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Tallinn Circuit Court confirms statement by RASK Attorneys-At-Law in 6-year criminal case against Pere AS

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Tallinn Circuit Court confirms statement by RASK Attorneys-At-Law in 6-year criminal case against Pere AS

On 7 November 2018, the Criminal Chamber of Tallinn Circuit Court confirmed the statement of case made by RASK Attorneys-At-Law regarding the justification of the actions of their client in the criminal case against Pere AS that has lasted more than 6 years and received considerable attention.

Tallinn Circuit Court annulled the conviction issued by Harju County Court in the criminal case against Pere AS, acquitting the former members of the company’s board Rein Kilk, Kaie Raig, Neeme Raig and Kristjan Oolo.

“We are of the opinion that the Circuit Court’s decision was correct and justified – a decision that takes into consideration the fundamental principles of current company law in Estonia. The wording of the decision is based onand re-asserts the existing practice of the Supreme Court. To put it simply, the message of the Circuit Court’s decision as well as the Supreme Court’s practice is logical: a transaction carried out within a group cannot damage the parent company, as the assets of the parent company will not decrease as a result of the transaction. That has been the criminal defence counsel’s main position since the very first days of the proceedings more than 6 years ago,” commented RASK Partner, Ramon Rask.

In the same criminal matter, Harju County Court found on 28 May 2018 that transferring all of the parent company’s assets to a newly-founded subsidiary with a 100% holding results in the parent company becoming a company without assets. However, with today’s decision, the Criminal Chamber of Tallinn Circuit Court confirmed the practice previously worded by the Civil Chamber of the Supreme Court and the statement of case made by RASK attorneys that in analogous transactions carried out within a group, the value of the parent company’s assets does not decrease, and such transactions cannot damage the interests of its creditors.

Upon transferring assets from a parent company to a subsidiary, the value of the subsidiary’s shares will change to the extent of the transferred assets, which is why the total value of the parent company’s assets will not change. Consequently, Tallinn Circuit Court was of the opinion that the transfer of the bread production facility’s registered immovables and trademarks from Pere AS to its newly-founded subsidiary Pere Pagar OÜ with a 100% holding did not reduce the value of the assets of Pere AS. The creditors’ interests were not damaged, which is why the Circuit Court considered the reproaches outlined in the charge presented by the prosecutor’s office to be unfounded.

The prosecutor’s office can contest the Tallinn Circuit Court’s decision in the Supreme Court within 30 days.