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The Riigikogu approved with 87 votes in favour the Act on Amendments to the Securities Market Act and the Financial Supervision Authority Act.

The Act on Amendments to the Securities Market Act and the Financial Supervision Authority Act (359 SE), initiated by the Government, implements in Estonia the EU market abuse regulation establishing rules to avoid abuse of the securities market, including the stock exchange, in order to prevent illegal activities in trading in securities. Market abuses mainly appear as violation of the rules for the use of inside information, or market manipulation. This harms the transparency and reliability of the market, and the interests of investors.

The Act extends the competence of the Financial Supervision Authority. For example, under the current Act, the Financial Supervision Authority can issue a precept to request performance of the obligation of disclosure. According to the amendments, the Financial Supervision Authority is able to disclose information if this has not been done in compliance with the requirements, or to correct false information that could influence the price movement of securities in the market. Also, it may warn the public of an infringement committed, to preclude investors from proceeding from false presumptions when carrying out transactions. This way the Financial Supervision Authority can respond to infringements more rapidly and flexibly.

At the same time, the Financial Supervision Authority will have the obligation to draw up and make public the procedure for processing the notifications of infringements received. There is no such obligation in the current Act, a notifier does not know for example if and how the Financial Supervision Authority plans to contact him or her to obtain additional information.

The Act raises the penalty payment rate for market abuses. In the event of an infringement by a natural person, the maximum rate will rise from 2 million euro to 5 million euro, and in the case of a legal person, from 10 million euro to 12 million euro, respectively. For the first infringement, a penalty payment of up to 5000 euro can be imposed on a natural person, and for following occasions, up to 50 000 euro. In the current Act, the rates are 1200 and 3200 euro, respectively. For legal persons, the penalty payment will be increased from 3200 euro to up to 32 000 euro for the first occasion, and from 32 000 to up to 100 000 euro for following occasions.

Four Bills passed the second reading in the Riigikogu:

The Bill on Amendments to the Commercial Code and Amendments to Other Associated Acts (location of legal person and its management board or the body substituting therefor) (347 SE), initiated by the Government, will create the possibility to manage Estonian enterprises from abroad. At present, both a company and the management board of an enterprise must be located in Estonia. In the case when a person wishes to manage an Estonian enterprise from abroad, the enterprise will have to appoint a contact person with the seat in Estonia who may be for example a notary, advocate or auditor.

Besides, an amendment will create additional possibilities for Estonian undertakings in particular for the activities of e-residents. The aim of the e-residency project is to facilitate for foreign undertakings the using of e-solutions offered in Estonia, including the establishment of legal persons and membership in the management bodies of such persons. At present, the registered office of an enterprise registered in Estonia must be in Estonia. A regulation will be established now that will enable the management of an enterprise across the border. Undertakings will have the obligation to submit their e-mail address to the commercial register. At present, the submission of the e-mail address is voluntary.

One motion to amend the Bill had been submitted. The aim of the amendment is to set clearer time limits for the appointment of the contact person of a company.

During the debate, Tanel Talve from the Social Democratic Party Faction took the floor and discussed issues relating to e-residency and e-Estonia.

The Bill on Amendments to the Liquid Fuel Act (361 SE), initiated by the Government, will transpose the EU’s obligation according to which by 2020, fuel produced from renewable sources, that is, biofuel, must account for 10 % of the total fuel energy in transport fuels consumed in Member States. As at 2015, the share of fuel from renewable sources, mainly green electricity, accounted for 0.2 per cent in transport in Estonia.

According to an amendment, as of May next year, sellers of fuel will have the obligation to sell fuel containing biofuel to the extent of at least 3.1–3.3 percent of energy potential. In the original Bill, this obligation was established as of May this year. The obligation to add biofuel will not be applied to winter diesel fuel from November 2018 to the end of March 2019.

Starting from April 2019, the amount of bioadditive in fuel released for consumption will have to be 6.4 per cent. By the beginning of 2020, this level will have to be at least 10 per cent and not less than 6.4 per cent in the total energy in every litre of fuel released for consumption.

Two motions to amend the Bill had been submitted. With a motion to amend, the minimum share of the total energy of biofuel in fuel released for consumption will be reduced. Another motion to amend consists of three interlinked motions, and it is intended to postpone by one year the obligation to add bioadditive to transport petrol and diesel fuel, established for fuel sellers by the Bill, so that the final target would still be achieved by the beginning of 2020.

