{"id":6227,"date":"2020-07-23T10:43:06","date_gmt":"2020-07-23T07:43:06","guid":{"rendered":"http:\/\/virtualofficeinestonia.com\/?post_type=ufaq&#038;p=6227"},"modified":"2026-01-11T12:04:20","modified_gmt":"2026-01-11T10:04:20","slug":"what-to-do-with-negative-share-capital","status":"publish","type":"ufaq","link":"https:\/\/virtualofficeinestonia.com\/et\/ufaqs\/what-to-do-with-negative-share-capital\/","title":{"rendered":"What to do with negative share capital (net assets)?"},"content":{"rendered":"<div  class=\"ewd-ufaq-faq-list ewd-ufaq-page-type-distinct ewd-ufaq-category-tabs-\" id='ewd-ufaq-faq-list'>\n\n\t<input type='hidden' name='show_on_load' value='' id='ewd-ufaq-show-on-load' \/>\n<input type='hidden' name='include_category' value='' id='ewd-ufaq-include-category' \/>\n<input type='hidden' name='exclude_category' value='' id='ewd-ufaq-exclude-category' \/>\n<input type='hidden' name='orderby' value='title' id='ewd-ufaq-orderby' \/>\n<input type='hidden' name='order' value='desc' id='ewd-ufaq-order' \/>\n<input type='hidden' name='post_count' value='-1' id='ewd-ufaq-post-count' \/>\n<input type='hidden' name='current_url' value='\/et\/wp-json\/wp\/v2\/ufaq\/6227' id='ewd-ufaq-current-url' \/>\n\t\n\t\n\t<div class='ewd-ufaq-faqs'>\n\n\t\t<div  class=\"ewd-ufaq-faq-div ewd-ufaq-faq-column-count-one ewd-ufaq-faq-responsive-columns- ewd-ufaq-faq-display-style-default ewd-ufaq-can-be-toggled\" id='ewd-ufaq-post-6227-oxngFaFCAM' data-post_id='6227'>\n\n\t\t\n\t<div class='ewd-ufaq-faq-title ewd-ufaq-faq-toggle'>\n\t\n\t<a class='ewd-ufaq-post-margin'  href='#' role=\"button\">\n\n\t\t<div class='ewd-ufaq-post-margin-symbol ewd-ufaq-square'>\n\t\t\t<span >A<\/span>\n\t\t<\/div>\n\n\t\t<div class='ewd-ufaq-faq-title-text'>\n\n\t\t\t<h4>\n\t\t\t\tWhat to do with negative share capital (net assets)?\t\t\t<\/h4>\n\n\t\t<\/div>\n\n\t\t<div class='ewd-ufaq-clear'><\/div>\n\n\t<\/a>\n\t\n<\/div>\n\t\n\t<div class='ewd-ufaq-faq-body' >\n\n\t\t\n\t\t\t<div class='ewd-ufaq-faq-categories'>\n\t\n\tCategories:\n\t\n\t\tAccounting\n\t\n\t\tCompany liquitation\n\t\n<\/div>\n\t\t\n\t\t\t<div class='ewd-ufaq-post-margin ewd-ufaq-faq-post'>\n\t\n<p class=\"has-primary-color has-text-color has-link-color has-medium-font-size wp-elements-6 wp-block-paragraph\"><strong>Negative share capital must be resolved as soon as possible.<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Below is a practical roadmap that <span style=\"margin: 0px;padding: 0px\">aligns with the requirements of the\u00a0<strong>Commercial Code<\/strong>\u00a0(\u00c4riseadustik) and common market solutions<\/span>.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity is-style-wide-thin-line\" \/>\n\n\n\n<h2 class=\"wp-block-heading has-vivid-cyan-blue-color has-text-color has-link-color has-medium-font-size wp-elements-7\">1. When is equity \u201ctoo low\u201d?<\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Under <strong>Commercial Code \u00a7 176(2),<\/strong> the company\u2019s <strong>net assets must be at least<\/strong>:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>50\u202f% of registered share capital<\/strong>, ja<\/li>\n\n\n\n<li><strong>not less than the minimum share\u2011capital requirement<\/strong> (currently\u202f<strong>\u20ac\u202f2\u202f500<\/strong> for O\u00dcs).