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Company Dissolution/Liquidation in Estonia

Company Dissolution/Liquidation in Estonia

Company liquidation in Estonia can become necessary when the legal entity is no longer profitable, or its activities are no longer relevant/it is no longer engaging in business in Estonia.

Irrespective of the reasons that determine business owners to close a company in Estonia, the processes that follow are governed by the company law, and end with removing the former company from the Commercial Register.

Our lawyers in Estonia can assist investors who are interested in winding up a company in Estonia. While the decision to do so may be difficult in some cases, having specialized assistance will make the process a straightforward one.

How can a company be liquidated in Estonia?

An Estonian company can be liquidated voluntary or compulsory. The voluntary decision is taken by the general meeting of the shareholders, while the compulsory liquidation is taken by a competent court.

A voluntary dissolution is possible when the following conditions are met:

  • – the resolution to dissolve the company is approved by at least two thirds of the shareholders who take place in the meeting;
  • – the dissolution of the legal entity is prescribed by its articles of association.

Company liquidation in Estonia will follow once the dissolution of the legal entity is notified to/entered into the Commercial Register.

The reasons a company is compulsory liquidated are various and may be caused by the lack of organization of general meetings of the company for more than two years, the expiration of the term stated in the Articles of Association, the lack of management board election.

The mandatory steps for liquidation presented below by our attorneys in Estonia are to be followed regardless of the management decisions or market conditions that made it mandatory for the shareholders to start winding up a company in Estonia.

What are the steps for company liquidation in Estonia?

Liquidation is a result of a general meeting decision or a result of a decision taken by the Court. The main regulations related to the Estonian liquidation are stipulated in the Commercial Code.

During the meeting in which the shareholders decide to close the company in Estonia, the company’s management presents the preceding annual repost and an overview of the economic activities.

It’s also necessary to settle a term for covering the outstanding claims during this meeting.

After the meeting, or after the Court decision, the Commercial Registry must be notified regarding the liquidation process. The request from the company’s management is usually accompanied by the minute of the meeting where the decision was taken.

The liquidator or the committee of liquidators is appointed in order to take all the measures necessary to close the liquidation. It’s mandatory that at least one liquidator is Estonian resident and must be member of the formal management board. In certain situation, when the articles of association decide so, the liquidator can be a third party.

The court is responsible for choosing a liquidator for the compulsory liquidation and must decide what remuneration will be granted to it.

His name(s) and signature specimen(s) must be recorded in the Commercial Register.

The following responsibilities are it assigns to the liquidator:

  1. elaborate a notification in the official gazette Ametlikud Teadaanded,
  2. notify all the creditors regarding the process and a timeframe when the claims can be deposited,
  3. auction the company’s assets if the funds are not covering all the debts,
  4. present the status of the liquidation in front of the general meetings.

The claims can be submitted no later than 4 months from the liquidation notification along with supportive documentation (which will be checked by an authorized auditor).

After covering the claims, the remaining assets are distributed among the shareholders depending on their contribution to the company’s capital. The payments are usually made in money.

The last step of the liquidation is the elaboration of a final balance sheet and its presentation in a general meeting. A petition for deletion from the Commercial register must be elaborated and the liquidator is paid and then dismissed.

When the company’s assets are insufficient to satisfy the claims of the creditors, then the liquidators can file a bankruptcy petition with a competent court. The experts at our law firm in Estonia can help you with more information about this process.

Our team presents a set of statistical data on declared bankruptcies that have been recorded in Estonia over the last few years:

  • in 2024 there were 90 bankruptcies recorded in the first half of the year;
  • there were 141 bankruptcies in 2023 and 100 in 2022;
  • 107 companies were declared bankrupt in 2021 and 155 in 2020;
  • the highest number of bankruptcies over the last ten years was in 2014, when 167 bankruptcies were declared.

How long does it take to liquidate a company in Estonia?

Usually the whole process of covering the claims of the creditors and the process of dividing the remaining assets to the shareholders takes around six months.

The application to delete the company form the business register must be submitted three months after the shareholders received notification that the final liquidation report was published.

Our lawyers remind former businessowners that a company that was deleted from the register is still required to store its documents for ten years. It is common practice for the liquidator to store these documents and the contact details of the person doing so will be notified to the business register.

Our attorneys offer complete solutions for business owners who wish to end the activities of a company, as well as those who are ready to start a business. In addition o our corporate-related services, our immigration lawyers in Estonia can help you with applications for residency in Estonia, or to obtain citizenship in Estonia.

If you would like to know more about company liquidation in Estonia, as well as the option to reinstate a company, please contact our Estonian lawyers.