Tag: Company

How to start your company with e-Residency in 4 steps

e-Residency allows aliens to set up a company in Estonia remotely by providing online access to government services


1. Get an e-Resident card

You can enjoy the benefits of e-Residency once you have obtained your Estonian digital ID — e-Residence card.

All you need to do at that stage is to submit your application. The process takes place online and is indeed straightforward.

The applications form is available on the e-Residency official website:

You need to prepare some documents beforehand:

  • copy of your verified ID
  • passport-style photo
  • motivation statement
  • Visa or Mastercard

While submitting the application, you will be asked to pay a state fee and choose a pick-up location for your e-Resident card kit. The state fee is 100–120 EUR depending on the pick-up location.

Once submitted, check your email for confirmation and wait for your application’s approval, which usually takes between 4 and 8 weeks.

After receiving positive news, first of all, we congratulate you and kindly remind you to take your ID and pick up the kit strictly by yourself.

2. Take care of legal address and a contact person based in Estonia

It is an absolute requirement to have both in order to set up your company with an e-Resident card.

It is well-known that Estonia is a good place for business as it welcomes every entrepreneur. Estonian legislation proves this fact. Whilst it may sound not very pleasant by its complexity, company registration in Estonia doesn’t take piles of documents. Just make sure to have a legal address and a contact person in Estonia — and bear in mind, we are here to help with both.

3. Choose the name, decide on Management Board, set up accountancy, and figure out the taxation — give it a good start, fill up this form:

4. Grow your business and enjoy multiple advantages of e-Residency!

e-Residency provides your company with freedom. Manage the process entirely online by submitting, signing, and securing all the documents remotely. Make your company global without a hard effort but by taking the proper advantage.

The favorable tax system, unlimited fintech opportunities, and business market full of talents and enthusiasm — go for it and join the community of successful people. We will help you at this very first and the most significant stage.

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Shareholders of an Estonian company can sell their shares remotely

Of course in certain conditions 🙂

In the Estonian e-residency program most of the things you need to do to manage your company can be done online.

However, some very specific legal procedures still required a physical visit to Estonia. One of them was changing the distribution of the shares of your company.

31.07.2020 On 1 August, an amendment to the Commercial Code will enter into force, which will enable private limited companies to transfer shares more easily in the future.

What are the conditions?

The legislation change gives shareholders great flexibility to redistribute the share capital easier and faster, and thus creates better opportunities to invest in Estonian companies. The minimum formal requirement provided by law is a written form specifying the share distribution, alongside these conditions:

In order to make a corresponding amendment to the articles of association, the share capital of a private limited company must be at least 10,000 euros and fully paid.

A notation shall also be entered on the registry card of the private limited company to indicate that the company removes the requirement of notarized approval of share disposal, sale or redistribution of shares. This indication helps to better safeguard the interests of the parties in the transaction, and this information may be important to potential acquirers before the transaction is made and influence their decision.

Such an amendment to the articles of association of an existing private limited company requires the consent of all shareholders. Therefore, the change cannot be made by a majority decision but must be the choice of all shareholders.

So in summary:

  • The company must have declared a share capital of 10,000€ and they should have been paid.
  • The company must alter the entry in the registry of the company to indicate the fact that shares can be redistributed online.

Other aspects to consider

Allowing a fully online redistribution of shares also increases the responsibility of the shareholders themselves and the management board. The Management Board will have the obligation to notify the Commercial Register immediately if there are changes in the shareholders’ distribution not performed through a notaryIn addition, the shareholders are obliged to immediately notify the management board of any changes in the shareholders’ data of these changes, so the management board can notify the Commercial Registry.

The smallest nominal value of a share has also changed. What’s that? The minimum fragmentation that a share can be subject to. Previously, shares where divided up to one euro. That meant that if you had a share capital of 2500 euros, those were generally 2500 shares of one euro. You could not own 1250,50 € in shares, it was either 1250 or 1251 euros (50% or 50,04% of shares respectively).