<\/li>\n<\/ul>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p class=\"wp-block-paragraph\"><strong>Example:<\/strong><br>An O\u00dc with a registered capital of \u20ac2\u202f500 must keep equity \u2265 \u20ac2\u202f500 (100\u202f%).<\/p>\n<\/blockquote>\n\n\n\n<p class=\"wp-block-paragraph\">If the balance sheet shows that equity is below either limit (often expressed as <em>negative share capital<\/em>), the board must<span style=\"margin: 0px;padding: 0px\">\u00a0convene a shareholders&#8217; meeting\u00a0<strong>within three months after approval of the annual report<\/strong><\/span> to decide on remedies.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity is-style-wide-thin-line\" \/>\n\n\n\n<h2 class=\"wp-block-heading has-vivid-cyan-blue-color has-text-color has-link-color has-medium-font-size wp-elements-8\">2. Practical ways to restore equity<\/h2>\n\n\n\n<ol start=\"1\" class=\"wp-block-list\">\n<li><strong>Issue new shares\/owner cash injection<\/strong> \u2013 quickest textbook fix.<\/li>\n\n\n\n<li><strong>Convert shareholder loans into equity<\/strong> (set\u2011off contribution).<\/li>\n\n\n\n<li><strong>Revalue (upwards) real estate or IP<\/strong> \u2013 allowed if a fair\u2011value report substantiates it.<\/li>\n\n\n\n<li><strong>Cut costs &amp; improve margins<\/strong> \u2013 demonstrate turnaround in the next financial year.<\/li>\n\n\n\n<li><strong>Sell non\u2011core assets<\/strong> \u2013 realise gains, book profit.<\/li>\n\n\n\n<li><span style=\"margin: 0px;padding: 0px\"><strong>Reduce share capital to a minimum (\u20ac2\u202f500)<\/strong>\u00a0and cover the rest via profit or later capital increase.<\/span><\/li>\n<\/ol>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p class=\"wp-block-paragraph\"><strong>Tip:<\/strong> Make sure any capital manoeuvre is properly <strong>documented<\/strong>, entered in the <strong>accounting ledgers<\/strong> and registered in <strong>e-Business Register<\/strong>.<\/p>\n<\/blockquote>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity is-style-wide-thin-line\" \/>\n\n\n\n<h2 class=\"wp-block-heading has-vivid-cyan-blue-color has-text-color has-link-color has-medium-font-size wp-elements-9\">3. Exit scenarios<\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Sell the company<\/strong> \u2013 shares can be transferred to a buyer who is willing to recapitalise. Ensure the SPA allocates responsibility for past debts.<\/li>\n\n\n\n<li><strong>Liquidate<\/strong> \u2013 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.<\/li>\n\n\n\n<li><strong>Turnkey liquidation service<\/strong> \u2013 we can handle filings, creditor notices, accounting &amp; tax clearance (fees start around \u20ac300\u2013\u20ac1\u202f000).<\/li>\n<\/ul>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity is-style-wide-thin-line\" \/>\n\n\n\n<h3 class=\"wp-block-heading has-medium-font-size\">4. When will the share capital be returned?<\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Only the <strong>paid-in share capital<\/strong> <span style=\"margin: 0px;padding: 0px\">may be returned to the owner, and this may occur\u00a0<strong>no earlier than 4 months<\/strong>\u00a0after the liquidation process begins<\/span>. The return can include both the registered share capital and any remaining funds in the company\u2019s bank account, provided all legal obligations have been fulfilled.