A subsidiary is a form of business opened by a foreign company in Estonia with a majority of share capital owned by it.
It is considered a legal entity and has a higher degree of autonomy than a branch. A subsidiary registered in Estonia must keep its own accounts and usually pay the corporate tax on profits in the country of origin.
The forms that a subsidiary can take in Estonia are the public limited liability company and the private limited liability company.
The name of the subsidiary established in Estonia must be unique. For this purpose, the name has to be checked online in the Estonian Commercial Register and reserved if necessary.
An Estonian public limited liability company must provide a minimum share capital of 25,000 Euros, unlike a private limited liability company which’s capital must be formed by at least 2,500 Euros.
The management of a public limited liability company is assured by a board of managers and a board of supervisors. The private limited liability company is managed by a management board and only optional by a supervisory board.
The management board must be formed by at least one member, if there are more than one, a chairman must be elected. The supervisory board is formed by at least three members. Only the members of the management board may sign in the name of the subsidiary different documents and conclude contracts.
The liability of the company’s members is limited by their contribution to the capital.
Before starting any activities, certain types of companies must register in the Register of Economic Agency, for example companies which performs activities in the following area: building, tourism, employment, travel, accommodation services, mining, pest control, industry or liquid fuel.
All the legal entities must register in the Commercial Register after opening a bank account and depositing the minimum share capital so the subsidiaries are no exception. The main difference is that the decision of opening a subsidiary in Estonia must be attached to the specific documentation (articles of association, list of shareholder and their contribution, details regarding the non cash contribution) and request for registration.
Another requirement for registering a subsidiary in Estonia is to register for VAT and for Central Sick Fund of Estonia. The last step is only for the subsidiaries which will hire personnel.
The whole process of registration for the Estonian subsidiary takes about one week if all the documents are entirely deposited. For consultancy regarding the laws in this country our attorneys partners from Estonia will be at your service.