Dissolution resolution and submitting the application for dissolution
Estonian private limited company (OÜ) can be dissolved by resolution of the shareholders or court decision.
There are two possible grounds for voluntary dissolution of the company:
- A resolution of the shareholders approved by at least two-thirds of the shareholders who participate in the meeting, unless the articles of association prescribe a greater majority requirement.
- Dissolution of private limited company as prescribed by the articles of association.
A liquidation proceeding is conducted upon the voluntary dissolution of a private limited company. The dissolution resolution of the private limited company shall be entered in the Business Register.
The management board needs to submit an application to the register. The resolution of the shareholders and the minutes of the meeting of shareholders or, in the cases provided by law, the records of voting are added to the application.
The liquidators of a private limited company are generally the members of the management board unless the articles of association or a resolution of the shareholders prescribe otherwise. A liquidator shall consent to being appointed liquidator. Currently liquidator needs to be a physical person residing in Estonia.
The liquidators terminate the activities of the private limited company, collect debts, sell the assets, and satisfy the claims of creditors. If the assets of the private limited company being liquidated are insufficient for the satisfaction of all claims of creditors, the liquidators shall submit a bankruptcy petition to a court.
Liquidation consists of the following stages:
- appointment of liquidators and entry of their names into the Business Register;
- publication of a notice regarding liquidation of a limited company in the Ametlikud Teadaanded and notification to all known creditors. The notice of liquidation shall indicate that creditors are to submit their claims within four months after publication of the notice.
- Preparation of the opening balance sheet of the liquidation and the annual report, approval thereof by the shareholders, and submitting it to the register.
- Selling the assets, collecting the debts, and satisfying the claims of the creditors of the limited company.
- Preparation of the final balance sheet and asset distribution plan.
- Distribution of assets between shareholders.
- Submission of an application for the deletion of the private limited company from the register.
Liquidation of a private limited company is a fairly time-consuming process that lasts at least six months. If it emerges that the private limited company has additional distributed assets, an additional liquidation must be carried out.
The activities of a dissolved private limited company can be continued, or a merger, division or transformation of the company may be conducted. A resolution on the continuation of activities shall be adopted before the commencement of distribution of assets between shareholders.
Merger with the assets of a natural person
A limited company with a single shareholder can be dissolved by merging the assets of the company with the assets of the company’s shareholder who is a natural person, after which the company is dissolved without liquidation proceedings. This is also permitted if the shares are in joint ownership of spouses. In the case of several shareholders, the shares may be first gathered in the hands of a single person, after which it is possible to apply such a merger procedure for several shareholders.
Upon the merger, the assets of the company are transferred to a natural person in accordance with universal succession. This means that all the assets of the company are transferred to the owner who is a natural person as a single pool of assets. The merger entails an unlimited personal liability of the natural person for the obligations of the company being merged. If a person does not want personal liability, it is still possible to go through the normal liquidation proceedings.
For detailed instructions for merging a private limited company with the assets of a natural person, see the Commercial Code.
Deleting a private limited company from the Estonian Business Register
After the liquidation proceeding of a private limited company, the liquidators shall submit an application to the commercial register for deletion of a private limited company from the commercial register. The application can be submitted at least six months after the entry of the liquidation of the private limited company in the Business Register and publication of the liquidation notice and three months after the date on which the shareholders were informed that the final balance sheet and asset distribution plan are presented to the shareholders for examination. The final balance sheet and asset distribution plan shall be appended to the application of deletion from the register.
If, after the private limited company has been deleted from the register, it becomes evident that the private limited company has assets which were not distributed and that supplementary liquidation is necessary, a court may, at the request of an interested person, order a supplementary liquidation and restore the rights of the former liquidators or appoint new liquidators.
A private limited company can only be deleted from the register provided that the limited company is not a party to any court proceedings currently conducted in Estonia.
A private limited company deleted from the register shall preserve its documents for ten years. The documents are generally deposited with a liquidator or with a person assigned by the liquidator. A notation is made to the register indicating the depositary of the documents.