How to close an Estonian company
On 1 February 2023, a new Estonian Commercial Code came into force along with an entirely new law called Commercial Register Act. These laws regulate how Estonian limited companies can be dissolved and deleted.
Generally, the changes add more flexibility for the e-resident founders who have decided to close their Estonian company. E-residents can now liquidate their company without a need to appoint a resident liquidator. Dormant companies that have not started activities can be closed without the cumbersome liquidation process simply by applying for deletion from the Business Register.
Liquidation or deletion?
Until recently Estonian limited company (OÜ) could only be dissolved by liquidation either voluntarily or through court action. E-resident founders had to appoint a resident liquidator, making some e-residents lie to the court about living in Estonia. As the court did not validate the claim by checking the Estonian population register information they could get away with it. Submitting false data to the court is an offence though.
Unicount was one of the companies which asked the Estonian Ministry of Justice to change the law so that e-residents could be liquidators of their companies. Resident liquidators were asking hefty fees and the prices were anything starting from 500 euros. A service provider that helped you to register the company may have refused to help you with liquidation service. This was partly excused by the personal liability the liquidator was carrying after a successful liquidation of a company. Service providers had to appoint their director or employee as the liquidator of a client company with personal liability.
Now you can delete your company
Starting from 1 February 2023 Estonian companies can be deleted from the register if they have not commenced activities. All shareholders and management board members need to agree with it. This is how it is written in the Commercial Register Act.
§ 63. Deletion based on petition
A private limited company may apply to the registrar for its deletion from the register if the private limited company has not commenced activities and it is confirmed by all members of the management board and all shareholders.
Not commencing any activities is something that is not further explained by the law. Also, there is no definition of a company dormant in Estonia. Basically, we would translate it to that the company has not had bank accounts or any transactions on business bank accounts, no sales nor expenses were recorded, the company carries no debt and never purchased assets. Having some company expenses paid by you personally should be fine if you do not want to reclaim them from the company. Before deletion the court will check that your company does not hold shares in other Estonian companies, have vessels, real estate or publicly traded stocks.
How to delete your company
For closing your company you need to be able to log in to the e-Business Register with your e-resident card. In the main information tab, there is now a new option called “Delete legal person”.
Starting the application through this automatically generates application text so no resolution needs to be uploaded. Important is that all shareholders and board members have to sign the application with their e-resident cards.
This is what your application would look like. As you can see, not depositing and registering the share capital is not an issue for limited companies registered before 1 February 2023. The liability to pay share capital is gone once the company is deleted. The good news is that there is no state fee for this application.
What happens after submission?
After you have submitted your application the court needs to check if other interested government agencies approve the deletion. The court also checks if the company has shares in other Estonian companies, real estate, vessels or publicly traded stocks. If these checks go well the notice is published in the official gazette ametlikudteadaanded.ee. Three months after the notice has been published the court can finally delete your company. Companies that got deleted voluntarily cannot be opened again.
The current information is that the court does not require you to submit annual accounts for previous financial years. We still need to investigate if the fines issued for late filing will be a reason for refusal by the court or tax office. The Estonian Tax and Customs Board is responsible for collecting the late filing penalty fees.
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