Setting up a private limited company (OÜ) in Estonia

Who can found an OÜ, and how?

An OÜ may be founded by one or more persons, natural or legal (ÄS § 137) [2]. The founders conclude a memorandum of association (ÄS § 138 lg 1) [4]; if there is one founder, it is replaced by a notarised foundation resolution signed by that founder (ÄS § 138 lg 5) [4].

The memorandum states, among other things, the business name, seat and address, the founders, the share capital, the nominal values and allocation of shares, the payment terms and the management board members (ÄS § 138 lg 2) [4]. The articles of association are approved together with the memorandum (ÄS § 138 lg 3) [4].

Two ways.

• At a notary. The memorandum and the articles must be notarised and signed by all founders (ÄS § 138 lg 4) [4].
• In expedited proceedings. Standard articles for expedited proceedings replace the memorandum and ordinary articles and are signed digitally by all founders (ÄS § 139¹ lg 3 ja 4) [5]. You cannot add your own provisions to them, and they cannot be used in fields of activity with special requirements (ÄS § 139¹ lg 2 ja 5) [5].

Share capital and contributions

The smallest nominal value of a share is one cent, and a larger nominal value must be a whole multiple of one cent (ÄS § 148 lg 1 ja 2) [3]. A contribution may be monetary or non-monetary (ÄS § 140 lg 1) [6]. The founders must pay for their shares in full before the application for entry in the commercial register is filed (ÄS § 140 lg 2) [6]; a bank account is opened in the name of the company being founded for monetary contributions (ÄS § 141) [7].

What the law says

• „Osanik ei vastuta isiklikult osaühingu kohustuste eest.“ [1] (translation: a shareholder is not personally liable for the company's obligations; ÄS § 135 lg 2).
• „Osa väikseim nimiväärtus on üks sent.“ [3] (translation: the smallest nominal value of a share is one cent; ÄS § 148 lg 1).
• „Asutajad peavad tasuma osa eest täielikult enne osaühingu äriregistrisse kandmise avalduse esitamist.“ [6] (translation: the founders must pay for their shares in full before the application for entry of the company in the commercial register is filed; ÄS § 140 lg 2).
• „Juhatuse liige peab olema teovõimeline füüsiline isik.“ [8] (translation: a management board member must be a natural person with active legal capacity; ÄS § 180 lg 2).

Management board

The management board is the company's governing body, which represents and manages it; it may have one member or several, and a member need not be a shareholder (ÄS § 180 lg 1 ja 2) [8]. Each board member may represent the company in all transactions unless the articles provide for joint representation (ÄS § 181 lg 1) [9].

What to do

1. Choose a business name and decide whether to found the company at a notary or with standard articles for expedited proceedings (ÄS § 138 lg 4; ÄS § 139¹ lg 3) [4] [5].
2. Set the share capital and the allocation of shares; each share's nominal value is at least one cent (ÄS § 148 lg 1) [3].
3. Pay for the shares in full before the registration application (ÄS § 140 lg 2) [6]. A bank's notice of the contribution must be attached if it exceeds 50 000 euros (ÄS § 144 lg 1 p 3) [10].
4. The management board files the application with the commercial register together with the memorandum and the articles (ÄS § 144 lg 1) [10].
5. Pay the state fee: 200 euros for entering an OÜ in the commercial register, 265 euros on an expedited application (RLS § 62 lg 2) [11].

Frequently asked questions

How large must the share capital be?

The law sets no fixed minimum; share capital is expressed in euros, and the smallest nominal value of a share is one cent (ÄS § 136; ÄS § 148 lg 1) [12] [3].

Can I found an OÜ alone?

Yes. One person may found an OÜ; the memorandum is then replaced by a notarised foundation resolution (ÄS § 137 lg 1; ÄS § 138 lg 5) [2] [4], or standard articles for expedited proceedings are used (ÄS § 139¹ lg 3) [5].

Am I personally liable for the company's debts?

A shareholder is not personally liable for the company's obligations; the company is liable with all its assets (ÄS § 135 lg 2 ja 3) [1].

Does a board member have to be a shareholder?

No. A board member need not be a shareholder but must be a natural person with active legal capacity (ÄS § 180 lg 2) [8].