On 1 February 2023, there will be regulatory changes to the registered legal address of Estonian companies and the requirement to have a contact person.
The Commercial Register Act, which enters into force on 1 February 2023, changes the regulation of the registered office address of a legal person and specifies when it is necessary to designate a contact person for the company.
Legal address
According to the new law, a legal person’s address can be an Estonian or foreign address. If a company currently has a foreign address of the location of the management board registered with the Business Register, then it is automatically considered to be the legal address of the company by law. These changes will be made by the register without the company management board making any applications for changing company details. The idea of the new regulation is to improve clarity and to remove the ambiguous term “the location of the management board” from the Commercial Code. It has been confusing and often very subjectively interpreted term by registry department court clerks, notaries, lawyers, service providers and e-residents.
For example, some notaries or court clerks may have required the e-resident founders to appoint a contact person on the basis of the management board member being a foreign resident without an Estonian registered residential address while others ignored it. Considering the risk of the company registration being denied without a contact person, most licensed service providers automatically applied themselves as your company’s contact person even if you did not specially instruct them to register your company with a foreign legal address of the “location of the management board”. As a fun fact, only 15% of e-resident companies published their foreign address of “the location of the management board” to the register.
Contact person
So therefore until 31 January it is kind of required to appoint a contact person if the location of the company’s management board (members) is in a foreign country. According to the new regulation, a contact person must be designated only if the registered legal address of the company is in a foreign country. In other words, an e-resident managed company must either have an Estonia virtual office address or designate a contact person to use a foreign legal address on the register.
In addition, the term of office of a contact person will be introduced, the term is entered into the register when appointing a contact person. If the register is not notified of the extension of the contact person’s term of office, the contact person’s data will be automatically removed from the register. This helps court clerks that had to deal with thousands of notices by service providers who did not want to be on the registry cards of companies that refused to pay for their service renewal.
Legal address – in a nutshell
If you are one of the few who had a foreign legal address of “the location of the management board” on the register make sure you understand the legal and tax risks related to having an official registered office address in a foreign country. It may mean that you are considered to be a 100% local company for tax purposes and also for court proceedings. At Unicount we are not sure if this is the aim for all the e-residents of Estonia. If you do not have a foreign legal address of the management board on the register you can ignore these changes unless you feel that you now want to edit your Estonian company’s business register details to remove the service provider who is your contact person at the moment.
There are some benefits to having them serve you as a contact person, as it enables them to receive close to 100% of the legal notices issued to your company by any Estonian public official or authority. These may be the messages you otherwise ignore because of your limited Estonian language skills or busy schedule. In Unicount we always publish all the received incoming messages to your company dashboard with human-corrected translations when available.
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