Company Liquidation in Estonia
While setting up a company in Estonia is pretty simple, liquidation is a bit more complex. In fact, rather than go through the process, some companies opt to just stop filing their annual reports and wait to be struck off the commercial register within a couple of years.
Company liquidation in the country can be voluntary or compulsory. A voluntary decision is usually taken by shareholders while a compulsory decision is taken by a court of law. Compulsory liquidation may be caused by several reasons including lack of organization of general meetings of the company for more than two years, lack of management board elections, and the expiration of the term stated in the articles of association.
For voluntary liquidation, a vote is required with at least two thirds of the board voting in favor of the liquidation. During the meeting, an overview of the economic activities of the company must be presented by the management. Also, a term for covering outstanding claims must be settled.
The company liquidation process
The regulations governing the liquidation process are stipulated in the Commercial Code. After the voting or the court decision, the Commercial Registry will be notified of the liquidation process. The notification is accompanied with the minutes of the meeting in which the decision was taken.
A liquidator or a committee of liquidators is then appointed to oversee the liquidation process. It is also possible for a third party to be appointed as a liquidator. Nevertheless, it is the sole responsibility of the court to select the liquidator and to decide the appropriate remuneration for this individual. Once selected, the name(s) and signature specimen(s) of the liquidator are recorded in the commercial register.
The first task for the liquidator is usually to elaborate the notification of the liquidation in the official gazette. He or she then notifies all creditors of the process and a time-frame when claims can be deposited. This person also oversees the auction of the company’s assets if the company’s funds cannot cover all debts, and reports on the progress of the liquidation process in general meetings.
At the end of the liquidation process, the final balance sheet is elaborated and presented in a general meeting. Thereafter, a petition to delete the company from the commercial register is filed. The whole process can take up to eight months and no less than six months.