Shareholder structure in the Estonian OÜ company

By establishing the Estonian OÜ company, each founder must make important decisions with respect to the newly created legal entity. The matters which should be taken into account include the amount of share capital, the personal composition of the management board and most importantly the shareholder structure.

Who can become a shareholder in OÜ?

When analyzing the issue of the shareholder structure in the Estonian OÜ company, many people wonder how to properly construct it. Similarly, to other countries e.g. Poland, there is freedom of choice here. The shareholders of the newly created company in Estonia can be both natural and legal persons (individuals and entities). There are also no restrictions on their residences. Thus, foreigners are allowed to own 100% of the company’s shares. Depending on the adopted shareholder structure, it will be necessary to provide various documents before registering the Estonian company.

In relation to natural persons, it will be necessary to provide the identity documents of the future shareholders for verification.

If we want a legal person (commercial company) to become a shareholder, it is obliged to present documents that clearly describe the shareholding structure and indicate people who are authorized to represent it. Therefor, an appropriate extract from the register of entrepreneurs functioning in the country of registration of the entity as well as the articles of association might be required. All of these documents have to be translated into Estonian, and sometimes also apostilled or legalized, in order to be valid in Estonia.

Number of shareholders in a company in Estonia

There are no restrictions as to the maximum number of shareholders in a company in Estonia. Shares can be owned by at least one person, regardless if it is a natural person or a legal person. In the latter case, there is a need to disclose UBO, i.e. the beneficial owner of the company in Estonia. This is a natural person or a group of natural persons who actually exercise power over a given entity. It should be emphasized that at any time the shareholders can be both physical and legal persons.

When constructing a shareholding structure, it is worth remembering not to divide it too much, as this may hinder important decisions. In addition, an excessively developed shareholding structure can significantly slow down the process of establishing the Estonian company. This might result from the extended time of obtaining the necessary documents from individual shareholders, the process of making sworn translations into Estonian, followed by the extended time needed to prepare the Estonian company’s corporate documents.

Company in Estonia – The possibility of changing the shareholding structure at a later time

According to Estonian regulations, the share purchase agreement must be concluded on the territory of Estonia and the operation itself should be carried out with the participation of an Estonian notary. In practice, this excludes the possibility of making transactions using Estonian e-residency, the so-called Estonian e-identity.

Therefore, there are two ways of changing the shareholding structure in the Estonian equivalent of a Polish limited company. The seller and buyer can appear in person at an Estonian notary. On the other hand, it is possible for them to grant power of attorney, on the basis of which a suitably specialized lawyer will act directly in Estonia. This will save a lot of costs and time.

Certain elementary issues of the transaction need to be established when planning the divestment of shares. First of all, the number of shares which is going to be sold and the sale price. The shares may be sold at a nominal price as well as the price agreed by the parties under the principle of freedom of contract.