The Bill on Amendments to the Electricity Market Act (290 SE), initiated by the Government, will change the principles of the support scheme for electricity generated from renewable energy sources or in an efficient cogeneration regime. Producers who start renewable energy production after 1 July 2018 will receive support under the new support scheme. In the case of wind farms, the support scheme will change as of 2021. The aim of the Bill is to make the support scheme less burdensome for the consumer. After 2020, the payment of supports will be linked to the national renewable energy target and the state will buy renewable energy additionally by way of adjudication. The Government will organise an adjudication on the proposal of the Minister of Economic Affairs and Infrastructure. In addition to that, the existing producers who will continue to receive the support on the basis of the current support rates until the end of the 12-year support period will be singled out. Thus the existing supports will be gradually reduced.

Six motions to amend the Bill had been submitted. The aim of one amendment is to provide that if a producer who has made the best tender offer in an adjudication organised for an adjudication of trade in statistics uses biomass of Estonian origin to the extent exceeding 500 000 cubic metres per year to produce energy for the adjudication, the Ministry of Economic Affairs and Communications will have to submit an analysis to the Government as to what impact the wood chips to be purchased would have on the timber industry.

On the basis of a motion to amend, small consumers will be able to receive renewable energy subsidy for example for solar panels with a capacity of up to 50 kW which corresponds to the capacity of a solar panel installed on the roof surface of an average apartment building.

According to another motion to amend, the deadline for the completion of installations for generating energy from wind will be postponed by one year, and the deadline for the completion of other generation installations will be postponed by six months.

The Bill on Amendments to § 20 of the Nature Conservation Act (373 SE), initiated by the Environment Committee, will bring § 20 of the Nature Conservation Act into conformity with the Constitution. The aim is to alleviate the situation of land owners in the cases where they have privatised their land from the state by payment in instalments, and later the state has imposed intensive nature conservation restrictions on their lands. The Bill endorses the proposal of the Chancellor of Justice to bring § 20 of the Nature Conservation Act into conformity with the Constitution.

One motion to amend the Bill had been submitted. With this motion to amend submitted by a committee, the Bill will amend the added subsection 20 (5) of the Nature Conservation Act, and it will be worded as follows: “If the owner of an immovable has fallen into arrears in payment of mortgage payments, suspension of the payment of the payments is permitted provided that a payment schedule has been entered into for payment of the debt that has arisen before suspension of the payments, and the debt is paid on the basis of the payment schedule.”

Five Bills passed the first reading in the Riigikogu:

The Bill on Amendments to the Forest Act and the Nature Conservation Act (396 SE), initiated by the Government, will make the making of forest management decisions clearer for forest owners. Major amendments to the Forest Act provide for lowering of the rotation age of spruce stands in fertile site types, and the promotion of the use of types of cutting alternative to clear cutting – shelterwood cutting and selective cutting. The Bill will mitigate the restrictions imposed thereon. The rules concerning these types of cutting in force at present do not facilitate effective forestation.

According to the Bill, the average age for spruce stands growing on fertile sites of habitat permitted to be cut will be lowered to 60–70 years. The explanatory memorandum notes that, at the moment, the average age of spruce stands to be cut must be 80 years as a minimum. The quality of the 80-year-old forest in fertile areas is however lower because around a third of such forest is mostly damaged due to root or trunk rot. The amendment concerns about 4200 hectares of forest land, which is 0.2 per cent of Estonian forests, 3000 hectares of which is state forest. The minimum rotation age does not oblige forest owners to cut. To protect the biodiversity of Estonian forests, in counterbalance, strict protection of fresh boreo-nemoral forests and fresh boreal forests to the extent of an additional 27000 hectares will be ensured. The respective areas have been found on state lands, and the State Forest Management Centre has suspended the management of forests there.

The Bill will preclude situations where the use of the ownership of a forest depends on the decisions and activities of a bordering neighbour. At the same time, restrictions on the size of key habitat which is up to 7 hectares at present will be eliminated. On state land, protection will be ensured to all areas that conform to the definition of key habitat. On private lands, protection will continue on a voluntary basis.

Artur Talvik, who took the floor on behalf of the Estonian Free Party Faction in the debate, said that the Free Party moved to reject the Bill. Andres Metsoja from the Pro Patria and Res Publica Union Faction said that this Bill was a step in the right direction if we actually trust the owner more. Keit Pentus-Rosimannus from the Reform Party Faction said that the Government had failed in the debates on the future of Estonian forest.

