Liquidation of OÜ company in Estonia

During current economic slowdown, more and more entities conducting business activity are experiencing difficulties with financial liquidity. Economic constraints, reduced demand and rising inflation are clear signs of the impending economic crisis. Many entrepreneurs are forced to make a difficult decision to liquidate the company.

Liquidation of the company in Estonia as a long-term and requiring process

First of all, it should be noted that the liquidation of the company in Estonia is a long-term process, lasting a minimum of 6 months. During this period, a number of required legal and accounting activities should be undertaken. We mean, among others, preparation of the opening and closing balance sheet, as well as the obligation to satisfy the creditors of the liquidated company in Estonia itself. It should be known that detailed regulations regarding the liquidation of a company in Estonia are set out in the Estonian Commercial Code.

Basis for liquidation a company in Estonia

In a situation where liquidation of a company in Estonia is taken voluntarily, it is based on the shareholders ‘decision taken at the shareholders’ meeting, which should be taken by a majority of at least two-thirds of the votes, although the articles of association may provide for more stringent requirements.

Person of the liquidator

Moreover, it should be emphasized that during the liquidation process of the company, it is headed by at least one liquidator appointed by the shareholders’ meeting. In accordance with Estonian regulation, at least one Estonian resident should be appointed as the liquidator. This is the liquidator who is responsible for meeting most of the liquidation obligations, such as notifying the registry of the initiation of liquidation, or posting an announcement calling on the company’s creditors to submit their claims and then satisfying them.

Other requirements for the liquidation process

In relation to a company with employees, it must be borne in mind that after the commencement of liquidation, the company must terminate all relations with employees.

The company’s liquidation procedure in Estonia also includes a number of accounting obligations, which the liquidator is responsible for. An example is the compulsion to prepare a liquidation report covering such elements as the balance sheet, statement of profit and loss, cash flow statement or statement of changes in equity.

Moreover, after satisfying the claims of all creditors and depositing money, the liquidator prepares the final balance sheet and distribution plan of the assets remaining after liquidation in order to divide them among the company’s shareholders in proportion to their shares, unless the articles of association provide otherwise. However, it should be remembered that in cases specified by law, the above-mentioned balance sheet and plan should be approved by a certified auditor.

Duration of liquidation a company in Estonia process

It is difficult to indicate the duration of the liquidation a company in Estonia process that would suit each company. Usually, the time of the liquidation process, including the time required to satisfy creditors’ claims, or the time necessary to divide the remaining assets of the company between shareholders, is about six months. However, it should be underlined that this time depends on the size of the company, the number of its creditors, or the number of its liabilities.

In addition, it deserves to be mentioned that there is a simplified liquidation procedure, which is available to companies with only one shareholder. This simplified procedure involves the combination of the company’s assets with the assets of a natural person. A broader description of the mentioned institution will be included in one of the next publications.