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Comparison of legal entity types in Estonia

Comparison of legal entity types in Estonia

  Branch of Foreign Entity   Private Limited Liability Company   Public Limited Liability Company  
  Minimum Share Capital Amount N/A   Minimum Share Capital Amount is €2,500   Min. Share Capital Amount is €25,000
  Branch of Foreign Entity is liable for the obligations of the branch.   A private limited liability company is liable with all of its assets.                                 –
  One or more than one director for the branch will be appointed by a foreign company. One director, at least, has a requirement to be a resident of Estonia, another European Economic Area (EEA) Member State or Switzerland.   A private limited liability company must have a management board. It can have one or several members, who do not need to be shareholder(s).                                     –
    Not required     A Supervisory Board is necessary if the articles of association prescribe its requirement. At least three members are required. They do not have to be a shareholder. A member of management board can’t be a member of the Supervisory Board.
  Not required   Audit is required. The annual report must be audited at the balance sheet date of the accounting year when at least two of the following criteria are exceed.   Required
                   Not required     If the articles of association prescribe the formation the reserve capital, it can’t be less than 1/10 of the share capital. At least 1/20 of net profit of the fiscal year is taken into the reserve capital until the amount specified in the articles of association has reached. The amount of reserve capital is determined by the articles of association and can’t be less than one-tenth of the capital of the fiscal year. At least 1/20 of net profit of the fiscal year is taken into the reserve capital until the amount specified in the articles of association has reached.
              Not regulated If net assets are less than half of the capital or less than the minimum capital requirement of € 2,500 in private limited companies and € 250,000 in public limited companies, shareholders must decide: 1) Implementation of the results where the net assets constitute at least half of the share capital and the minimum capital requirement. 2) Merger, Dissolution, Company Transformation, Division. 3) Bankruptcy Petition Submission.                                                                     –                        
                        Not regulated Prohibited loans: A company can’t loan or guarantee to: 1) One of the shareholders representing more than 5% of the share capital. 2) A shareholder of member of its parent company represents more than 5% of the parent’s company share capital 3) A person to acquire shares 4) A member of its Management Board or Supervisory Board or an authorized person.   An affiliate/subsidiary can guarantee a loan to its parent undertaking or a member of the same group if it does not harm the financial position of the company or the interests of the creditors. A company can’t loan or guarantee to: 1) One of the shareholders representing more than 1% of the share capital. 2) A shareholder of member of its parent company represents more than 1% of the parent’s company share capital 3) A person to acquire shares 4) A member of its Management Board or Supervisory Board or an authorized person.     An affiliate/subsidiary can guarantee a loan to its parent undertaking or a member of the same group if it does not harm the financial position of the company or the interests of the creditors.              
                    Not regulated Competition prohibition: A member of the Management Board or Supervisory Board can’t do the following items without the consent of shareholders or Supervisory Board: 1) Being a sole proprietor in the area where the company is undertaking an activity.  2) Being a partner of a general partnership or a general partner of a limited partnership in the same field of undertaking activity as the company. 3) Being a member of the governing body of a company that operates in the same field of activity unless the companies belong to one group.                        –
A foreign company must keep separate accounts related to the branch. An unconfirmed copy of the audited and approved annual report of the foreign company must be submitted to the Commercial Register no later than one month after the approval of the annual report or seven months after the end of the fiscal year. The exceptions apply to companies of states which are parties to the European Economic Area Agreement. Annual financial report at the end of the fiscal year: A company must prepare some documents as an annual report which contains required documents such as: balance sheet, income statement, cash flow statement, statement of changes in owner’s equity and accompanying notes. The management report, the auditor’s report (if required) and the profit distribution proposal must be also submitted within six months after the end of the fiscal year. The company must submit a signed copy of the company’s annual report with the auditor’s report. The profit distribution proposal and the list of shareholders if necessary.                           –      

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