A private limited company is compulsorily dissolved on the basis of a court order. In general, the reason for compulsory dissolution is non-compliance of the private limited company or its activities with the law. If it is possible to eliminate the circumstance or defect that is the basis of the compulsory dissolution, before deciding on the compulsory dissolution of the private limited company, the court sets a deadline for the private limited company, during which it is possible to eliminate the defect and continue its activities afterwards.
The most common reasons for compulsory dissolution
- The shareholders have not adopted the resolution on dissolution, even though its adoption was mandatory based on the law or articles of association.
- The term of office of the management board expired more than two years ago and a new management board has not been elected.
- The net assets of the private limited company have fallen below the minimum stipulated by law.
- The purpose or activity of the private limited company is not in conformity with the law, public order, or good manners.
There might also be other grounds provided by law for the compulsory dissolution.
Compulsory dissolution process
Submit an application for the compulsory dissolution of the private limited company to the court. The application may be submitted by the management board, the supervisory board, a member or members of the management board, shareholders, as well as other persons specified in legislation. A compulsory dissolution may also be initiated by a court.
The application for compulsory dissolution must be submitted to the county court that has jurisdiction over the location in which the company is registered. Attach to the application the decision of the shareholders and the minutes of the meeting of the shareholders or, in the case provided by law, the record of voting.
Compulsory dissolution enters into force as of the entry into force of the relevant court decision. The court sends the corresponding information to the business register for making an entry of dissolution.
If the court decides on liquidation, the decision of compulsory dissolution is followed by the liquidation of the private limited company.
Deletion of a private limited company from the register without dissolution
There is an exceptional procedure for the deletion of a private limited company from the register due to failure to submit an annual report.
Where a private limited company has not submitted an annual report to the registrar within the time limit provided by law, the registrar sets a time limit for the private limited company for submission of the annual report with a warning on deletion from the register. In addition, the registrar publishes in the publication Ametlikud Teadaanded a notice for creditors concerning the deletion of the company from the commercial register.
A private limited company may be deleted from the register if it has not submitted its annual report within the deadline set by the registrar and at least three months have passed from the submission deadline prescribed by law. A private limited company may be deleted from the register if:
- it has no assets according to the land register, ship registry, commercial register and Estonian register of securities;
- it is not a party to any on-going court proceedings, criminal proceedings or enforcement proceedings;
- the persons and authorities designated by law have provided their consent for deletion from the register.
Where a company that is subject to the obligation to appoint a contact person has not appointed a contact person, the registrar commences, under the same terms and conditions, proceedings for the deletion of the legal person due to lack of contact person.
The registrar may reinstate a private limited company deleted from the register to the register for continuation of activities if the private limited company submits the missing data. A petition for reinstatement to the register may be submitted within three years after deletion.