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.
A full or limited partnership is terminated by a decision of the shareholders, upon expiry of the term or achievement of the objective, or is terminated by a court order.
In general, the termination of full and limited partnerships consists of three important phases:
- Decision on termination and application for termination
- Removal of the enterprise from the Business Register
The termination of a full or limited partnership shall be based on a shareholder’s decision for which more than 3/4 votes of the shareholders have been given, unless a higher majority is required by the association’s agreement. To close the company, submit a joint application to the Business Register with the minutes of the meeting of the members.
The decision to terminate a full or limited partnership and to apply to the Business Register is followed by liquidation, during which it is important for you to observe the established procedure.
- Liquidators are appointed and entered into the Business Register. Liquidators are generally shareholders. A third person may be appointed as liquidator by agreement of the shareholders. At the shareholder’s request, the court may, for good reason, appoint a person who is not a shareholder as liquidator.
- Approval of the opening balance of liquidation and the accounting for the business year by the shareholders. The opening balance of liquidation and the report for the business year shall be submitted immediately after approval to the Business Register.
- Termination of the association, recovery of debts, sale of the association’s property and satisfaction of creditors’ claims.
- Compilation of the final balance sheet of the liquidating enterprise and division of property, in exceptional situations also preparation of the report for the business year. The residual assets of the liquidators shall be distributed to the shareholders in accordance with the contributions of the shareholders, unless otherwise provided in the association’s contract.
- After a proper liquidation of a full or limited partnership, you will be required to submit to the Business Register a declaration on the removal of the business from the Business Register.
By the time the total and limited partnership is liquidated, there are no strict restrictions, and it depends primarily on the characteristics of the enterprise and on the coherence of the cooperation between the different actors involved in the liquidation.
The completed activities of the association may also be continued, or the enterprise may be merged, divided or reorganized. Liquidators must submit to the Business Register a declaration of continuation of the business for this purpose.
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.
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. We offer full support on all stages of developing your business, and offer a variety of services, including 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.