Kamilla Kirss, Counsel, Fort

This Article was originally published in Issue 7.11 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.