Types of Companies in Estonia
Types of Companies in EstoniaUpdated on Friday 09th April 2021
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The Commercial Code (Äriseadustik) establishes the legal activities of companies in Estonia. The business activities of a company start once it has been registered with the Commercial Register. Each company must be registered under a name that will contain the appendage referring to the legal form of the company. Also, there are certain forms of activities that require special licenses.
In this article, our company formation agents list the main characteristics of the five available business forms in the country as well as briefly outline the main steps required to incorporate and the most important accounting requirements. For more information, our website contains articles related to all of these topics and our company registration specialists are ready to personally assist you when opening a company, as well as when using the unique and convenient e) residency system in Estonia for company formation. We are here to answer any additional or specific questions you might have before you commence the registration process in Estonia.
The legal forms at a glance
Please read below for more information about each of these business forms presented by our incorporation specialists.
The Private limited company (OÜ) in Estonia
It suffices a person to start a private limited company. The Estonian private limited company has a capital formed by shares and is owned by one or more shareholders, that are not liable individually. The minimum amount to start a private limited company must be 2, 550 euros, and the minimum nominal value of a share must be 1 euro. When the founders of the private limited company are natural persons, the payment of the entire capital can be postponed until after the incorporation of the company. Until the amount is paid in full, the founders are liable for the remaining amount.
The Estonian private limited company must have a management board formed by Estonian residents, although management board members do not need to be shareholders.
For more information regarding the types of companies in Estonia, please watch the video below:
The Public Limited Company (AS) in Estonia
A legal or natural person is the minimum required to start a public limited company in Estonia. It needs a public share capital of 25, 500 euros with a minimum nominal share value of 1 euro. Its shareholders have no liability for the company’s legal obligations. Compared to the private company, the public company’s shareholder must be registered in the Estonian Central Register of Securities and it is required to have a management and supervisory board. The supervisory board is usually made up of 3 members, not necessarily shareholders but half of them must be EU residents. The supervisory board appoints and organizes the management.
If you want to open a company our Estonian lawyers can offer you the best legal advice. They can also help you in the process of trademark registration in Estonia.
The General Partnership (TU) in Estonia
The Estonian general partnership must be made of 2 or more partners and submits to the terms of the partnership agreement. Partners have joint and full liability for the obligations of the company. There is no minimum capital investment and the profits are divided amongst the partners according to their share, unless the agreement specifies otherwise.
The Limited Partnership (UU) in Estonia
The Estonian limited partnership must be made of at least a fully liable partner and is required to have a general partner and a limited partner. The general partner will be fully liable for the company’s legal obligations while the limited partner is liable up to his amount of investment.
Both for the limited and the general partnership, the partnership agreement is the main constitutive document, and it contains important information about the manner in which business will be performed. The following are included: the business name and the registered office, the amount of contributions, other terms and conditions that may be particularly determined and included by the founders (as long as these are not in direct conflict with the law).
The Sole Proprietorship (FIE) in Estonia
A natural person has the possibility of being a sole proprietor but must register with the Commercial Register after submitting a notarized petition. The sole proprietor has full liability for the legal activities of the business.
Branches in Estonia
A foreign company may open a branch office in Estonia. Branch offices must also register with the Commercial Register even if they are not a legal business and the parent company is liable for all the activities of the branch.
The following documents from the foreign company are relevant for branch registration in Estonia:
- the foreign company’s copy of the registration certificate or the Commercial Register extract issued by the authorities in the company’s country of origin;
- the consent or license of branch establishment, if needed;
- the appointment of the branch director/resolution for the appointment thereof;
- copy of the company’s Articles of Association or Memorandum;
- director’s specimen signatures;
- contact details.
All the required documents are translated into Estonian. Notarization costs should also be taken into account. Our team can provide more details about the branch for those foreign investors who are interested in expanding to the Estonian market in this manner.
Company formation in Estonia
When registering with the Commercial Register a company must submit an application within 6 months from the foundation, the memorandum and articles of association, and a bank payment as evidence of the full payment of the share capital. These are part of the incorporation steps required for company formation. Below, we list other important stages:
- Choose and reserve the company name: the chosen name needs to be unique and a simple online check is possible;
- Establish an address: this is mandatory for company formation, however, investors may also choose to use a virtual office;
- Register the company: this is the actual registration which is done according to the chosen business form;
- Prepare to have employees: the employees are registered in the employment register with the Tax and Customs Board;
- Obtain special licenses: if the company will activate in a controlled business field, the company owners will need to apply for special permits and licenses; electronic registration suffices in most cases in Estonia and our team of company formation agents can give you more details about the process.
Company registration in Estonia is a simplified process and one that is largely digitized. However, there are instances in which the registration needs to take place through a notary, such as when the founders are not able to sign documents digitally or when the contribution to the share capital is not monetary but through a proprietary rights that is being transferred to the company (software, for example). Our team can provide more details.
According to Estonia’s investment agency, company formation in the country can be fast-tracked. The following data and statistics apply:
- 3 hours: in some cases, this is all it takes to start a company; our team can give you more details about this;
- 98% of the companies are incorporated online;
- 99% of the banking transactions are also performed online;
- 98% of the required tax statements are filed electronically/online;
- more than 14,500 companies in the country were created using e-Residency.
e-Residency is a convenient manner in which a foreign investor can obtain a digital ID issued by the Estonian Government. This allows the holder to open and run a business and use the entirety of the convenient digital services available in the country. Not only that the company can be incorporated online, there is also no need for the foreign founder to be present in the country to manage the business, the activities can be handled remotely. This solution is available irrespective of nationality and our team of company formation agents in Estonia can give you more details on how you can proceed.