Conclusions regarding transparency and disclosure
In general, the legal, regulatory and institutional structures that govern the transparency and disclosure regimes for listed companies seem sound on key disclosure requirements such as financial reporting and related party transactions. All Estonian listed companies are required to comply with IFRS. The standards for auditing have been brought into line with IAASB standards with the enactment of the Auditing Act.
However, there remain some disclosure gaps, in particular in relation to Principle V.A. There is no specific requirement to disclose company objectives (V.A.2), nor to disclose information about board members, including remuneration, qualifications, the selection process, other company directorships and whether they are regarded as independent (V.A.4). No reporting is required in relation to employee or stakeholder issues (V.A.7). While Estonia has a “comply or explain” corporate governance code, it does not require a general explanation of corporate governance structures and policies (V.A.8), only requiring explanations in cases of non-compliance. A proposal currently under consideration by the Ministry of Finance to require listed companies to disclose information on management board remuneration would be a desirable improvement. In addition, Estonia’s implementation of Principle V.A could be considerably strengthened through a review and update of the voluntary CG code to include clearer explanations of disclosure requirements in relation to the points mentioned above, and to consider adopting regulatory requirements in cases where voluntary compliance appears to be weak or not well justified, such as in relation to independent directors.
With passage of the Auditing Act, SOEs are also required to conform fully to international accounting standards, and the State Assets Act requires them to report on their compliance with the voluntary CG code.