Bill on facilitating public procurements passed the second reading

Two Bills passed the second reading in the plenary assembly today.

The Business Register Bill (493 SE), initiated by the Government, will provide for the data composition of the Business Register, the procedure for making entries and maintaining the Register, and the supervision and liability.

The Business Register is a database in the state information system whose purpose is to collect, preserve, and divulge information on legal persons in private law that have been founded under Estonian law, sole proprietors active in Estonia, or local branches of foreign companies. The e-Business Register is a web platform that can be used for submitting applications to the Business Register or accessing information on legal persons and sole proprietors. The e-Business Register may publish not only the data in the Business Register but also public data accessible through other databases and services.

The purpose of the Bill is to harmonise the registration proceedings for legal persons. The register of non-profit associations and foundations will be brought under the Business Register, which will make the registration proceedings simpler and clearer for both the undertakings and the registrar.

Other major amendments concern private limited companies because the Bill intends to eliminate the minimum capital requirement for private limited companies and bring the list of shareholders under the Business Register. The Bill also improves the supervisory options for the registrar by steering legal persons towards meeting their reporting obligation in a better way. For this purpose, the procedure of striking off from Register for the failure to submit the annual report is simplified and accelerated. The supervisory options of the registrar are extended to ensure the reliability of the Register and the meeting of the reporting obligations by the undertakings. The minimum capital requirement for private limited companies will be eliminated, which will force their founders to give more thought to the capital that is required to provide for the activities of the company. When a private limited company is founded today, the founders generally opt for the minimum capital provided in the law, which does not even need to be paid and which for this reason does not say much about the reliability or viability of the company; in the future, when this option is no longer available, the chosen and paid share capital will provide the necessary information about the reliability of the company to third persons as well. In addition, the current minimum capital requirement of EUR 2,500 has come down in value compared to 1995 when it was introduced.

The Bill creates the option in the e-Business Register to reserve a business name for six months to better prepare for the founding of the company and ensure that the suitable business name already exists when the application is submitted to the Business Register.

The enforcement of the Act will take place in three stages because the volume of IT systems development is massive and a single-stage enforcement would therefore be impossible. The general deadline for entry into force of the Act is 1 February 2023; changes in the list of shareholders will enter into force on 1 September 2023; and reserving the business name and applying for the entry into the Register on a specific date will enter into force on 1 March 2024.

The Bill on Amendments to the Public Procurement Act and Amendments to Other Associated Acts (491 SE), initiated by the Government, will solve the practical problems that have emerged in the implementation of the Act and will bring the Act into conformity with the European Union public procurement directives. This includes mostly amendments of a technical nature to improve legal clarity and to make the organisation of procurement more flexible.

The amendments concerning the award criteria, the handling of abnormally low tenders and breach of public contracts will make the public procurement procedure as well as the performance of public contracts more flexible for the contracting authorities and entities and will enable the contracting authorities and entities to take better account of the specificities of a particular public procurement and the relevant market situation when setting the public procurement conditions. The amendments concerning self-cleaning and the Single Procurement Document will reduce the workload for contracting authorities and entities as well as the administrative burden for economic operators.

Two of the amendments made in response of criticism from the European Commission are of a technical nature and concern the calculation of the percentage of activities performed on the open market – which is one of the preconditions for cooperation between the contracting authorities and entities – and the level of precision of the description in the procurement documents in the event of innovation partnership.

Two amendments concern allowing negotiations to specify the tender with the successful tenderer in the event of competitive dialogue, which may be very important for the final layout of the terms of a public contract, considering the nature of the procedure. In the course of negotiations and the specification of the tender, the tender and the procurement documents may not be amended and it will have to be ensured that the tenderer is not placed in a more advantageous position compared to other tenderers. The amendment will allow for flexibility, which is crucial for the achievement of a high-quality result where competitive dialogue is used.

The remaining two amendments concern the establishment of award criteria. Their weightings may be expressed by providing a range with an appropriate maximum spread or, where this is not possible for objective reasons, in descending order of importance. Although contracting authorities and entities are used to fixing definite weightings to award criteria, which is also the most transparent and verifiable way and best ensures equal treatment of economic operators in the assessment of tenders, the flexibility to be added may in certain cases contribute to finding the most economically advantageous tender.

During the debate, Kalvi Kõva (Social Democratic Party), Jüri Jaanson (Reform Party), Heiki Hepner (Estonian Conservative People’s Party), and Andres Metsoja (Isamaa) took the floor.

Verbatim record of the sitting (in Estonian)

The video recording of the sitting will be available on the Riigikogu YouTube channel.

(Please note that the recording will be uploaded with a delay.)

Source: Parliament of Estonia