Liquidation of an Estonian Company

If unforeseen circumstances are an obstacle to doing business the usual way, and it becomes clear that a company no longer generates income, then it is advisable to terminate it. Company in Estonia OÜ team will help at all stages of the company’s liquidation.

Liquidation of a company is a legal process, the result of which is the complete termination of the financial and economic activities of a company and the removal of a company from the Estonian Commercial Register. The specialists of Company in Estonia OÜ will help you complete a company termination procedure as soon as possible in full compliance with the law and fully remotely.

It is almost impossible to carry out the liquidation procedure of a company without qualified legal support. Therefore, we will be happy to advise you on all issues that have arisen, we will recommend the best option for sale/termination or transfer of a company, as well as prepare and submit all the necessary documents to save you from an unwanted company the soonest time possible.

A prerequisite for liquidation of a company is that a shareholder has an Estonian e-Resident card.

The analysis of enquiries made by the clients of Company in Estonia OÜ shows that in most cases, company owners wish to liquidate their company in Estonia for the following reasons:

Many business owners in Estonia choose not to liquidate their company in accordance with the requirements of local legislation. But, as practice shows, if a company owner simply neglects an unprofitable company in Estonia it can soon prove very costly as it may be difficult for the owner to start a new business in Estonia or affect the owner’s chances to obtain or extend a resident’s permit or a visa.

How to liquidate an Estonian company legally

The law prescribes the liquidation process in detail. Typically, the liquidation process takes 8 to 10 months.

In situations where the company owner who started the liquidation process cannot meet legitimate claims of creditor(s), the company liquidator or a member of the company’s management board must submit to the court an application to declare the company bankrupt. Failure to do so may result in civil and/or criminal liability.

The owner can also draw up a notarised statement on behalf of the company about the liquidation. This can be done personally by a member of the management board at the presence of a public notary, or by proxy through the owner’s representative in Estonia.

An alternative to the decision to liquidate the company in Estonia may be to sell it or gift it, followed by a change of the owner or/and its manager. This procedure of re-registration of the company takes between 5 and 7 days. After the registration, the claims about the company’s liabilities will be submitted not to the previous management board or to the previous owner of the company, but to the new owner.  Legal experts of the Company in Estonia OÜ will provide you full support in carrying out such transactions.

According to the Estonian Commercial Code, the procedure of liquidating a company must include the following:

• Presentation of the liquidation decision and declarations by the main shareholders of the company, on the basis of which it was decided to liquidate the company
• Appointment of the liquidator, who must be a resident of Estonia
• Publication of a notice on the liquidation of the company in the Estonian media
• Verification of creditors’ claims
• Preparation of the company’s balance sheet and the profit allocation plan
• Delisting of the company from the e-Business Register following a respective court decision

Stages of liquidation of a company

1. 1. At least 2/3 of the owners participating in the meeting must approve the decision to voluntarily liquidate the business and appoint a liquidator.
      At least one of the liquidators must be a resident of Estonia (Company in Estonia OÜ provides an Estonian liquidator). After the final decision on the termination of activities has been made, the company cannot conduct economic activities. Only the actions necessary to liquidate the enterprise can be taken.
   2. The member of the Management Board (e-Resident) and the authorised liquidator sign and submit to the Commercial Register the notarised application for the liquidation of the company and the appointment of liquidators. The application is submitted electronically on the portal for entrepreneurs along with the minutes of the general meeting on the closure of the company.
   3. The notice of liquidation is published in the public domain, followed by a notice to all known creditors.
   4. 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.
   5. Four months after the publication of the notice of liquidation and satisfaction of the claims of all creditors, the final accounting report, and the plan for the distribution of assets of the remaining property are submitted to the shareholders for consideration. If the assets of the partnership being liquidated are insufficient to pay all the debts, the liquidator must immediately file a bankruptcy petition with an explanation of financial insolvency.
   6. Upon completion of the liquidation (not earlier than 6 months after the application for liquidation of the company), the liquidator submits a notarised application to the Commercial Register to exclude the company from the Commercial Register (provided that the company is not involved in legal proceedings currently being conducted in Estonia).

Help in liquidation of a company

To start a liquidation of a company, you must fill out a feedback form and indicate the details of the company to be terminated. To implement the liquidation, your company needs a final accounting report. You can provide it to the specialists of Company in Estonia OÜ, if it has already been prepared in advance. If not, we will help with the preparation of the necessary reports.

Basic conditions for the liquidation of an Estonian company:

• The procedure takes about 6-8 months.
• Cost of services for a company liquidation – 750 EUR.
• To start the procedure, the company must submit annual reports.
• Before liquidation, the company must have no debts.

Assistance in company liquidation include:

• Local liquidator assignment
• Legal document preparation
• Filling the application for company liquidation

TRANSFER OF AN ESTONIAN COMPANY TO A NEW OWNER

An alternative way to take authority from shareholders to own and manage a company is to transfer a company to a new owner-representative of Company in Estonia OÜ.