The Estonian Conservative People’s Party Faction and the Estonian Free Party Faction moved to reject the Bill at the first reading.

26 members of the Riigikogu voted in favour of the motion and 42 were against. The motion was not supported and the first reading of the Bill was concluded.

The Bill on Amendments to the General Part of the Environmental Code Act and Other Acts (397 SE), initiated by the Government. The amendments are necessary for the establishment of the environmental decisions information system (KOTKAS) that would integrate into a single information system all applications relating to environmental permits, the proceedings on the permits, and the permits issued. This will simplify the issue of environmental permits, the monitoring relating to permits, and annual reporting, and will also simplify the maintenance, use and availability of data. Application for an environmental permit will become cheaper, higher-quality and faster.

The explanatory memorandum notes that, in the first stage in 2015–2017, the functionality of conducting proceedings on integrated permits will be created, and in the second stage in 2017–2019, sectoral environmental permits will be added, and five different information systems will be replaced. The Minister of the Environment will establish the database.

The new database will help reduce bureaucracy and the administrative burden in communicating with the state, particularly through pre-completed yearly reports, consolidation of data into one database, and information exchange through KOTKAS.

The amendments proposed with the Bill on Amendments to the Alcohol Act and the Advertising Act (381 SE), initiated by the Government, concern the sale of alcohol, presentations of alcoholic products, and supervision. The visibility of alcoholic beverages in shops will be reduced. They will have to be placed separately from other goods, and the place where they are displayed must not be visible outside the sales premises. In shops in which the size of the sales area exceeds 450 m², a display of alcoholic beverages must not be visible from the rest of the sales area.

The Bill will obligate sellers to assure that the person purchasing alcohol is an adult. For the ascertaining of violations of the prohibition on selling alcohol to minors and trading in smuggled goods, transactions for the purpose of monitoring compliance will be provided for, and fine rates will be increased.

With the amendments to the Advertising Act, the content and design of alcohol advertisements will be restricted. Also, alcohol advertisements in outdoor advertising, on social media networks and on the front and back pages of supplementary publications of newspapers and magazines will be prohibited. Sales promotion methods that give discounts when purchasing alcohol in large quantities will be prohibited. Consumer games and posts on social media related to alcohol trademarks will also be prohibited.

Member of the Reform Party Faction Toomas Kivimägi, who took the floor in the debate, said that the Reform Party Faction moved to reject the Bill at the first reading in order to allow time for the Government to introduce necessary changes and to hear the opinions of market participants. Martin Helme from the Estonian Conservative People’s Party Faction said that the Bill did not protect the Estonian people or their health, and said that their Faction moved to reject the Bill at the first reading. Monika Haukanõmm from the Estonian Free Party Faction said that the Free Party Faction hoped that the shortcomings pointed out would find a solution in the course of the further proceedings on the Bill. Helmen Kütt from the Social Democratic Party Faction said that the Bill that is at the first reading today aims at the protection of public health, particularly young people. She added that the aim is to reduce total consumption and, in particular, excessive consumption of alcohol, to ensure a secure environment for everybody, and to reduce the crime, social problems and health damage due to alcohol.

The Reform Party Faction and the Estonian Conservative People’s Party Faction moved to reject the Bill at the first reading.

24 members of the Riigikogu voted in favour of the motion and 43 were against. The motion was not supported and the first reading of the Bill was concluded.

The Customs Bill (374 SE), initiated by the Government, will bring the Customs Act into conformity with the new European Union customs legislation. The provisions duplicating European Union legislation will be omitted from the Act, and terminology will be changed.

As of 1 May 2016, the new Customs Code is in force in the European Union which harmonises customs rules within the Union. For undertakings, customs formalities will become simpler and administration will become paper-free

The main aim of the new Code is to establish uniform requirements and to transfer customs clearance into a new uniform electronic environment in all European Union Member States. The electronic environment will be created gradually by 2020, and transitional provisions will be implemented in 2016–2020.

Customs formalities are provided for more extensively in directly applicable Regulations of the European Parliament and of the Council and of the Commission, and the provisions with the same content in the Customs Act need to be repealed: e.g. the procedure for the provision of security for customs duty, the provisions concerning the procedures with economic impact and temporary storage, and the procedure for lodging a customs declaration.

