Incorporation of Limited Company

The Estonian legal system is based on the continental European model.

The new Commercial Code was adopted on 15 February 1995 and has been effective since 1 September 1995. The law expresses the basic principles of Estonian entrepreneurship according to the best European traditions and standards and outlines the role of the Commercial Register. According to the Commercial Code there are five forms of business entities, which are created by entry into the Commercial Register 

The most popular types of legal entity being set up by foreigners in Estonia are the so called “Osaühing, OÜ”, or Private Limited Company and the Public Limited Company (aktsiaselts or AS) 

INCORPORATION OF PRIVATE LIMITED COMPANY

A private limited company is a company that has share capital divided into private limited company shares. A shareholder will not be personally liable for the obligations of the company. A private limited company is liable for the performance of its obligations with all of its assets.

The share capital must be a minimum of 40,000 EEK (approx. EUR 2,556). The minimum nominal value of a share is 100 EEK. A shareholder may freely transfer a share to another shareholder.

Upon transfer of a share to a third person, the other shareholders have the right of pre-emption.

A share of a private limited company can be pledged or encumbered or divided or transferred to successor if not fixed otherwise in the Articles of Association. The shareholder is required to make a contribution corresponding to the nominal value of the shareholders share. The Management Board organises the accounting of the private limited company. A private limited company must have an auditor if the share capital of the private limited company is greater than 400,000 EEK (approx. EUR 25,560) or if so stated in the Articles of Association. An auditor is also mandatory when the company surpasses certain threshold values in terms of turnover, number of employees and asset value

Incorporation documents shall be signed at notary’s office. All founders and Board members are required to be present.

The required minimum of share capital is EEK 40. 000, a contribution payable into capital may be done by three different ways:

1. 100% in cash, monetary contribution
Disadvantage is your “money frozen” for three weeks.

2. 100% non-monetary contribution. Appraisal by an auditor is required.
A non-monetary contribution may be a whatsoever property or pecuniary right appraisable in money and transferable to the public limited company to which a claim may be subjected, i.e. starting from a facsimile, refrigerator, car to bonds and securities, etc.
Costs related to obtaining an auditor’s appraisal are added to the incorporating costs in case of such a non-monetary contribution.

3. More than one-half (EEK 20 100) in cash and the remaining (EEK 19 900) by a non-monetary contribution. In such a case no auditor’s appraisal is required.

INCORPORATION OF PUBLIC LIMITED COMPANY

A public limited company is a company that has a share capital divided into public limited company shares. A shareholder is not personally liable for the obligations of the public limited company. A public limited company is liable for the performance of its obligations with all of its assets. One or more natural or legal persons without or with share subscription may found a public limited company.

Share capital must be a minimum of EEK 400,000 (approx. EUR 25,560) and the minimum nominal value of a share should be EEK 10. Shares shall be registered. Shares shall be entered in the Estonian Central Register of Securities. The rights attached to registered shares belong to the person who is entered as the shareholder in the share register maintained by the company. The management board shall ensure the timely submission of correct information. The number of shares a shareholder can own in a company is unlimited and shares can be freely transferred to third parties. A share cannot be divided.

The remuneration of auditors is obligatory and the general meeting, who specifies the procedure for the remuneration of auditors, will also specify the number of auditors.

The management of a public limited company operates through general meetings of shareholders, the Management Board and the Supervisory Board. A private limited company operates through the Management Board.

The general meeting of the shareholders has the highest authority in the corporation and is to be convened at least once a year. It approves the annual report, distributes profits, elects the Supervisory Board and the auditors of the corporation, amends the Article of Association, increases and decreases the share capital, decides on dissolution the public limited company and etc. according to law. Resolutions are usually passed by a simple majority vote. However, for a change in the Articles of Association or termination of its operations and for a resolution to decrease or increase share capital, a majority of 2/3 is required.

The Management Board is the executive body of the corporation, which represents and manages the corporation. The Management Board must report the corporation`s activities and economic situation to the Supervisory Board at least once every four months. The residence of at least one-half of the members of the management board must be in European Union, in ECC or Switzerland.

The Supervisory Board plans the strategic activities of the corporation, arranges its management, and controls the Management Board. A member of the Management Board cannot be a member of the Supervisory Board.

Similar to incorporation of a private limited company. Contributions into share capital, amounting in minimum to EEK 400.000, may be either monetary or non-monetary. Other than in case of a private limited company, a supervisory board and an auditor are required to be appointed for the public limited company. Registration of the shares with Estonian Depository of Securities is also mandatory.

PRICE FOR INCORPORATION OF A PRIVATE LIMITED COMPANY: starting from 650,00 Euro *

The price can vary in case of non-monetary share capital contribution, depending on the size of the share capital and  based on the number of incorporators.

The price includes: state & stamp fees, notary fees, other taxes, general consultation, services and assistance, preparation of all necessary documentation ( Articles of Association, Incorporation agreement, etc), commercial register statement (B-kaart) and general administrative expenses

* The prices does not include translation fees at notary

PRICE FOR INCORPORATION OF A PUBLIC LIMITED COMPANY:  starting from 950,00 Euro *

The price can vary in case of non-monetary share capital contribution, depending on the size of the share capital and  based on the number of incorporators.

The price includes: state & stamp fees, notary fees, other taxes, general consultation, services and assistance, preparation of all necessary documentation ( Articles of Association, Incorporation agreement, etc), commercial register statement (B-kaart) and general administrative expenses

* The prices does not include translation fees at notary