The structure of ownership and control
The ownership structure which emerged after the accelerated privatisation process reflected the Government’s desire to establish a base of core owners. At the onset of the process, smaller enterprises were sold by auction. Nearly all of these smaller companies were privatised by the end of 1994. The privatisation of medium and larger state owned enterprises took longer to get under way. At the end of 1992, only seven of these companies had transferred ownership through management and employee buy-outs. One of the key features of the Estonian privatisation process was that the tender method borrowed from Treuhand (the agency that privatised East German enterprises) resulted in the majority of sales going to outside investors (both Estonian and foreign private companies).
The Estonian Privatisation Agency, created in 1993, in charge of co-ordinating the privatisation process, saw 70 per cent of the companies it privatised go to foreign owners. Estonia imposed no restrictions on foreign initial ownership of its privatised SOEs. On the contrary it was believed that “outsiders tended to bring modern management and marketing skills as well as capacity to make capital investment, all of which were crucial for an effective turnaround” (Estonia Institute, 1999).
Currently, seven of the listed companies have a domestic controlling owner with more than 50% ownership, another two have domestic ownership reaching over 40%. The other companies have a slightly more dispersed ownership structure, with two to four main
Figure 2.1. Investment in Tallinn securities market by country
1. Figures provided by Estonian authorities, as of 1 February 2010.
owners. Although the documentation provided by Estonian authorities suggests that there is some limited overlapping of significant owners of companies, complex ownership structures are not a prevalent feature of the market. Shareholders with less than 5 per cent of shares in individual companies represent 27 per cent of all shares in the market. The Estonian Central Register of Securities, the main register of the state, administers share registers of all joint-stock companies operating in Estonia and all securities and pension accounts opened in Estonia.