Market announcement

Title

Agreement of shareholders with substantial shareholding

Message

The City of Tallinn and OÜ Utilitas as the shareholders of AS Tallinna Vesi
entered into an agreement on 03/02/2021 (hereinafter the Shareholders Agreement)
which took effect on 31/03/2021. AS Tallinna Vesi joined the Shareholders
Agreement when it came into effect.

Pursuant  to  the  clause  7.8 of  "Requirements  for  Issuers"  of  the  market
regulation  of Nasdaq Tallinn, an Issuer is required to ensure that shareholders
holding  five per cent (5%)  and more of the  votes represented by the shares of
the  Issuer disclose  information, through  the Issuer,  on all  the significant
provisions  of all the agreements made  with other shareholders or third parties
which  are aimed at restricting the free  transferability of the shares or which
may have a significant effect on the price of the shares.

Pursuant to the clause 7.9.3 of "Requirements for Issuers", an issuer is obliged
to  disclose immediately  information about  transactions with persons connected
with  the  Issuer.  The  information  disclosed  about  such  transactions shall
include:

   i. information on all the parties to the transaction and their connection
      with the Issuer;
  ii. a description of the conditions of the transaction and information on the
      sum to be received or paid by the Issuer and the due dates of payment;
 iii. information on the effect of the transaction on the Issuer's profit,
      assets and liabilities;
  iv. information on the number of the Issuer's shares held by the connected
      person after the transaction, if the substance of the transaction is the
      acquisition of a holding from the connected person and the Issuer uses its
      own shares to pay for acquiring the holding.

At  the time of disclosing this notice,  the City of Tallinn holds 10,469,565 A-
shares  (i.e. representing 52.35% of the share  capital of AS Tallinna Vesi) and
1 B-share  in AS Tallinna Vesi (hereinafter also referred to as the Company). OÜ
Utilitas  holds 3,530,435 A-shares  in the  Company (i.e. representing 17.65% of
the share capital of the Company).

The  Shareholders  Agreement  regulates  the  commercial  policy of the Company,
however, the liabilities of the parties arising therefrom are not defined by any
amounts,  which renders it impossible to indicate the effect of the Shareholders
Agreement on the profit, assets and liabilities of the Company. The Shareholders
Agreement  does not provide for the payment  of any specific sums to the Company
or  by the Company, and  the entry into force  of the Shareholders Agreement did
not  lead to any change in  the number of shares of  the Company owned by any of
the parties to the Shareholders Agreement.

  * Considering the arrangements for the management of the Company going
    forward, we point out the following:

      i. it has been agreed that the Supervisory Board of the Company continues
         to have nine members. The agreement is that the City of Tallinn shall
         be entitled to nominate candidates for four members of the Supervisory
         Board (two of them by direct appointment) and OÜ Utilitas shall be
         entitled to nominate candidates for three members of the Supervisory
         Board (two of them by direct appointment). Two members of the
         Supervisory Board continue to be elected from amongst independent
         candidates. The Chairman of the Supervisory Board shall be elected from
         amongst the Supervisory Board members presented by OÜ Utilitas. The
         Vice Chairman of the Supervisory Board shall be elected from amongst
         the Supervisory Board members presented by the City of Tallinn.
     ii. the Management Board of the Company shall have two to three members. OÜ
         Utilitas shall nominate candidates for at least two Management Board
         members, and the Chairman of the Management Board shall be elected from
         amongst the Management Board members presented by OÜ Utilitas.

  * As regards the acquisition and transfer of shares of the Company, the
    following has been agreed in the Shareholders Agreement:

        i. the Shareholders Agreement does not restrict the right of the City of
           Tallinn or OÜ Utilitas to acquire the shares in the Company from
           third parties;
       ii. the City of Tallinn and OÜ Utilitas may transfer their shares in the
           Company only by way of monetary payment, unless otherwise agreed on a
           case-by-case basis, or if OÜ Utilitas transfers shares to a connected
           person who meets the conditions of the Shareholders Agreement;
      iii. the City of Tallinn and OÜ Utilitas are obliged to offer the shares
           in the Company, intended to be transferred by themselves, first to
           each other for acquisition, unless OÜ Utilitas transfers shares to a
           connected person who meets the conditions of the Shareholders
           Agreement;
       iv. the City of Tallinn may transfer the A shares of the Company in the
           amount corresponding to 50% of all A shares of the Company plus
           another A share only together and in one block. OÜ Utilitas may
           transfer its A shares in the Company, owned by OÜ Utilitas pursuant
           to this notice, only together and in one block. (Both of the relevant
           blocks of shares are hereinafter referred to as the Core Shares);
        v. in order to transfer its Core Shares to the buyer who is not
           connected to OÜ Utilitas, OÜ Utilitas shall require the consent of
           the City of Tallinn, which may not be refused unreasonably if the
           transferee is a strategic investor who meets the conditions defined
           in the Shareholders Agreement.
       vi. the transferee of the Core Shares must step in the Shareholders
           Agreement to replace the shareholder who transferred its shares to
           the transferee.
      vii. if the City of Tallinn intends to sell its Core Shares, then in
           certain cases, OÜ Utilitas shall also be entitled or obliged to sell
           its shares in the Company's to the same transferee;
     viii. if a shareholder, who is a party to the Shareholders Agreement, has
           been declared bankrupt or the person having a direct control over OÜ
           Utilitas has changed without a prior consent of the City of Tallinn
           (in line with the definition in the Shareholders Agreement), the
           relevant shareholder must sell its Core Shares to the other
           shareholder who is a party to the Shareholders Agreement, if so
           requested by the other shareholder; and
       ix. in the event of issue of new shares of the Company, the shareholders,
           who are parties to the Shareholders Agreement, may subscribe those
           shares pro rata to their shareholding in the Company unless a
           shareholder is unwilling to maintain the proportion of its
           shareholding.

  * The Shareholders Agreement has been entered into with the understanding and
    expectation that the shares of the Company will remain listed on Nasdaq
    Tallinn Stock Exchange. In the Shareholders Agreement, the City of Tallinn
    and OÜ Utilitas have agreed not to vote in favour of any resolutions to
    terminate the listing of the shares on Nasdaq Tallinn Stock Exchange without
    having previously agreed on amendments to the Shareholders Agreement that
    would take effect after the listing of the shares is terminated.
  * The Shareholders Agreement shall terminate either upon a relevant written
    agreement by all parties, liquidation of the Company or if one and the same
    person becomes the owner of the Core Shares (and the B share until its
    cancellation) owned by the City of Tallinn and OÜ Utilitas.


Laura Korjus
AS Tallinna Vesi
Head of Communications
(+372) 62 62 271
[email protected]