Operating a private limited company in Estonia or anywhere else requires the owners (shareholders) to comply with certain statutory requirements to remain in good standing. This includes the filing of the annual report, and appointment of a local contact person, in the case of e-Residents.
Even if the company is not actively trading, to maintain its active status in the Commercial Register of Estonia there are minimum compliance requirements.
When a company in Estonia fails to make filings and is removed from the register, there are specific steps that can be taken for its legal restoration, which have been introduced since February 2023. Essentially, if a company is deleted due to reasons like non-compliance with annual filings or fees, it is now possible to have it restored, while before that the only option was to revive it for additional liquidation.
This is due to the continued streamlining and digitization that Estonia pioneers in the world of business administration. While the deletion of the legal entity from the Commercial Register now happens more quickly, the process of reversal and reinstatement has now been made more flexible.
Every Estonian business owner should be aware of these changes because they mean that the Commercial Register can actively monitor compliance, and can even delete the business from the register without the approval of the owners in some circumstances.
If the Tax Office consents, and the company is not involved in any ongoing court proceedings, criminal proceedings or enforcement proceedings, and has no assets in Estonia, then deletion can happen quickly due to lack of compliance, and having assets and/or activities outside of Estonia will not help you. It may be possible to liquidate a deleted company, so that you can receive payments and wind up its business, but a court-appointed liquidator would manage that and the disbursements to creditors.
Note: The company's legal rights and liabilities remain intact if a company lapses, meaning that obligations must still be fulfilled, and creditors can submit claims against the directors of the deleted company! Furthermore, there can be long-term legal consequences for simply walking away from an unprofitable situation, which could affect your ability to start new businesses in the future. It’s important to either close your business down properly or get it back up and running in accordance with all legal obligations.
Restoring Your Business in Estonia
The good news is that those who want to continue to operate their company - and who are prepared to comply fully with the reporting and appointment requirements - now have 3 years from the deletion, to sort things out.
As with most things in Estonia, this can all be performed fully remotely, with the support of your e-Residency marketplace provider such as GroüHub. Assuming there are no additional complications, then the services of a notary will not be required.
Preparation for the administrative restoration process
If you realize that because of lapsed compliance, your company no longer exists in the business register, here’s what you need to do.
Firstly, you need to check that you are within the 3-year reinstatement deadline. This also applies to any entities that were deleted before the legal changes in February 2023. Fortunately, the Estonian business registry operates with complete transparency, and you can easily check its status online.
If you’re within the 3-year window, no court authorization is required.
If the reason for deletion was the absence of the mandatory contact person, then an appropriate representative must first be appointed - or reappointed, because your previous representative would also have been removed from the register along with the lapsed entity. It’s easy to appoint GroüHub as your legal address and contact person with no delays.
The contact person (or legal person) must consent to that role and e-sign their obligation, for submission to the registrar. For most e-Residents, this crucial role - to accept procedural documents locally, and declarations of intent, on behalf of the company - will be carried out as part of the bundle of services offered by the local business service provider, such as GroüHub. However, those who are managing their own accounts must not overlook the importance of this role, even in almost totally paperless Estonia!
Once you have made the appointment, any missing annual reports must be submitted. This applies even if there was no economic activity during the reporting period. If any shareholders are unavailable to approve the report, the management board can still submit it, with that annotation, and for company restoration purposes it will be accepted that the report has been received.
Application for restoration in the Commercial Register
Once you have met all the conditions above for reinstatement, it is a simple matter of adopting a shareholder resolution that all deficiencies have been rectified and the company intends to take up its activities once again.
This resolution must be digitally signed by a person with representation rights, as entered in the register prior to deletion - i.e. a board member or appointed proxy. A notarized wet signature may be used instead of a digital signature.
The state fee of €200 is payable electronically at this point when the application is submitted to the business register. If GroüHub arranges the payment for you through our bank account, that is effectively immediate. All the necessary documents must be included in the submission along with the resolution, such as missing reports and appointment details, so that all non-compliance deficiencies can be proven rectified - but we will make sure everything is correctly compiled and submitted.
After this is completed, working with a reputable provider like GroüHub can help you ensure your business does not lapse into non-compliance again, through timely reminders of all required documentation and filing. Whether it’s an admin oversight or a serious business challenge that caused this situation, our personalized advice and support will help ensure that this never recurs, and you can operate your business compliantly and securely in the Estonian fiscal environment.
And if at any point you no longer require your e-resident company, we can also help you to dissolve it in a controlled and safe legal process which ties up all loose ends and liabilities, rather than leaving you open to personal risks later in your career.
It is also important for Estonian residents to note that their status was granted by the Estonian Police and Border Guard for particular purposes, associated with the development of the Estonian economy. As such, if you no longer operate your business in Estonia, there may be issues with revocation or failure to renew your Estonian e-Residency.
Estonian business law has made significant strides in facilitating company restoration, offering a lifeline to those who may have lapsed in their compliance duties. The introduction of a more flexible restoration process, especially for e-Residents, underscores Estonia's commitment to supporting the business community. This three-year window for reinstatement, coupled with the ability to manage everything remotely, reflects the country's innovative approach to business administration.
It is crucial for company owners to stay informed and take proactive steps to maintain their company's good standing in the Commercial Register. By ensuring compliance and leveraging the support of experienced service providers like GroüHub, businesses can avoid pitfalls and secure their operational continuity.
We offer you to book a personalized advisory call with our expert, who will listen, understand, explain and clarify your questions about e-Residency and doing business in Estonia.
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