A commercial association is dissolved by resolution of the shareholders or compulsory judicial decision. A commercial association is also deemed dissolved upon the expiry of a term in the case of a fixed-term association or on the grounds specified in law or the articles of association. In general, the dissolution of a commercial association consists of three key stages:
- Adopting a dissolution resolution and submission of a dissolution resolution.
- Liquidation.
- 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.
Liquidation
The commercial association dissolution resolution and submission of application is followed by liquidation. 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.
The residence of at least half of the liquidators must be in Estonia. A liquidator shall consent to being appointed liquidator.
The liquidators terminate the activities of the association, collect debts, sell the assets, and satisfy the claims of creditors. If the assets of an association being liquidated are insufficient for the satisfaction of all claims of creditors, the liquidators shall submit a bankruptcy petition to a court.
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 and approval of the liquidation report by the decision of the members of the association
- Selling the assets, collecting the debts, and satisfying the claims of the creditors of the association.
- Preparation of the final liquidation report, including the asset distribution plan. The liquidators must present the final liquidation report to all members for perusal.
- Returning of contributions and distribution of remaining assets between members.
- Submission of an application for the deletion of the association from the commercial registry to the registrar.
If a creditor known to the association has not filed a claim and the claim cannot be satisfied for reasons independent of the association, the money which belongs to the creditor is deposited if the conditions for depositing exist. If an obligation cannot be performed during liquidation or if a claim is under dispute, the assets of the association cannot be distributed between the members unless the contested amount of money has been deposited and the creditor has been granted sufficient security.
If the assets of the association are not sufficient to cover the claims of creditors and if complete personal responsibility or additional liability of the members of the association is prescribed by the articles of association, the members of the association are liable for the obligations of the association based on the size of their contribution.
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 publication of the liquidation notice and three months after the date on which the members were informed that the final balance sheet and asset distribution plan are presented to the shareholders for examination. The final liquidation report shall be appended to the application of deletion from the commercial register.
A commercial association can only be deleted from the register provided that the private limited company is not a party to any court proceedings currently conducted in Estonia.
A commercial association deleted from the commercial register shall preserve its documents. The documents are generally deposited with a liquidator or with a person assigned by the liquidator. A notation is made to the register indicating the depositary of the documents.