Articles of Association of a Modern Company: Online Management, Non-Monetary Contributions, Digital Votings

July 30, 2020

If you are planning to incorporate a company with us, we can help you amend the Articles of Association that will be suitable for the online management of the company. Here we would like to demonstrate to you the exact wording used in the document and explain how exactly it will influence your future company.  

Ok, what are the Articles of Association?

When you start a new company you must establish the rules and regulations for its future operations. It is done in the document called the Articles of Association (sometimes Articles of Incorporation), which acts as the legal foundation for your company.

Articles of Association vary for each company as they act as a separate set of rules. However, there is a set of basic information that must be contained in the document: Company information (name, legal address, type of the company, share capital).

  • Corporate structure (Shareholders, directors).
  • Rules for the main events (Corporate decisions, board meetings, shares issuance and distribution, votings).

The easiest way to create the Articles is to use the official templates, which are provided by the government in most European countries.

It is common to adapt the template right away to avoid future complex procedures of amending the original Articles.

We are ready to provide you with the template that you will be able to adapt to your special needs. But in order to run your business online, there are specific points that might be set out in the document.

Here is what we advise to add to the Articles and why

To better understand what we mean, you can download the template articles and go over the text with us.


2.2.13. The company may issue tokens

This short phrase will allow a company to issue digital assets in the future. These assets are to represent the ownership right of a share or a fixed income instrument of the company. The Digital assets can be used to ease up fundraising and/or implement transferability of the shares. Furthermore, Digital assets can upgrade the ESOP flow of any company by 100% automating it. This will not mean that traditional securities are to be eliminated, it will only allow your company to think about the future possibilities of equity management of the company.

2.4 Payment for the shares

2.4.1 The payment for the Shares (contribution) shall be either monetary or non-monetary.

This is easy and useful. The contribution of share capital in Estonia may be delayed, but still must be done before you pay the dividends out. This article will allow your company to contribute not just in fiat, but in any commodity, that could be found valuable.

2.4.3 A non-monetary contribution may be anything that is monetarily appraisable and transferable to the Company (including crypto assets) or a proprietary right which may be the object of a claim.

In order to specify what is meant by the non-monetary contribution, we’ve added another paragraph. You can add anything you think might be relevant into the braces along with crypto assets.

2.4.4 The value of the non-monetary contribution shall be appraised by the Management Board. In cases provided by law, the appraisal of the value of the non-monetary contribution shall be verified by an auditor who shall present a written opinion on whether the value of the non-monetary contribution meets the requirements of the law.

That paragraph is mandatory to establish who is to specify the value of non-monetary contributions. It is also crucial for the government to make sure you understand, that an audited report might be required in some cases and you are willing to provide it (for instance, when a share capital of the company exceeds 25000 Euro the audited report is to be provided).


3.1 Competences of shareholders

In the section “Competences of Shareholders”, several matters are covered. It is required to establish from the start, who is responsible for different decisions in the company and what exactly shareholders are to decide directly.

3.1.2 Issuing convertible bonds, entering into a convertible bond agreement, changing any material terms of any such transaction

We’ve added a custom responsibility to decide on the issuance of convertible bonds, as this instrument gains popularity for startup funding.

3.3 Meeting of Shareholders / Shareholders’ meeting

The digital company should have digital shareholder meetings. We’ve created the right wording in order to make it possible. We advise saving all of the phrases as they are in order to make sure that the Digital meeting will be valid.

  1. The Management Board shall have the right to determine that the General Meeting may be held in full or in part over the Internet, by two-way communication or in another technically secure manner. In such a case, the voting procedure also shall be conducted by means of the respective electronic voting system.

We define that Management Board is responsible for choosing the location of the meeting. This means that the decision of the Board is enough to determine the fact that the voting is going to be held online. We further indicate the requirements for two-way communication to secure shareholders’ rights.

  1. The General Meeting shall be convened by the Management Board unless otherwise provided by law. The Management Board shall notify all Shareholders of convening the General Meeting in a way that the respective notice would reach the addressee at least one (1) week prior to the General Meeting. The notice might be sent by electronic means of communication.

We state that there are cases, when the meeting can not be held online. That is the requirement of the government. We also indicate that the notice about e-voting can be sent online, but surely in advance.

  1. Decisions and votes (hereinafter collectively referred to as “resolutions”) of the General Meeting can either be carried out among those present or, outside of the framework of a physical assembly, with votes by way of electronic communication. A decision which is taken via telephone or video conference is also considered a resolution taken among those present. The exact procedure of electronic voting shall be determined by the Management Board.

Online is great, but what if someone wishes to carry offline voting? Well, we think the best solution is to allow both methods. Furthermore, the Management Board is free to add or restrict any type of communication, in case it will be considered necessary.

Adoption of resolutions without convening the General Meeting

In Estonia, the resolution can be adapted without convening the General Meeting. We think it might also be useful for an online company that wishes to decide on matters ASAP. Here is what we consider to add in the document.

  1. To adopt a resolution without convening the General Meeting as set forth in Article 173 of the Commercial Code, the Management Board shall send a respective notice together with a draft of the resolution to all Shareholders specifying the term, which may not be shorter than 5 (five) days, during which a Shareholder must present its opinion on the resolution. If a Shareholder does not respond within this term, the Shareholder shall be deemed to have voted against the resolution. The Management Board shall prepare a voting record of the voting results and shall immediately send it to the Shareholders.

First of all, we cite the regulators’ rules. Then we indicate that the Management Board is free to decide to adopt the resolution in the new format.

But surely it is not possible without the shareholder’s decision. In this scenario shareholders only need to answer if they are for the amendments. Otherwise, shareholder’s vote will be against the matter. Stating that guarantees that the resolution will pass only of more than enough shareholders will be willing to adapt it. Why?

Well, in standard voting, the percentage of votes for the matter can be counted from the number of votes received. In this case, the percentage of votes will always be counted from the total number of votes from all of the outstanding shares.

  1. The Management Board shall prepare a voting record of the voting results and shall immediately send it to the Shareholders. Provided that the resolution is drafted in a written or electronic form in the manner set forth by law and signed by all Shareholders. In such a case, the resolution is adopted if it has been signed by all Shareholders. The Management Board may determine that the approval and voting on such a resolution may take place by the Internet, by two-way communication or in another technically secure manner.

And some more phrases formalizing the record after adoption of the resolution. By the way, shareholders still get to e-sign everything.


The Management Board can make a proposal to the General Meeting to distribute the profits in cryptocurrency. If the General Meeting agrees to distribute the profits in cryptocurrency then the Shareholders shall create respective wallets on the exchange determined in the resolution of the General Meeting

Okay, that is something really unique. We add the possibility to distribute dividends in cryptocurrency. No worries, that is just the possibility, it is not mandatory to do so.

We believe that sooner or later cryptocurrencies will become a common financial instrument that will allow you to save time and money on cross-border (and even internal) transactions. If your shareholders are from Japan you will be able to reach them with stablecoins in less than an hour, while bank transferring will take you a while and the commission might be not favorable.  

That’s it, I got you, what now?

If you decide (or already decided) to use incorporation service from Tokenomica we will include this wording into the articles by default. Please let us know it you would like to change or add something, we will help you with legal advice on the matter.

If you have any further questions feel free to contact us directly, we will be glad to hear from you!