The procedure for winding up a business is specified in the Commercial Code.
Types of liquidation of an undertaking
The liquidation of companies may occur as voluntary dissolution by a resolution of the shareholders' meeting or general meeting of the shareholders, or as compulsory dissolution by a court ruling. Upon the termination of a private limited company or a public limited company its liquidation generally takes place, unless otherwise specified by the law.
In case of a public limited company or a private limited company, the voluntary dissolution is decided at a shareholders' meeting or at the shareholders’ general meeting, and the dissolution resolution is adopted, if upon the absence of the requirement for a higher quorum in the statutes, at least 2/3 of the votes represented in the meeting or in the general meeting are given in favour of it.
The compulsory dissolution of a public limited company or a private limited company is executed by a court ruling. Prior to the initiation of the procedure for compulsory dissolution, the court may grant an additional deadline for the company to eliminate the circumstances resulting in compulsory dissolution. Compulsory dissolution comes into force from the enforcement of the relevant court ruling. The grounds for compulsory dissolution can be found in the Commercial Code.
When filing for bankruptcy is the only option left for a business owner, it pays to cut losses, initiate proceedings sooner rather than later, and move on to a new business project.
Deletion from the register
Deletion of an undertaking from the register
After the completion of the liquidation of a general partnership and a limited partnership, the liquidators will file an application with the Commercial Register for the deletion of the general partnership from the register. The final balance sheet shall be added to the application.
The management board shall submit an application to the Commercial Register for making the entry of the dissolution resolution of a private limited company or a public limited company, to which the corresponding resolution of the shareholders and the protocol of the shareholders' meeting or the general meeting of the shareholders will be added. A company is deemed to be dissolved from the making of the dissolution entry in the Commercial Register. In case of a voluntary dissolution of a company it should be kept in mind that a company cannot be deleted from the Commercial Register without the written consent of the regional structural unit of the Tax and Customs Board.
A branch of a foreign company located in Estonia shall be deleted from the Commercial Register when the company is terminated or if the company applies for dissolution. Prior to the deletion of the branch from the register, the liquidation of the branch must be executed pursuant to the provisions of the Commercial Code.
Sole proprietors are deleted from the Commercial Register upon their application or on other grounds specified in the law.
Deletion of a taxable person from the register
In case of a termination application the commercial registrar shall submit an application to the Tax and Customs Board in order to receive approval. Approval is not granted if the Tax and Customs Board has claims against the company. With the deletion from the Commercial Register the undertaking is also considered deleted from the Tax and Customs Board.
A sole proprietor is not deleted from the Commercial Register based on his/her application if pursuant to the law he/she must be entered in the register (above all in case if the sole proprietor is registered as a taxable person with the Tax and Customs Board pursuant to the Value Added Tax Act). In the latter case, the sole proprietor must, prior to submitting an application for the deletion from the Commercial Register, apply for being deleted from the Register of payers of value added tax.
Further information on the termination of the activity of a company can be obtained from the Enterprise Estonia website.