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Doing Business in Estonia

Private and Public Limited Liability Companies are the most common form of business. The Commercial Code, introduced in 1995, regulates the business sector in Estonia. A business may be in the name of an individual or a commercial enterprise.

Anyone starting a new business in Estonia must have a resident’s permit and a work permit. Once resident in Estonia for three months, an individual must apply for a resident’s permit and to obtain one, must either be in business or employed. To start a new business often requires an activity licence, which can be obtained by application.

A self-employed person should register with the Estonian Tax and Customs Board; there is no fee for this. If the individual declares liability for VAT, then he or she must register with the Commercial Register. This requires submission of a notarised petition and payment of the appropriate fee.

A Private Limited Liability Company must be entered in the Commercial Register. A Memorandum of Association and Articles of Association must be submitted. Details in the Memorandum should include the name of the business, the trading address, details of the founding shareholders, the amount of share capital and value of shares, and details of the management and supervisory boards.

Evidence is required that the full amount of share capital has been paid into an Estonian bank. Management boards must submit an application to the Commercial Register within six months of the date of formation of the company.

Forms of Business Organisation

Private Limited Liability Company (Osaühing)

This type of company has its capital in the form of shares, owned by shareholders. Individual shareholders are not liable for the legal obligations of the company. The minimum amount of share capital is EEK40,000 (EUR2,556) and the minimum shareholding EEK100 (EUR6.4). A Private Limited Liability Company must have a management board that constitutes the body that gives strategic direction to the company. Members of the board must be legal residents of Estonia, though do not necessarily need to be a shareholder.

A supervisory board is required where the total share capital exceeds EEK400,000 and where the number of members of the management board is less than three. It is a requirement of law that a Private Limited Liability Company has an auditor once the size of the company’s share capital exceeds the EEK400,000 limit.

Public Limited Liability Company (Aktsiaselts)

A Public Limited Liability Company’s share capital is comprised of public shares. As with a Private Limited Liability Company, shareholders have no liability for the company’s legal obligations. The minimum share capital is EEK400,000 (EUR25,560) and the minimum nominal share value EEK10. Details of shareholders must be recorded in the Estonian Central Register of Securities.

A Public Limited Liability Company is required by law to have a management board and a supervisory board. The former may be comprised of several members, none of which need be shareholders although 50% must be residents of the EU. The supervisory board, which is normally made up of three members, directs and organises the management board and ultimately makes the key decisions about the running of the company.

General Partnership (Taïsühing)

This is a type of business with two or more partners and is governed by the terms of the partnership agreement. Partners are liable in full for the obligations of the company. There is no stipulated minimum capital investment.

Limited Partnership (Usaldusühing)

This form of partnership requires that at least one partner is fully liable for the obligations of the business and stipulates the obligations of a general partner and a limited partner. A general partner is fully liable for the obligations of the partnership whereas a limited partner is only liable up to the limit of his or her personal contribution to the business. A limited partner has limited management and executive powers in such a company form.

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