Dissolution resolution and submitting the application for dissolution
A private limited company is dissolved by resolution of the shareholders or judicial decision.
Grounds for voluntary dissolution:
- A resolution of the shareholders approved by at least two-thirds of the shareholders who participate in the meeting, unless the articles of association prescribe a greater majority requirement.
- Dissolution of private limited company prescribed by the articles of association.
A liquidation proceeding shall always be conducted upon the voluntary dissolution of a private limited company. The dissolution resolution of the private limited company shall be entered in the commercial register. The management board shall submit an application for entry to the registrar. The resolution of the shareholders and the minutes of the meeting of shareholders or, in the cases provided by law, the record of voting are appended to the application.
Liquidation
The liquidators of a private limited company are generally the members of the management board unless the articles of association or a resolution of the shareholders prescribe otherwise. A liquidator shall consent to being appointed liquidator.
The liquidators terminate the activities of the private limited company, collect debts, sell the assets, and satisfy the claims of creditors. If the assets of the private limited company 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 the dissolution and liquidators in the business register.
- Publishing the liquidation notice in Ametlikud Teadaanded and notifying creditors. The liquidation notice must state that the creditors submit their claims within four months of the publication of the notice.
- Preparation of the liquidation report, which is approved by the shareholders by decision and submitted to the business register. With the adoption of the resolution on dissolution, the financial year of the private limited company ends and a new financial year begins.
- Selling the assets of the private limited company, collecting debts, and satisfying the claims of creditors.
- Preparation of the final liquidation report and asset distribution plan.
- Distribution of assets between partners.
- Submission of an application for the deletion of the private limited company from the business register to the registrar.
The activities of a dissolved private limited company can be continued, or a merger, division or transformation of the company may be conducted.A resolution on the continuation of activities shall be adopted before the commencement of distribution of assets between shareholders.
Merger with the assets of a natural person
A private limited company with a single shareholder can be dissolved by merging the assets of the company with the assets of the company’s shareholder who is a natural person, after which the company is dissolved without liquidation proceedings. This is also permitted if the shares are in joint ownership of spouses. In the case of several shareholders, the shares may be first gathered in the hands of a single person, after which it is possible to apply such a merger procedure for several shareholders.
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 owner who is a natural person as a single pool of assets. The merger entails an unlimited personal liability of the natural person for the obligations of the company being merged. If a person does not want personal liability, it is still possible to go through the normal liquidation proceedings.
For detailed instructions for merging a private limited company with the assets of a natural person, see the Commercial Code.
Deleting a private limited company from the Commercial Register
After the liquidation proceedings of a private limited company, the liquidators must submit an application to the business register to delete the private limited company from the business register. The application can be submitted at a minimum of six months after entering the liquidation of the private 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 and the asset distribution plan must be attached to the application for deletion from the business register. In the application, all liquidators must confirm that the final liquidation report has not been challenged in court or the action has not been reviewed or was dismissed or the proceedings in the case have been terminated and that the claims of the creditors of the private limited company have been satisfied or the necessary assets have been deposited, as well as that the private limited company is not a party to any ongoing court proceedings. If the private limited company has one shareholder who is also the liquidator, the three-month period specified in the first sentence of this section will not be applied for allowing the inspection of the final liquidation report.
If, after the deletion of the private limited company from the register, it turns out that the private 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 private 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.