When the net assets (equity) of an Estonian private limited company (OÜ) fall below the statutory threshold, the board and shareholders must act quickly to avoid personal liability and, in the worst case, compulsory dissolution.

Below is a practical roadmap that reflects the requirements of the Commercial Code (Äriseadustik) and common solutions in the market.

1. When is equity “too low”?

Under Commercial Code § 176(2) the company’s net assets must be at least:

• 50 % of registered share capital, and
• not less than the minimum share‑capital requirement (currently € 2 500 for OÜs).

Example: An OÜ with a registered share capital of €10 000 must keep equity ≥ €5 000.
An OÜ with a registered capital of €2 500 must keep equity ≥ €2 500 (100 %).

If the balance sheet shows that equity is below either limit (often expressed as negative share capital), the board must, within three months after approval of the annual report, convene a shareholders’ meeting to decide on remedies.

2. Legal options (Commercial Code § 176)

3. Practical ways to restore equity

1. Issue new shares / owner cash injection – quickest textbook fix.
2. Convert shareholder loans into equity (set‑off contribution).
3. Revalue (upwards) real estate or IP – allowed if fair‑value report substantiates it.
4. Cut costs & improve margins – demonstrate turnaround in the next financial year.
5. Sell non‑core assets – realise gains, book profit.
6. Reduce share capital to minimum (€2 500) and cover rest via profit or later capital increase.

Tip: Make sure any capital manoeuvre is properly documented, entered in the accounting ledgers and registered in e-Business Register.

4. Exit scenarios

• Sell the company – shares can be transferred to a buyer who is willing to recapitalise. Ensure the SPA allocates responsibility for past debts.
• Liquidate – a clean way to close down if there is no buyer or business rationale. Requires publishing a creditor notice and preparing a final balance sheet.
• Turnkey liquidation service – professional firms can handle filings, creditor notices, accounting & tax clearance (fees start around €300–€1 000).

5. Director’s liability

Failure to address negative equity may expose the board to personal liability for damages (Commercial Code § 187) and fines. Timely action and documented shareholder decisions are therefore crucial.

6. Frequently asked questions

Need help?
We can assist with share‑capital operations, draft resolutions, Business Register filings, or a turnkey liquidation package.

This guide is provided for general information and does not constitute legal advice.

Estonian legislation lays down a minimum set of compulsory details.

That have to appear on every sales invoice so that it qualifies as a valid source document (raamatupidamisalusdokument) for accounting and tax purposes.

The key acts are:

• Accounting Act (Raamatupidamise seadus) § 7

• Value‑Added Tax Act (KMS) § 37(7)

1. Mandatory invoice details

Tip: Electronic invoices (e‑invoices) are fully acceptable if integrity and authenticity are guaranteed.

2. Language of source documents

• Invoices may be issued in Estonian or English.

• Documents in any other language must be accompanied by a sworn translation into Estonian or English to be accepted by auditors or the Tax and Customs Board (MTA).

3. Proving the business purpose

Under both the Accounting Act and the Income Tax Act, an expense is deductible only if it is business‑related and substantiated.
If the invoice alone does not make the business purpose evident (e.g. taxi, parking, travel tickets), add explanatory information such as:

• project or client name;

• employee name & business trip dates;

• licence‑plate number of the company car, etc.

Lacking or incomplete documentation may lead to the expense being treated as a non‑business cost, subject to fringe‑benefit or dividend tax.

4. Special cases & simplified invoices

5. Checklist before posting an invoice

1. Are all mandatory fields present and legible?

2. Do the figures add up correctly (net, VAT, total)?

3. Is the business purpose documented (if not obvious)?

4. Is the invoice in Estonian or English (or accompanied by a sworn translation)?

5. Is the invoice reviewed & approved according to your internal controls?

Non‑compliant invoices

If the source document is missing compulsory data, you may:

• ask the supplier to re‑issue or correct the invoice; or

• annotate missing contextual info yourself (date, project, car number, etc.), provided the core data required by law are already present.

However, you cannot deduct input VAT or recognise the cost as tax‑deductible while key requisites are missing.

This guide is for general information only and does not constitute legal advice. For complex situations consult a professional accountant or tax adviser.

Every Estonian legal entity – including micro‑sized OÜs owned by e‑residents – must file an annual report (majandusaasta aruanne) with the Business Register within 6 months after the end of its financial year (Commercial Code § 60).

Typical deadline: If your financial year = calendar year, the report is due 30 June of the following year.

1. Financial‑year basics

To change the FY you must submit a shareholders’ resolution and amend the articles in the Business Register before the new FY starts.

