Contact Person – new obligations for Companies in Estonia
The institution of Contact Person first appeared in Estonian legislation several years ago. It is a simple institution for effective contact with Companies. More and more businesses are being registered by foreigners in Estonia because of the friendly environment, transparent tax system and the possibility to run a business remotely. In fact, it is the ability to run a company from anywhere in the world that can make it difficult to get documents into the hands of the board of directors, and thus effectively into the company.
The Estonian legislature has introduced the institution of a licensed Contact Person to treat any correspondence delivered to a Contact Person as having been delivered to the Company. Thompson&Stein has an Estonian license to provide contact services and has been offering them to its clients since the very beginning of such an obligation.
Current regulations
The current Contact Person regulations have been in effect in an unchanged form since 2018. A contact person in Estonia is required to be held by a company that:
– does not have Estonian residents on its board of directors;
– has its registered office outside Estonia.
Under the current regulations, the Contact Person was established for an indefinite period. This spawned a number of abuses, as very often service providers were registered as Contact Person even though they did not actually have contact with the company. New regulations have been introduced in 2023 to further streamline the process.
Changes from 2023
Under the new regulations, the Contact Person service will only be provided for a contractual period. This excludes non-contractual use of the service, as it will be automatically removed from the register. The Thompson&Stein law firm provides contact person services in Estonia, which can be purchased for a period of one to three years. This allows the Company to ensure that its operations are aligned with the new requirements. The relevant declaration is made at the time the company is registered with the Commercial Register.
For existing entities
All Companies registered prior to the entry into force of the new regulations must compulsorily submit the relevant statements by April 30, 2023. The application must be accompanied by the Contact Person’s consent, prepared by Thompson&Stein, along with the period for which it is granted.
There are two ways to submit the application to the registry, depending on the fact of owning electronic signatures:
- the Company’s Board of Directors has an Estonian electronic signature – it is necessary to submit the relevant resolution, along with the Contact Person’s consent to the registry – in this case, Thompson&Stein’s lawyers will prepare all documents for the registry and provide documents for signature.
- the Company’s Board of Directors does not have an Estonian electronic signature – it is necessary to submit the necessary resolution, along with Contact Person’s consent to the register through a notary public – in this case, Thompson&Stein’s lawyers will prepare all necessary resolutions, assist in signing documents in any country, we also provide translation services from Polish to Estonian and notary services in Estonia.
Next steps for Thompson&Stein clients
During the first two weeks of March, Thompson&Stein consultants will contact the company’s board members to determine the best way to comply with statutory requirements, as well as adjust the length of the contract for Contact Person services. To avoid the need for annual statements, consider appointing a Contact Person for longer than 12 months. The law firm offers the service for 12, 24 and 36 months.
What will happen to entities that fail to meet the statutory requirements?
After May 1, 2023, the Commercial Register in Estonia will review all entities that have not made the declarations they were required to make. After this period, it has the option to:
– impose a penalty on the company
– impose a penalty on the company’s management
– initiate coercion proceedings against the company and its shareholders.
The lack of a contact person results in the inability to receive official correspondence, including that addressed by tax offices in connection with the proceedings. The company will thus be organizationally paralyzed.