On the 1st of February 2023 a new version of the Estonian Commercial code and the new Business Registry Law shall come into force. The new version of the Commercial code along with the new Business Registry law will introduce substantial changes and will also offer new opportunities and options for Estonian companies.
One of the changes will remove the minimal share capital requirements for the Private Limited Company (Est. Osaühing). This effectively means that the minimal share capital is 1 euro cent.
Also, to form a share capital, it will no longer be necessary to provide a confirmation from the financial institution, if the share capital is less than 50 000 EUR. A simple confirmation from the company management about the relevant payment into the share capital will now be sufficient. This will greatly simplify the forming of the share capital for an Estonian company.
Simplification for legal entities
The major change is for legal entities setting up subsidiaries in Estonia. Previously they had to open a bank account and pay in the share capital. This meant that the registration procedure could take weeks or even months depending on the bank. With the share capital requirement lifted legal entities can start a company in Estonia much faster and with fewer related costs. Magrat is one of the few market players who provide company formation assistance services to corporate founders, both with a visit to Tallinn.
Changes for physical person
Physical persons were able to start companies without share capital payment even before the new law. But previously the capital had to be paid in and relevant changes to the company data made before the first dividend payment. Now there’s no such requirement to pay in the capital before the dividend payment.
Moreover, if you have already paid in your company’s share capital, now you can reduce it to near zero and withdraw the funds from the company. Naturally, Magrat can assist you with that. Check our reduction of share capital product and contact Magrat Client Service Team for more information.
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.
If you have further questions, Magrat’s Client Services Team is always at your service. You can contact us via the contact form or via chat on our website.