2. What must be included?

Estonian GAAP (Estonia’s Good Accounting Practice) recognises four size categories. Reporting requirements scale with size:

Most of our clients fall under micro or small category.

3. Penalties for late filing

Late filing also raises red flags with banks and partners; keep your compliance record clean.

4. Best‑practice timeline (calendar‑year FY)

Submitting early avoids last‑minute e‑system congestion.

5. Key accounting frameworks

• Accounting Act – bookkeeping, source documents, reporting.
• Estonia’s Good Accounting Practice – national GAAP.
• Accounting Board guidelines – interpretations & detailed rules.

Solid day‑to‑day bookkeeping is the foundation of a clean annual report. We help micro and small OÜs keep ledgers in shape and file on time.

Need assistance? Contact us for a fixed‑fee quote.

This overview is for general information only and not legal advice. Always check current laws and the Business Register instructions.

Every Estonian legal entity – including micro‑sized OÜs owned by e‑residents – must file an annual report (majandusaasta aruanne) with the Business Register within 6 months after the end of its financial year (Commercial Code § 60).

Typical deadline: If your financial year = calendar year, the report is due 30 June of the following year.

1. Financial‑year basics

To change the FY you must submit a shareholders’ resolution and amend the articles in the Business Register before the new FY starts.

2. What must be included?

Estonian GAAP (Estonia’s Good Accounting Practice) recognises four size categories. Reporting requirements scale with size:

Most of our clients fall under micro or small category.

3. Penalties for late filing

Late filing also raises red flags with banks and partners; keep your compliance record clean.

4. Best‑practice timeline (calendar‑year FY)

Submitting early avoids last‑minute e‑system congestion.

5. Key accounting frameworks

• Accounting Act – bookkeeping, source documents, reporting.
• Estonia’s Good Accounting Practice – national GAAP.
• Accounting Board guidelines – interpretations & detailed rules.

Solid day‑to‑day bookkeeping is the foundation of a clean annual report. We help micro and small OÜs keep ledgers in shape and file on time.

Need assistance? Contact us for a fixed‑fee quote.

This overview is for general information only and not legal advice. Always check current laws and the Business Register instructions.

When the net assets (equity) of an Estonian private limited company (OÜ) fall below the statutory threshold, the board and shareholders must act quickly to avoid personal liability and, in the worst case, compulsory dissolution.

Below is a practical roadmap that reflects the requirements of the Commercial Code (Äriseadustik) and common solutions in the market.

1. When is equity “too low”?

Under Commercial Code § 176(2) the company’s net assets must be at least:

• 50 % of registered share capital, and
• not less than the minimum share‑capital requirement (currently € 2 500 for OÜs).

Example: An OÜ with a registered share capital of €10 000 must keep equity ≥ €5 000.
An OÜ with a registered capital of €2 500 must keep equity ≥ €2 500 (100 %).

If the balance sheet shows that equity is below either limit (often expressed as negative share capital), the board must, within three months after approval of the annual report, convene a shareholders’ meeting to decide on remedies.

2. Legal options (Commercial Code § 176)

3. Practical ways to restore equity

1. Issue new shares / owner cash injection – quickest textbook fix.
2. Convert shareholder loans into equity (set‑off contribution).
3. Revalue (upwards) real estate or IP – allowed if fair‑value report substantiates it.
4. Cut costs & improve margins – demonstrate turnaround in the next financial year.
5. Sell non‑core assets – realise gains, book profit.
6. Reduce share capital to minimum (€2 500) and cover rest via profit or later capital increase.

Tip: Make sure any capital manoeuvre is properly documented, entered in the accounting ledgers and registered in e-Business Register.

4. Exit scenarios

• Sell the company – shares can be transferred to a buyer who is willing to recapitalise. Ensure the SPA allocates responsibility for past debts.
• Liquidate – a clean way to close down if there is no buyer or business rationale. Requires publishing a creditor notice and preparing a final balance sheet.
• Turnkey liquidation service – professional firms can handle filings, creditor notices, accounting & tax clearance (fees start around €300–€1 000).

5. Director’s liability

Failure to address negative equity may expose the board to personal liability for damages (Commercial Code § 187) and fines. Timely action and documented shareholder decisions are therefore crucial.

6. Frequently asked questions

Need help?
We can assist with share‑capital operations, draft resolutions, Business Register filings, or a turnkey liquidation package.

This guide is provided for general information and does not constitute legal advice.

Basically, yes, if the activity is related to the goals of the association.

However, it should not be the only source of income. The main part or some part must still usually come from subsidies and membership fees.