Liquidation of your Estonian company is a process of bringing your business to an end and distributing its assets to owners. A liquidation event usually happens when a company does not have any positive income and is insolvent or there is no use for the company. Therefore, the remaining assets that the company has are used to pay creditors and shareholders based on the rights that they have for the assets.
Whether your business is not making any positive income, or your Estonian company does not really serve any purpose, then the liquidation of the business might be the best option. However, it is important to know that liquidation is not the only option you have, and others might just be faster.
Liquidation process in Estonia
The liquidation process in Estonia is regulated by the Commercial Code and it takes around 6 months in total and the process usually consists of:
- Making a liquidation decision to liquidate the company at the shareholder’s meeting where at least 2/3 vote for the decision (if the articles of association do not state otherwise).
- Sending your liquidation application to the Commercial Register with the shareholder’s decision and appointing a liquidator (liquidators are usually the company’s shareholders).
- Making an official publication and notifying all creditors while stating that all claims must be made within 4 months.
- Compiling an annual report and a balance sheet which are signed by the shareholders and sending them to the registry.
- Selling the business’ assets, making claims to debtors and satisfying creditor claims towards the company.
- Compiling a closing balance and an asset distribution plan.
- Distributing assets between the shareholders.
- Sending an application for the deletion of the company from the business registry.
At the end, a distribution of the remaining assets will take place between the shareholders and creditors, and the company will be removed from the Estonian business registry.
Merger of an Estonian company
An alternative option to liquidating a company is a merger. A merger can be done between a company that is owned by a sole private person and a natural person by merging the assets. Or between two businesses by deleting one from the registry and adding assets to the other entity.
This process is a lot quicker and takes approximately one and a half months to complete from the beginning to the end. A merger consists of drafting a merger resolution, making a notarial merger agreement, submitting a notice to the public notice portal and closing the account.
Transfer ownership of your Estonian company
Finally, in case you do not wish or have the time to liquidate or to do a merger, there is always the option of transferring the ownership of your company to another person or entity. This usually takes place through a sales process where money or assets are exchanged in accordance with the value of the company.
In case of inactive companies, there is usually not much value that the company has, and it may be limited to the share capital, while operating companies need to be valuated thoroughly to get a good idea of how much it is worth.
Incorporate is here for you
In case you have any further questions about liquidating, performing a merger or transferring ownership of your Estonian company, please feel free to reach out to us and we will be happy to help you out!