Dissolution of a commercial association
- Adoption and submission of a dissolution resolution
- Deletion from the Commercial Register
A private limited company is dissolved by resolution of the shareholders or compulsory judicial decision. In general, the dissolution of a commercial association consists of three key stages:
- Adopting a dissolution resolution and submission of a dissolution resolution.
- Deletion of a commercial association from the Commercial Register.
Adoption and submission of a dissolution resolution
The basis for dissolution of a commercial association is the resolution of its shareholders, for which over 3/4 of the shareholders vote in favour, unless the articles of association stipulates a larger majority. The management board shall submit to the general meeting deciding on the dissolution the approved annual report for the last financial year and an overview of the economic activities of the commercial association in the current year. The dissolution of the commercial association must be decided by the commercial association even if the number of commercial association members has been below five for six months.
To dissolve a company, the management board must submit to the Commercial Register an application and the dissolution resolution of the shareholders along with the minutes of the general meeting. The commercial association shall be considered dissolved as of the making of the dissolution entry into the Commercial Register.
The commercial association dissolution resolution and submission of application is followed by liquidation, in the course of which it is important that you follow a specific series of steps.
Liquidation consists of the following stages:
- Appointment of liquidators and entry of their names into the Commercial Register. You can submit the application for the dissolution entry to the Commercial Register electronically or through the Company Registration Portal. The liquidators of the commercial association are the members of the management board, unless provided otherwise in the articles of association, the resolution of the general meeting or judicial decision. At least one-half of the liquidators must be persons whose place of residence is in Estonia.
- Publication of a notice regarding liquidation of the commercial association in the Ametlikud Teadaanded and notification of all known creditors. The liquidation notice must specify that the creditors must present their demands within four months of publication of the notice.
- Preparation of the final balance sheet and distribution of assets. After all of the creditors’ demands have been satisfied and the necessary deposits have been made, the liquidators shall prepare the final balance and the residual asset distribution plan. The liquidators shall present the final balance and asset distribution plan to all members.
After all claims by creditors have been satisfied or secured by deposits as necessary, the contributions paid by the members shall be returned to them. The residual assets left after the contributions are returned shall be distributed among the members in accordance with the size of their contributions, unless provided otherwise in the articles of association. In general, the assets may be distributed after six months have passed since the dissolution of the commercial association was entered into the Commercial Register and the liquidation notice published and after two months have passed since the shareholders were notified of the presentation of the final balance sheet and asset distribution plan.
Liquidation of a commercial association is a fairly time-consuming process that lasts at least six months. The activities of a dissolved commercial association can also be continued, or a merger, division or transformation of the company may be conducted. To do so, the liquidators must submit to the Commercial Register an application for continuing their activity.
Deletion from the Commercial Register
After the commercial association has been liquidated as required, the company’s management board will have to submit an application to the Commercial Register for the deletion of the company from the Commercial Register. This can be done after a minimum of six months of the entry of the dissolution of the commercial association into the Commercial Register and providing notification thereof. You will have to attach a final balance sheet and asset distribution plan to the application for deletion from the Commercial Register.