Tallinna Börs                 NEWS RELEASE                      05/11/2004



COMMITTEE'S DECISION ON ESTIKO



On 5 May 2004, the Listing and Surveillance Committee of the Tallinn 

Stock Exchange reviewed the circumstances identified and materials 

collected in the course of supervisory proceedings carried out with respect 

to a potential violation of the TSE Rules by AS Estiko in relation to the 

acquisition of shares in AS Estiko by AS Rondam, a core shareholder of AS 

Estiko and a company controlled by Mr. Neinar Seli, member of the 

supervisory board of AS Estiko.



The Listing and Surveillance Committee of the Stock Exchange, having 

examined the circumstances identified and materials collected in the 

course of the supervisory proceedings carried out with respect to the 

activities of AS Estiko, established:



1. AS Rondam, a company controlled by Mr. Neinar Seli, member of the 

supervisory board of AS Estiko, made four (4) transactions (plus one 

transaction of which the Committee already gave a warning to AS Estiko 

and which is therefore excluded from this assessment) with the shares of 

AS Estiko within the period commencing one week before the end of the 

reporting period and ending on the day following the date of publication of 

the relevant reports, i.e. the "restriction period".



Therefore, circumstances are evident in the conduct of AS Estiko which 

prove that the conduct of AS Estiko has been contrary to the obligations 

set out in clauses 4.3.2, 4.5.2 and 4.5.4 of the part "Requirements for 

Issuers" (hereinafter: RI)of the TSE rules.



AS Estiko has violated the obligations set out in the RI, which oblige an 

issuer to ensure that the members of the directing bodies and employees 

of the issuer avoid from using inside information and that the members of 

its directing bodies comply with the requirements for a restriction period 

arising from the special position of the directing bodies. As the purpose of 

the restriction period is to prevent insider dealing, it makes it possible to 

ensure that transactions are made in a uniform manner and on the basis 

of publicly known information, thus enhancing the transparency and 

reliability of the market. The Stock Exchange therefore considers it 

important that listed companies comply with the restriction period.



2. The use of confidential information in the activities of the member of 

the supervisory board of AS Estiko, Mr. Neinar Seli, and the company AS 

Rondam controlled by him has not been established.



3. The fact that AS Rondam referred to the provisions on the restriction on 

transactions or provided any relevant explanatory instructions when 

making the transaction or concluding the relating preliminary contracts 

was not proved. The Listing and Surveillance Committee considers it 

necessary to note that AS Rondam/ Mr. Seli should have made the 

aforementioned transaction with care so as to comply with the 

requirements of the Rules, i.e. inform the other party to the transaction of 

the applicable restrictions. The Listing and Surveillance Committee would 

further like to note that as AS Rondam made one of the transactions (on 

21 August 2003) with AS Estiko, which was represented by the company’s 

director Mrs. Ellen Tohvri who is also subject to the restriction period 

arising from the Rules, the Director of AS Estiko has also failed to exercise 

due diligence in her conduct.



4. AS Estiko has published no stock exchange announcements concerning 

the purchase option agreement of 24 April 2003 and the transaction of 21 

August 2003, although an issuer is required to publish information on any 

transfer of its own securities, indicating the reason for the transaction, 

unless the transaction is made under a resolution of the general meeting.



Therefore, the circumstances of the conduct of AS Estiko prove that the 

conduct of AS Estiko was contrary to the obligations set out in clause 3.7 

of the RI.



5. AS Estiko published no announcement neither on the purchase option 

agreement of 24 April 2003 nor the transaction with AS Rondam of 21 

August 2003, although AS Rondam is connected with AS Estiko and AS 

Estiko is required to immediately publish the information required by the 

Rules on transactions with connected persons.



Therefore, the circumstances of the conduct of AS Estiko prove that the 

conduct of AS Estiko was contrary to the obligations set out in clause 

7.9.3 of the RI.



6. The interim report of AS Estiko for the Q3 of 2003 does not include 

information on the transactions with connected persons (parties) made on 

21 August 2003 as prescribed by IAS24 and EASBS2, omitting a 

description of the connection between the parties, the kind and scope of 

transactions during the year, the account balances concerning the 

connected persons as of the balance sheet date, and the pricing policy 

applied.



Therefore, the circumstances of the conduct of AS Estiko prove that the 

conduct of AS Estiko was contrary to the obligations set out in clauses 

5.1.1 and 5.1.2 of the RI.



8. On the basis of a resolution of the general meeting of shareholders of 

21 May 2001, AS Estiko repurchased 81,915 E-type of shares of AS Estiko 

from its shareholders. AS Estiko repurchased a majority of these shares 

from 30 May 2001 to 31 July 2001; one transaction in which AS Estiko 

repurchased 132 shares was made on 5 February 2002.



According to § 284 (1) of the Commercial Code, a company has to 

transfer its own shares within one year after acquisition. Subsection 4 of 

the same section prescribes that if the shares are not transferred during 

the above term, the shares shall be cancelled and the share capital 

reduced accordingly.



AS Estiko sold all the E shares repurchased by it to AS Rondam on 21 

August 2003, i.e. largely two years after acquisition; hence, AS Estiko did 

not transfer the repurchased shares within the term set out in § 284 of 

the Commercial Code and did not cancel them.



Substantive assessment of compliance with the requirements of the 

Commercial Code is not within the competence of the Tallinn Stock 

Exchange.



9. There are no objective circumstances which would have prevented AS 

Estiko or the member of its supervisory board from duly performing its 

obligations.



10. There are sufficient grounds to apply the legal remedies within the 

competence of the Stock Exchange to AS Estiko.



Based on the "Agreement on Listing Securities on Tallinn Stock Exchange" 

concluded between the Stock Exchange and AS Estiko and guided by 

clause 10.2 of the RI and clauses 4.1.2.1 and 4.8.1 of "Supervision", the 

Listing and Surveillance Committee of the Stock Exchange



decided:



to impose a fine of fifty thousand (50,000) kroons on AS Estiko for 

violation of clauses 3.7, 4.3.2, 4.5.2, 4.5.4, 5.1.1, 5.1.2, and 7.9.3 of 

the RI.





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