The reasons for liquidating a company in Estonia may be very different, from bankruptcy, forced termination on the basis of a court decision, to the owners’ voluntary decision to close the business. In any case, in order to be liquidated and deleted from the Commercial Register, the company must pass through different stages and procedures.
A company must begin the liquidation procedure by adopting a decision signed by the sole member or by at least 2/3 of the shareholders. In order to liquidate a company in Estonia, the shareholders must submit an application before the Commercial Register, along with the minutes of the general meeting. The shareholders must also present a financial report for the previous year and a current year economic insight.
The general meeting shall also appoint the liquidators, with the main tasks of: termination of the company, preparing an opening balance sheet and explanatory report, preparation of financial statements for the year ended, informing the creditors about the company’s situation, recovering the debts and satisfy the creditor’s claims, drawing up a final balance sheet and the liquidation of the remaining assets by an distribution plan in order to divide the remaining assets between the company’s owners. When there are not enough assets to satisfy all claims, there must be submitted a bankruptcy petition.
The liquidation of a company in Estonia by voluntary decision implies ending the daily activities of the company, ending the company’s financial activity and starting liquidation proceedings, including termination statements that shall be submitted to the Commercial Register.
The procedure of liquidation of a company in Estonia also includes a liquidation report which shall contain the following elements: the income statement, statement of cash flows, statements of changes in equity, report on profits and losses.
Once the liquidation of a company in Estonia is started, the company shall also terminate the working relations with the employees.
The compulsory liquidation of a company in Estonia requires the intervention of the court, in order to dissolve a company that doesn’t comply with certain requirements. The forced grounds for termination are: results in non-compliance with laws on compulsory liquidation, the purpose or activity is contrary to the law (for example when the company violates foreign labor recruitment or when the company fails to comply with the obligation to submit an annual report), foundation of a serious violation of the law, the company’s situation does not meet the statutory requirements, the powers of the board expired more than two years ago and a new management board has not been elected.
When the forced termination relies on an underlying defect or other circumstances that are likely to be eliminated, the court will usually establish a deadline for elimination of those circumstances.
The petition for forced dissolution may be submitted to the court by the company’s management board, shareholder or other persons specified by law. The court may also decide on its own initiative on forced termination.
In order to liquidate a company in Estonia, the Court will also appoint a liquidator that will be in charged for all further actions, as in the case of voluntary liquidation.
A notification about the company’s liquidation must be published in the Official Gazette and the direct creditors will receive an official notice about the company’s situation. In this sense, the creditors can raise claims within 4 months since the announcement was published in the Official Gazette and all the claims must be sustained by appropriate documentation. This procedure is also available for voluntary liquidation.
The liquidator must then draw up the balance sheet and take care of the distribution of the remaining assets within 6 month from the publication in the Official Gazette and no later than 2 month from the elaboration of the balance sheet.
The liquidator must provide, no later than 6 month from the liquidation announcement, the petition of deletion from the Commercial Register. This can be made only when all the assets have been fully redistributed between the shareholders.