In the future, free zones will no longer be differentiated by type, and free warehouses will be eliminated. As with the consolidation of different ways of processing that belong among special procedures, so in eliminating the free zone types and free warehouses the aim is to make the common customs law more transparent and simple. The terminology of Estonian legislation needs to be consistently brought into conformity with the Customs Code. If all the numerous amendments were incorporated, the Act would become difficult to read. Therefore a new Bill was drafted which at the same time updates provisions that do not need direct amendment on the basis of the Customs Code: the provisions duplicating the Administrative Procedure Act are omitted, the regulation concerning representation is amended, the procedure for calculating the costs of customs service is amended, the Act is amended by adding provisions concerning databases, the provisions concerning goods transferred to state ownership are specified, and the number of elements of a misdemeanour is reduced.

The Bill will not change the duties of the Tax and Customs Board upon the implementation of customs legislation, the use of premises for the activities of the customs authorities, the provisions concerning uniform, the provisions concerning secret co-operation, the administration of the Estonian Customs Tariff, customs formalities on a passenger train, customs formalities for goods for defence purposes and goods of diplomats, the procedure for the issue of international vehicle weight certificates, the procedure for authorising the use of TIR Carnets, and the provisions concerning state supervision.

Besides the updating of terminology, the legal bases for the administration of securities related to payment of customs duty and excise duty and the establishment of a tax warehouse will be amended in the Taxation Act, the Value-Added Tax Act and the Alcohol, Tobacco, Fuel and Electricity Excise Duty Act. There will be a new basis for calculating the rate of interest on customs duty. The Act is planned to enter into force on 1 May 2017.

The Bill on Amendments to the Competition Act and Amendments to Other Associated Acts (386 SE), initiated by the Government, will transpose into Estonian law the directive concerning private enforcement of competition law. Among other things, the provisions regulate claims arising from agreements harming competition, decisions by associations of undertakings, or abuses of a dominant position. This concerns in particular cartel agreements and abuses of a monopoly position. The deadline for the transposition of the directive was 27 December 2016.

According to the Bill, every injured party will have the possibility to obtain full compensation for the harm which means compensation of actual loss, loss of profit and default interests. Under the current law, injured parties can be identified only by way of interpretation and, as a general rule, compensation for loss of profit cannot be claimed. The Bill will amend the beginning of the calculation of default interest of the relevant claims, and according to it, payment of default interest will be due from the time when the harm occurred until the time when compensation is paid. Under the current law, it is calculated as of the time when the obligee informed the obligor of the claim or filed an action to collect the money or a petition for application of expedited procedure in the matter of payment order. The Bill will provide that the limitation period for a claim arisen from the commission of a prohibited act is 5 years. Under the current law, the limitation period for a claim is 3 years. In addition to the transposition of the directive, the Bill will again give the Competition Board the right to exercise administrative supervision, that is, to issue precepts to local governments, state authorities or other persons performing administrative duties.

The Riigikogu suspended the second reading of a Bill:

The Bill on Amendments to the Citizen of the European Union Act and the Equal Treatment Act (189 SE), initiated by the Government, has been drafted in view of the need to bring Estonian legislation into conformity with the EU directive aiming to facilitate the exercise of rights conferred on workers and the members of their family in the context of freedom of movement, and to ensure that they are not discriminated against on grounds of nationality. The Directive applies to matters in the area of freedom of movement for workers, e.g. access to employment, conditions of employment and work, access to social and tax advantages, membership of trade unions, access to education for the children of workers, etc. In addition, the Directive provides for the designation of a contact point in every Member State who monitors compliance with the relevant rights of workers of the Member State and their family members. According to the Bill, the Gender Equality and Equal Treatment Commissioner will be such contact point in Estonia.

Member of the Constitutional Committee Mart Nutt pointed out that the committee moved to suspend the second reading of the Bill.

The deadline for submission of motions to amend is 30 March 2017 at 5.15 p.m.

The sitting ended at 8.44 p.m.

Verbatim record of the sitting (in Estonian) http://stenogrammid.riigikogu.ee/en/201703221400

Video recordings of the sittings of the Riigikogu can be viewed at https://www.youtube.com/riigikogu (NB! The recording will be uploaded with a delay.)

Riigikogu Press Service
Marie Kukk
631 6456; 58 213 309
[email protected]
Questions: [email protected]