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity is-style-wide-thin-line\" \/>\n\n\n\n<p class=\"has-vivid-cyan-blue-color has-text-color has-link-color wp-elements-10 wp-block-paragraph\"><strong>NB!<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">In Estonia, for a Private Limited Company (O\u00dc), the \u20ac2,500 minimum share capital requirement was abolished in February 2023, meaning the share capital can be as low as \u20ac0.01; however, founders become personally liable for the difference if assets fall short of \u20ac2,500 in bankruptcy. For a Public Limited Company (AS), the minimum remains \u20ac25,000.<br><\/p>\n\n\n<\/p><\/div>\n\t\t\n\t\t\t\n\t\t\n\t\t\t\n\t\t\n\t\t\t<div class='ewd-ufaq-faq-tags'>\n\t\n\tTags:\t\n\t\n\t\tAccounting, \n\t\n\t\tCommercial Code, \n\t\n\t\tEstonia, \n\t\n\t\tShare Capital\n\t\n<\/div>\n\t\t\n\t\t\t\n\t\t\n\t\t\t\n\t\t\n\t\t\t<div class='ewd-ufaq-permalink'>\n\t\n\t<a href='https:\/\/virtualofficeinestonia.com\/et\/ufaqs\/what-to-do-with-negative-share-capital\/?Display_FAQ=6227'>\n\t\t\n\t\t\t\t <div class='ewd-ufaq-permalink-image'><\/div> \t\n\t<\/a>\n\n<\/div>\n\t\t\n\t\t\t\n\t\t\n\t\t\t<div class='ewd-ufaq-back-to-top'>\n\t\n\t<a class='ewd-ufaq-back-to-top-link'>\n\t\tBack to Top\t<\/a>\n\n<\/div>\n\t\t\n\t<\/div>\n\n<\/div>\n\t<\/div>\n\n\t\n<\/div>","protected":false},"excerpt":{"rendered":"<p>A What to do with negative share capital (net assets)? Categories: Accounting Company liquitation Negative share capital must be resolved as soon as possible. Below is a practical roadmap that aligns with the requirements of the\u00a0Commercial Code\u00a0(\u00c4riseadustik) and common market solutions. 1. When is equity \u201ctoo low\u201d? Under Commercial Code \u00a7 176(2), the company\u2019s net [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","template":"","ufaq-category":[318,400],"ufaq-tag":[351,423,332,370],"class_list":["post-6227","ufaq","type-ufaq","status-publish","hentry","ufaq-category-accounting","ufaq-category-company-liquitation","ufaq-tag-accounting","ufaq-tag-commercial-code","ufaq-tag-estonia","ufaq-tag-share-capital"],"openstation_lock":null,"openstation_contributors":[],"openstation_attached_media":[],"jetpack_likes_enabled":false,"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/virtualofficeinestonia.com\/et\/wp-json\/wp\/v2\/ufaq\/6227","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/virtualofficeinestonia.com\/et\/wp-json\/wp\/v2\/ufaq"}],"about":[{"href":"https:\/\/virtualofficeinestonia.com\/et\/wp-json\/wp\/v2\/types\/ufaq"}],"author":[{"embeddable":true,"href":"https:\/\/virtualofficeinestonia.com\/et\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/virtualofficeinestonia.com\/et\/wp-json\/wp\/v2\/comments?post=6227"}],"wp:attachment":[{"href":"https:\/\/virtualofficeinestonia.com\/et\/wp-json\/wp\/v2\/media?parent=6227"}],"wp:term":[{"taxonomy":"ufaq-category","embeddable":true,"href":"https:\/\/virtualofficeinestonia.com\/et\/wp-json\/wp\/v2\/ufaq-category?post=6227"},{"taxonomy":"ufaq-tag","embeddable":true,"href":"https:\/\/virtualofficeinestonia.com\/et\/wp-json\/wp\/v2\/ufaq-tag?post=6227"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}