How can I delete my Estonian company?

In the dynamic world of business, understanding the full lifecycle of your company is crucial, including the less glamorous aspects like liquidation. Whether your company has naturally reached the end of its journey or you're considering a strategic move, being well-informed about the liquidation process is essential. This guide delves into the details of Estonian company liquidation, including recent changes that simplify the process for dormant companies and an intriguing option of liquidation via merger.

Understanding the process of deleting Estonian company 

Company liquidation in Estonia is a formal process of winding up a business entity, governed by the Estonian Commercial Code. The process ensures that all assets and liabilities are handled appropriately before the company is dissolved.

The standard deletion process

1. Shareholder resolution: The process begins with the shareholders drafting a resolution to initiate liquidation, which requires approval.
2. Appointment of a liquidator: A liquidator, either from the management board or an external professional, is appointed to oversee the process. At least one liquidator must be an Estonian resident.
3. Public notice: A notice regarding the liquidation is published in the official publication Ametlikud Teadaanded and potentially on the company's website.
4. Inventory and valuation: A comprehensive inventory and valuation of the company's assets and liabilities are conducted.
5. Settlement with creditors: All debts and obligations to creditors are settled within a specified period.
6. Distribution of assets: Remaining assets are distributed among shareholders based on their ownership stakes.
7. Tax obligations: All tax obligations, including income tax and VAT, must be settled.
8. Submission of final reports: The liquidator prepares a final report, which is submitted to the Commercial Register.
9. Application for deletion: Once the liquidation report and other necessary documents are submitted, the company can be deleted from the Commercial Register.

Liquidation via merger with a sole shareholder

An alternative to traditional liquidation is to merge the company with its sole shareholder. This process involves transferring the company's assets and liabilities to the shareholder, which can be time-efficient and offers several advantages:

• Asset utilization: Assets and liabilities are transferred to the shareholder.
• Time efficiency: The process is usually completed within 3-4 months.

The process of deleting Estonian company via merger

1. Shareholder resolution: The management and shareholder decide to pursue liquidation via merger.
2. Shareholder agreement: A notarial agreement detailing the terms of the merger is formulated.
3. Public notice: A notice regarding the merger is published in Ametlikud Teadaanded.
4. Valuation and asset transfer: Assets and liabilities are valued and prepared for transfer.
5. Formation of accounting documents: Essential documents are prepared and submitted to authorities.
6. Dissolution of original company: The original company is formally dissolved upon completion of the merger.

Digital application for deleting Estonian company for dormant companies

A recent change in Estonian company law allows for a simplified deletion process for dormant companies. If a company has had no economic activity, it can now apply for deletion either digitally or through a legalized application. After submission, the tax office must approve the deletion, which generally takes between 2 weeks to 2 months.

Pricing and costs

The cost of liquidating a company or executing a merger in Estonia varies based on the financial complexity, outstanding obligations, and professional involvement. Consulting with experienced legal advisors is crucial for obtaining accurate cost estimates tailored to your unique situation.

Conclusion

Deleting Estonian compay, whether through standard processes, simplified deletion for dormant companies, or via merger, can be a complex but manageable task with the right guidance. By understanding the intricacies and costs involved, and with the support of professional corporate service providers, you can ensure a seamless transition and compliance with legal requirements.

Frequently asked questions (FAQ) about estonian company liquidation

1. What is company liquidation in Estonia?

Company liquidation involves winding up a company's affairs and operations, distributing assets, settling liabilities, and dissolving the company.

2. Why would a company opt for liquidation?

Reasons include financial distress, cessation of operations, regulatory compliance, or strategic decisions to end the company's existence.

3. What are the different types of liquidation in Estonia?

• Regular liquidation
• Simplified deletion for dormant companies
• Liquidation via merger with a sole shareholder

4. How long does the liquidation process typically take in Estonia?

The process can take several months, depending on the complexity. Regular liquidation can take around 8 months, while liquidation via merger takes about 3-4 months.

5. What is the role of a liquidator?

The liquidator oversees the entire process, including valuing assets, settling debts, distributing assets, preparing reports, and ensuring compliance.

6. What is the role of shareholders in liquidation?

Shareholders initiate the process by passing a resolution and may receive a share of remaining assets after settling liabilities.

7. What happens to the company's assets and liabilities during liquidation?

Assets are sold to settle liabilities, with any remaining assets distributed among shareholders. In a merger, assets and liabilities transfer to the shareholder.

8. Can a company continue operations during liquidation in Estonia?

Typically, the company ceases operations during liquidation, though limited operations may be necessary to facilitate the process.

9. What are the tax implications of liquidation?

All tax obligations, including income tax and VAT, must be settled before the process is completed.

10. What is the significance of public notices during liquidation?

Public notices ensure transparency and inform creditors and stakeholders about the company's status.

11. Can an Estonian dormant company go through liquidation?

Yes, through regular liquidation or a simplified deletion process if the company has had no economic activity.

12. What is the difference between liquidation and bankruptcy in Estonia?

Liquidation winds up a company's operations, while bankruptcy involves a legal declaration of insolvency.

13. Can a liquidation process be reversed once initiated?

Reversing the process is possible but complex and requires a court application. Please make sure to contact Wisor Group OÜ advisors for further details. 

14. How can corporate service providers assist with the liquidation process?

They offer guidance, ensure compliance, accurate valuations, and manage the process for a smoother transition.

15. Are there alternatives to deleting Estonian company?

Yes, one alternative is selling the company with the intention of later liquidating it.

For more detailed information or assistance with the liquidation process, feel free to contact our team of legal professionals at Wisor Group OÜ.