Establishing a private limited company (OÜ)
- What must be done before establishing a private limited company?
- What documents do you need to establish a private limited company?
- How to register a new private limited company?
- Establishing a private limited company through a notary
- What are the costs of establishing a private limited company?
- How long will it take to establish a private limited company?
- What must be done after founding a private limited company?
The private limited company (osaühing or OÜ in Estonian) is the most common form of business in Estonia.
The advantages of the private limited company:
- simple and quick registration;
- a relatively low share capital requirement (2500 euros);
- shareholders have no personal proprietary liability for the private limited company’s obligations.
The private limited company can be established without contributing the share capital if the proposed area of activity does not require capital investments. The share capital of such a company will be formed by the liabilities of the founders amounting to the sum they promised to provide as share capital contribution.
Before establishing, find the answers to the primary questions that will determine the most important rules governing your company’s everyday activity.
- What will the company’s business name be? Visit the e-Business Register to check your chosen business name is available.
- What will your initial area of activity be? Search system for EMTAK fields of activities
- Who are the shareholders and how large are the partner’s share capital contributions?
- What will the private limited company’s place of business and the address of its location be?
- How will the management of the private limited company take place?
Holders of an Estonian ID card or e-Residency card and a growing number of EU member states’ ID cards can establish and manage Private Limited Company fully online. If an ID or e-Residency card is not available, a visit to a notary in Estonia is needed to verify the foundation documents.
If you register the company electronically in the Company Registration Portal of the e-Business Register, you can prepare the articles of association for you company based on the provided template.
If you register your company with a notary, the notary will prepare an application of establishing a private limited company, the memorandum of association and articles of association for you.
More information and help in establishing a company can be found on the website of Invest in Estonia.
You can register a private limited company electronically at the Company Registration Portal of the e-Business Register. You need the technical equipment for electronic registration (ID-card and ID-card reader).
A private limited company can be registered electronically in the Company Registration portal of the e-Business Register only, if:
- all persons related to establishment (members of the management board, founding members, etc.) are able to sign the application of initial entry and establishment documents digitally;
- the private limited company is established without an immediate share capital contribution or with a monetary contribution made electronically in the course of preparing an application in the Company Registration Portal of the e-Business Register.
To streamline the process of establishing a private limited company through a notary, you will have to submit the following information:
- memorandum of association, if the company is registered at the notary or, if the company is registered under electronic expedited procedure, a template articles of association, the form for which is provided;
- articles of association (except for in the case of electronic registration under expedited procedure);
- information on communications devices;
- bank certificate regarding deposit of share capital;
- certificate regarding payment of state fee (except in the case of electronic registration).
Notary offices will also have the samples of documents necessary for establishing a private limited company.
To establish a private limited company, you will have to pay a state fee of 145 euros. If you establish the private limited company electronically under expedited procedure, the state fee will be 190 euros. The state fee can later be recognized as a business expense as the costs of establishing the private limited company.
If you are using a notary for the formation of a private limited company, the notary fees will be added. The precise amount depends on the size of share capital and the number of founders. VAT will be added to all of the notary fees.
The private limited company contribution may be monetary or non-monetary. In the latter case, the contribution can be made in the form of equipment, computers or other monetarily appraisable assets. If the share capital of a private limited company is at least 25 000 euros and the value of a non-monetary contribution exceeds 1/10 of the share capital or if all non-monetary contributions of such private limited company collectively form more than one-half of the share capital, the valuation of the sufficiency of the value of the non-monetary contribution shall be verified by an auditor.
A private limited company can be established without contributing the share capital if the proposed area of activity does not require capital investments. The share capital of such a company will be formed by the liabilities of the founders amounting to the sum they promised to provide as share capital contribution.
If you register electronically, a company can be established in just a few hours in the best case; still, budget one business day. Registering a private limited company through a notary will take 2-3 days.
Depending on the company’s area of activity and size, a varying number of additional steps must be taken. First you will have to open a bank account for the private limited company, where the company’s share capital is to be deposited. You will already have transferred this sum to the court’s deposit account or the bank’s e-start-up account when you formed the company. It is not possible to open a bank account without the company’s Commercial Register number.
- If you will be operating in an area of activity subject to special requirements, you will have to apply for an activity licence.
- If your annual turnover exceeds 40 000 euros, you will have to register as a VAT payer with the Tax and Customs Board.
- If you hire employees, you will have to register them with the Tax and Customs Board.
- If you hire employees, you will have to notify the Labour Inspectorate that the company has started operating.