By Shannon Power, 21st March 2023
On the 1st of February 2023, Estonia’s new Commercial Register Act entered into force. This Act implies substantial amendments to the country’s current Commercial Code, whereby the provisions governing the commercial register are transferred to this new Commercial Register Act. Among this new Act, are changes to the regulations of the registered office address of a legal person, specifications of when it will be necessary for a company to appoint a contact person, and the new minimum share capital contribution.
The New Registered Office Address Regulations
Until the 31st of January 2023, the legal address of an Estonian company has been tied to that of their contact person, meaning their legal address has automatically been that of the company’s contact person.
According to the new regulation, a company’s office address can be registered in Estonia or within a separate foreign country. For existing companies, this does not mean that you have to change your legal address from that of your contact person going forward. If a company does choose to change its legal address, that in itself will not mean that the company tax residency will change. If a company currently has a foreign address of the location of the management board registered with the Business Register, then it will be automatically considered to be the legal address of the company by law.
However, new companies will have the choice of registering either an Estonian address or a foreign address as their legal office address.
The new regulation aims to improve clarity and remove the ambiguous term “the location of the management board” from the Commercial Code. The regulation also creates a definitive separation between a contact person’s address and a company’s legal address.
Appointing a Contact Person
According to the new Commercial Register Act, a contact person may only be appointed if the company’s registered legal address is in a foreign country. This means that an e-resident managed company must have an Estonian virtual office address or a contact person to use a foreign legal address on the Business Register.
Under the new regulations, when a company is appointing a contact person, they must also provide the expiry date of the appointment when submitting their application for an appointment. The registrar must be informed if the term of the appointment is to be extended. If the term of appointment is not extended, the contact person will be removed from the register. This will assist court clerks who had to deal with thousands of notices by service providers who did not want to be on a company’s registry card and did not pay their service renewal.
Share Capital Contribution
As of the 1st of February, the minimum share capital contribution you will have to make when establishing your company is €0.01 per shareholder. This means that with each additional shareholder, the minimum will increase by 1 cent. Your share capital contribution payment has to be made when registering your company. Share capital contributions by OÜ’s shareholders can be made as monetary or non-monetary assets according to the Commercial Code. The amount of share capital associated with your company is determined at the time of registration but can be changed later. When completing the registration, you will have to confirm the completion of this payment to the account associated with your company.
Before this new minimum was established, the minimum share capital contribution was €2500, and the payment could be deferred.
If you have any additional questions regarding Estonia’s new Commercial Register Act and what this may mean for your company, please do not hesitate to contact the Euro Company Formations team. Call us at + 353 (0)1 6461627 or fill out our contact form.