Share Capital for an Estonian Company

Share Capital for an Estonian CompanyWhen a private company is created with limited liability, minimum capital requirements disappear.

The Minister of Justice, Maris Lowry, submitted to the Riigikogu a draft Business Register Act, prepared as part of a project to modernize business-related legislation which, inter alia, removes the minimum capital requirement in force since 1995.

In the course of an audit of corporate law, which began in 2014, the legislation on the activities of associations under the leadership of the Ministry of Justice underwent a thorough, substantive and systematic review with a view to harmonizing and updating it, the Ministry reported.

The legislation in force in Estonia today is undoubtedly competitive and contributes to success. However, this does not mean that we can rest. Changes in the world require us to be constantly ready to respond and update the rules and possibilities», commented Lowry.

Based on the audit feedback, the draft Law on Business Register, the largest of the drafts prepared so far, harmonizes the registration procedure for all legal entities. It would also make the regulation of private limited companies more flexible in several respects, for example by removing the minimum capital requirement for the establishment of a private limited company.

If the statutory minimum capital, which is not subject to payment and therefore provides little evidence of the reliability and sustainability of a limited liability partnership, is now automatically selected for the establishment of a limited liability partnership, Lowry explained the reasons for the change.

Flexibility will also be given to other companies, for example, by allowing the e-business register to reserve a brand name for six months, to better prepare for the establishment of the company and to have a suitable trade name when applying to the Commercial Register.

According to the Minister, the improvement of legal certainty benefits everything, which is the main objective of a number of changes.

According to the Minister, it is hoped that more structured government requirements will also lead to better reporting by companies. The electronic business registry can provide more information on problematic entities than before, and in case of non-compliance with reporting obligations, the entity can be removed from the registry even more quickly.

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