A public limited company can be voluntarily dissolved by resolution of the shareholders. As a general rule, the dissolution of a public limited company consists of three major stages:
- passing a resolution on dissolution and submitting an application for dissolution;
- liquidation;
- removal of the public limited company from the business register.
Dissolution resolution and submission of an application for dissolution
The voluntary dissolution of a public limited company is based on a resolution of the general meeting of shareholders, which must be approved by at least 2/3 of the votes represented in the meeting, unless the articles of association prescribe a greater majority requirement. If a public limited company has different classes of shares, it is also necessary that at least two-thirds of the votes represented by each class of shares vote in favour of the dissolution resolution.
In order to dissolve a public limited company, the board must submit an application to the business register and attach to it the resolution and the minutes of the general meeting. You can submit the dissolution entry application electronically in the e-Business Register.
If the dissolution of a public limited company is decided by an extraordinary general meeting, the board shall submit to the general meeting an annual report for the previous financial year approved by the general meeting and an overview of the economic activities of the public limited company for the current year, which must indicate the period within which the public limited company can satisfy the creditors’ claims.
Liquidation
The decision to dissolve a public limited company and the filing of the application are followed by liquidation, during which it is important to follow a specific order of activities.
The liquidators of a public limited company are usually members of the management board, unless otherwise stipulated in the articles of association, a decision of the general meeting, or a court order. The court appoints liquidators in the event that it is requested by shareholders whose shares represent at least 1/10 of the share capital. The liquidator must have consented to being appointed liquidator.
Liquidation consists of the following stages:
- Appointment of liquidators and entry of the dissolution and liquidators in the business register.
- Publishing the liquidation notice in Ametlikud Teadaanded and notifying creditors. The notice of liquidation must state that creditors submit their claims within four months of the publication of the notice.
- Preparation and approval of the liquidation report by the decision of the general meeting of shareholders. The liquidation report is submitted to the business register immediately after approval. The court may exempt the public limited company from the obligation to audit the liquidation report if the financial situation of the public limited company is so clear that auditing is not necessary in the interests of either the shareholders or the creditors.
- Selling the assets of the public limited company, collecting debts, and satisfying the claims of creditors.
- Preparation and auditing of the final liquidation report, including the asset distribution plan.
- Distribution of assets among shareholders.
- Submitting an application for the deletion of the public limited company from the business register to the registrar.
The remaining assets are distributed among the shareholders pursuant to the asset distribution plan drawn up by the liquidators in accordance with the nominal value of their shares, unless otherwise provided by the articles of association. In general, assets can be distributed after six months from the entry of the liquidation of the public limited company into the business register and the publication of the liquidation notice, and two months from the notice to the shareholders of the publication of the final liquidation report.
If a creditor known to the public limited company has not submitted a claim and the claim cannot be satisfied for reasons beyond the control of the public limited company, the money belonging to them will be deposited if possible. If it is not possible to fulfil the obligation during the liquidation or if the claim is disputed, the assets of the public limited company must not be distributed among the shareholders if the disputed amount of money has not been deposited or the creditor has not been given sufficient security.
If the assets of the public limited company being liquidated are not sufficient to satisfy all the claims of the creditors, the liquidators must file a bankruptcy petition with the county court.
The liquidation of a public limited company is a time-consuming process that lasts at least six months.
It is also possible to continue the activities of a dissolved public limited company or carry out a merger, division, or transformation of the public limited company. The decision to continue activities must be made before starting the distribution of assets among shareholders. The liquidators must submit an application to the business register to continue the activities of the public limited company.
Merger with the assets of a natural person
A public limited company with one shareholder can also be dissolved by merging the assets of the company with the assets of the sole shareholder who is a natural person. In this case, the company is dissolved without liquidation proceedings. This kind of merger is also possible if the shares are in the joint ownership of spouses.
Upon the merger, the assets of the company are transferred to a natural person in accordance with universal succession. This means that all the assets of the company are transferred to the acquiring natural person as a single pool of assets. With this kind of a merger, the natural person acquiring the assets accepts complete personal liability for all the responsibilities of the company being acquired. If the natural person who is the sole shareholder does not want to accept personal liability for all the responsibilities of the company, regular liquidation proceedings can be conducted.
For detailed instructions for merging a private limited company with the assets of a natural person, see the Commercial Code.
Deletion from the business register
After the completion of the liquidation, the liquidators must submit an application to the business register to delete the public limited company from the business register. The application can be submitted at a minimum of six months after entering the liquidation of the public limited company in the business register and the publication of the liquidation notice, and three months after the date on which the shareholders were informed of the publication of the final liquidation report and asset distribution plan. The final liquidation report must be attached to the application for deletion from the business register.
If, after the deletion of the public limited company from the register, it turns out that the public limited company has undistributed assets and additional liquidation is necessary, the court may, at the request of an interested party, decide on additional liquidation and restore the rights of the previous liquidators or appoint new liquidators.
A public limited company may be deleted from the register only on the condition that it does not participate as a party in any ongoing court proceedings in Estonia.
A public limited company deleted from the business register must store its documents for ten years. The documents are generally deposited with the liquidator or a person appointed by the liquidator. This person is specified in the business register.