Subsidiary in Estonia

A subsidiary company is a legal entity that is owned by a parent company. Affiliated company structure, accounting and administration system are regulated by the government of the country where the subsidiary is registered. The responsibilities of board members are also regulated by the government of the country where the daughter company is located.

Company registered in some country can also decide to expand their activity to new jurisdictions. The idea behind it is to increase the number of clients and enter larger and solvent markets by means of more favourable taxation in other countries. Moreover, a subsidiary’s existence is a highly advantageous way to attract investors who, through their investment, get a share of the business. It is important to note that controlling interest is still in possession of a parent company that allows maintaining control over the business. LKS Consult OÜ will be glad to consult you during the entire process of establishing a subsidiary company in Estonia. Our company provides assistance in preparing legal documents; thereby, if necessary, we offer an opportunity to register an affiliate company in Estonia remotely without your presence in the country.

Subsidiary company

A subsidiary is under the control of a parent company if the concern directly or through intermediaries holds more than 50% shares of a daughter company with the right to vote or some other way of controlling finances and activity of a company.

Key terms

Dominant influence: ability to take responsibility for the financial and operational policy of a subsidiary. 

Significant influence: right to participate in financial and operational policy-making of an investment object.

Subsidiary: a company that is under the dominant influence of a parent company. 

Parent company: an enterprise that has one or more running subsidiaries.

Concern: the parent company, including its every subsidiary.

Consolidated accounting reports: reports of concern are represented as reports of unified economic entities. 

Commercial activity: the integrated combination of activities and assets implemented to facilitate:

1. Income for investors
2. Lower costs and more economic benefit.

Dominant influence also exists in the case of a parent company holding 50% shares or less voting rights; in that case, however, mother company:

1. has an actual dominant influence on more than 50% voting rights based on the agreement with other investors
2. has a dominant influence over the financial and operational policy of a company according to the agreement or regulation
3. can designate or remove the majority of executive members and high authority, for example, the board of the company
4. can guide decisions of executive members and high authorities.

The process of a subsidiary establishment

It is significant to highlight an absolute necessity of charter capital contribution by the Estonian subsidiary before the company establishment. Since it is almost impossible to open an account in the Estonian bank without the presence of a subsidiary board member, and as it entails several financial cost and complicated procedures, professionals from LKS Consult OÜ offers the following, and to date, the only way to open a subsidiary in Estonia:

1. A representative of a LKS Consult OÜ establishes a company in Estonia in his own name, considering the name and activity field of your choice

2. When registering a company, capital (not less than 2,500 EUR) is being contributed, and information appears in the Estonian Commercial Register

3. Parent company acquires the Estonian company by proxy/by a visit to Estonia.

To establish a subsidiary, the parent company is required to submit the following documents in English:

• Certificate on the company establishment
• Company regulation
• A list of shareholders

All documents must be original, issued by the Commercial Register in the country of registration, and translated to English by a sworn translator.

Costs

Company establishment, the contribution of capital and a state fee	1,500 EUR
Providing deal participant by power of attorney (parent company)	790 EUR
Providing deal participant by power of attorney (subsidiary)	790 EUR
Analysis of the parent company documents	400 EUR
Notary services, the state fee for company rebooking	200 EUR