Things do not always go according to the plan, and it’s completely OK. If a business doesn’t meet the hopes and expectations, or the circumstances demand the same, it is essential to initiate your company dissolution.
According to the Estonian legislation, an Estonian company’s activity cannot be suspended or paused — the company can either be active, in a state of liquidation or permanently liquidated. That’s why we strongly advise not to leave a company on its own when plans didn’t work out. It is important to act responsibly with a legal provider’s help to wrap this up and focus on new beginnings.
The most traditional way to liquidate a company in Estonia is a voluntary dissolution. Another potential option is to transfer a company to a new owner, simply put, to sell. Once you’ve decided not to run your company anymore, it is also possible to merge your company with another company, or in the case of a single shareholder, with an individual’s assets.
Any possible way of a company liquidation takes effort and should be approached with responsibility. Please be aware that the termination of a company is a long legal process that is nearly impossible to realise without legal support.
In this blog article, we’ll be looking into the most common ways of closing your company in Estonia.
If you decide to stop your company’s activity, the team of Company in Estonia OÜ recommends this option for terminating a business. This means voluntary dissolution of your company by a resolution of its shareholders. At least 2/3 of the shareholders have to approve the termination. At this point, owners should designate a legal liquidator who must be a resident of Estonia.
After the final decision was made, the company must stop its activity — only actions towards termination could take place.
Next, the management board and the authorised liquidator must submit a formal request for the company termination to the Commercial Register. After that, the notice of liquidation will be published in the public domain, followed by a notice to all known creditors.
Please be aware that a member of the management board must have an Estonian e-Residence card.
During the first three months after the liquidation decision, the initial balance sheet is drawn up, as well as the final annual report. All documentation must be approved by the competent authority and submitted to the Commercial Register.
Within the following months, shareholders deal with selling assets and collecting collect debts.
About four months after the publication of the notice of liquidation and satisfaction of all creditors’ claims, the final accounting report and the plan for the distribution of assets of the remaining property are submitted to the shareholders for consideration.
As the final step of closing your business, you must submit an application to delete your company from the Commercial Register.
The entire process, on average, takes 6-9 months and might be extended depending on the time of consideration by the local authorities.
Selling a company
The first thing to do when planning to sell a company is to find a potential buyer. When the buyer is found, you need to visit the notary and submit all required documents. Beforehand make sure that:
- Annual reports are prepared
- Accounting is in order
- Corporate taxes are paid
Finding a buyer and managing legal procedures is rather complicated. It is very common and smart for entrepreneurs to use the services of legal providers.
Re-registration of a company occurs in two ways – by power of attorney or by a personal visit of all company representatives to Estonia. By law, the procedure for re-registering a company should take up to 5 business days after visiting a notary.
When choosing a company transfer by power of attorney, you need to prepare the required documents and send them to the provider of your choice. The consulting company will prepare an example of power of attorney based on the information you have provided. After that, the example needs to be sworn translated and certified at a notary. Once your provider receives the certified power of attorney, a company transfer process will take about 2 weeks.
Re-registration of a company by a visit is a quick way to exit your company and can limit your stay in Estonia to one day. The owner of a company needs to prepare the necessary documents regarding a company’s activity and send them to a service provider upon arrival. Once the documents are all good and received, the provider makes an appointment with you and a joint appointment at a notary to sign a prepared petition.
As it follows from this post, company liquidation is a time-consuming process.
The procedure of termination involves legal aspects and requires accuracy along with the familiarity of Estonian legislation. Whilst it is recommendable to act legally and dissolve a company according to the government rules; we also advise to consider consulting legal provides. This facilitates the procedure significantly and reduces your involvement to a minimum.
You don’t want to spend your time and efforts on something that you refer to as a turned page, right?
We are here to close this case for you. The specialists of Company in Estonia OÜ have a vast positive experience in both company liquidation by voluntary dissolution and transferring. Our team of professionals provides accounting services in Estonia.
We will help you complete a company termination procedure as soon as possible in full compliance with the law and fully remotely. More about the services and cost, please find here.