On the 1st of February 2023 a new version of the Estonian Commercial code shall come into force. The new version of the law will introduce substantial changes and will also offer new opportunities and options for Estonian companies. Magrat team summed up the most important changes that can impact your business management and give you more flexibility in the Estonian business environment.
Book a name for your new company in advance
A new law introduces an option to book the name of the company prior to its registration. This may be a useful option, allowing you to not worry about conflicts related to similarities in company names or someone trying to use an identical company name. The new feature will be available from 1st of February 2023 but even now you can check the availability of your chosen business name for free using the name query page in Estonian e-Business Registry.
Liquidation process simplified, foreign liquidators allowed
Under the new legislation, the accounting during the liquidation procedure will be somewhat simplified with less reports being required. This will make closing the company easier. Also, the new law removes the requirement that the company liquidator must be an Estonian resident, now a foreigner can also perform this role.
If your business project is complete and you need to liquidate your Estonian company, February 2023 may be the best time to start. You can check Magrat liquidation services and contact us for more information.
Faster forced removal from registry, second chance available
The amended law stipulates that the company can be removed from the registry much faster than previously in case the annual report has not been submitted. This means that management and shareholders must follow the deadlines of reporting far more strictly.
The good news is that the new law foresees the opportunity to restore/reopen the previously closed company. This applies both to companies previously closed down using the standard liquidation procedure and those removed from the registry due to the failure to present annual reports in due time.
Shareholders must approve annual report
The new law also states that the company shareholders must approve the annual report, before the company management will present it to the commercial registry. This means that the registry will no longer accept annual reports if a proper shareholders’ resolution or minutes of the shareholders meeting are missing. This is especially important for companies that have 2 or more shareholders. After an annual report is completed, a shareholders’ meeting must be held before the report is submitted to the registry. If your Articles of Association allows remote decision making, this procedure should be properly followed.
This overview of changes aims to give a general idea of the most important changes to the Estonian Commercial code. The changes overall are more numerous and may affect other more minor aspects of regulation. Also, it is important to note that the implementation of the new law will take place over a period of time, with some parts coming into force immediately, some from September 2023 and others even later.
For more details please contact Magrat team.