The authorized capital of the Estonian company is the amount of money that the founders of the company shall contribute when registering it. The designated amount is usually used to protect the creditors of the enterprise and provide financial stability of the company.
The share capital can be used to finance the company’s activities and purchase various assets. However, the enterprise should make sure that the authorized capital does not fall below the minimum level established by the legislation of Estonia.
The contribution of the share capital of the enterprise can be made both as a cash contribution to the payment details of the company (bank account or payment system), and in the noncash way via transferring the property of the founders to the company balance sheet (for example, mobile phones and computers, intellectual property, etc.).
Procedure for the contribution of the share capital in Estonia from 01.02.2023
On February 1, 2023, amendments to the Commercial Code of Estonia came into effect, in terms of which the minimum amount of the authorized capital for the Estonian company was reduced to EUR 0.01 (previously, the minimum possible amount of the share capital was EUR 2,500).
Besides, according to the revisions that came into force at the beginning of February 2023, it is no longer possible to register the company in Estonia without making a real contribution of the share capital. However, according to the clauses of the Law, the entrepreneur will not need to confirm contribution of the authorized capital by documents (for example, to provide extract from deposit account) if the declared amount does not exceed EUR 50,000.
It is worth pointing out that in the case when the claimed amount of the authorized capital is less than EUR 2,500, then the founders of the company are potentially responsible with their personal funds to the creditors of the enterprise for the shortfall amount. Thus, this situation is very similar to the pre-existing provision when the founders were responsible with their own funds for the amount of the non-contributed authorized capital.
Thus, the amendments that came into effect cancelled the previously existing procedure when the company in Estonia could be registered without contributing the authorized capital with its real funds. However, the circumstances that the minimum amount of the share capital was reduced to EUR 0.01 and the founders shall not confirm contribution of funds in favor of the enterprise by documents, in fact, did not change actual state of things – payment and registration of the share capital is not a burdensome and labor-intensive process.
If you are interested in possibility of registering the company in Estonia or you have any questions regarding making contribution of the authorized capital according to the new rules – feel free to contact our lawyers and consultants!
You can find additional information about the company incorporation in Estonia on the subject page of our website.