With the new legislation, the minimum denomination of share is one cent of an euro. So now if you have 2500 euros in share capital, you may have 250,000 shares of 0,01€ of value each. The lower nominal value of a share is very convenient for potential acquirers, because the company can issue an exact share percentage that does not have to be rounded up or down to the nearest whole number.

Conclusion

If the above conditions are met, it will be possible to sell the shares or part of the private limited company on the park bench, in a café or on a computer using digital signatures.

 

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An easier and cheaper way to sell a part of a private company?

The buyer and the seller usually go to a notary to sell the share of the private limited company, conclude a sales contract with the notary, and in addition to the purchase price, a notary fee is also paid, which may depend on the price. However, such a way of selling is not the only way to dispose of a share; the law also provides for a simpler and cheaper alternative.

Registration of a share in the ECSD

The shareholder can register the share of the private limited company in the Estonian Central Register of Securities (similarly to the shares of a public limited company, which are automatically registered), after which it is sufficient to sell securities to sell and buy orders to their banks. Although it is sufficient to make securities orders for the disposal of a part, it is advisable to draw up a simple written sales contract specifying the essential terms of the sale.

The registration of the share of a private limited company in the ECSD requires the adoption of the respective resolution of the shareholders / sole shareholder and subsequent submission of the decision together with the respective application and the list of shareholders to the ECSD.

Securities account required

In order to register a share, each shareholder of the private limited company must have a securities account in which his share is transferred. Securities account can be opened at any bank operating in Estonia e. an account manager. In order to open an account, the bank must fill in the necessary documents, the bank employee shall enter the account opening information in the ECSD and archive the basic documents for opening the account. If the shareholder already has a securities account, then obviously it will not be necessary to open a new company for registration in the ECSD and the registration in the ECSD can also be done digitally.

Sale of part of a securities transaction

The transfer of the part from the seller to the buyer shall be effected by giving the relevant securities transaction orders. The seller gives his securities account manager a transaction order, specifying the part to be sold, the type and price of the transaction, and the date of the transaction, and the buyer also gives his securities account manager an order to accept the transaction.

The easier and cheaper way to sell a part of a private limited company – register part in the ECSD. The transaction orders submitted by the seller and the buyer must be in accordance with each other, i. contain the same information as regards the part, the form of the transaction, the price and the date.

There are two types of securities transactions – unpaid transactions and transactions against payment. In the case of a transaction for payment, the money is automatically transferred from the buyer to the seller during the transfer of securities. If the buyer’s bank account does not have enough cash at the time of the transaction, there will be no transfer of securities. In the case of an unpaid transaction, there will be no automatic cash settlement from the buyer to the seller during the securities transfer. If the parties to the transaction have agreed to pay for the securities but make the transfer in the form of payment without payment, they must pay the purchase price as mutually agreed (for example, bank transfer or cash). Traditionally, a transaction is executed against a payment that guarantees the protection of the interests of both parties.

Advantages of selling part through ECRS

Some of the benefits of conducting a sale through the ECSD are legal certainty, flexibility, and cost and time savings. The purchaser of securities registered in the ECSD (eg shares or units) has at least as much legal protection as the purchase of a registered immovable on the basis of an entry in the land register.

As there is no need to go to a notary to transfer the share registered in the ECSD, there is no obligation to pay a notary fee, which, depending on the purchase price, can be a significant saving. At the same time, the transfer of the share registered in the ECSD is not without costs. The share registration fee is EUR 30 + VAT in the ordinary procedure and EUR 100 + VAT in the urgent procedure, the minimum fee for the security is EUR 12 + VAT. In addition, bank charges may apply and a transaction fee will be payable to the bank when selling and transferring securities. In case of sale of a lower value part, the transfer of the share in the ECSD may not be a saving, but in case of sale of a higher value part, the saving may be significant.

 

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How to change the Estonian company name in the Estonian business portal?

From time to time there is a need to change the company name. Everyone knows their own reason why they need to do it.

Whatever the reason for the company name change, you have all the right in the world to do so. Let’s go through the procedure of changing the Estonian company name below.

The name can be changed in the business registry using your e-Residency card and also with Estonian, Latvian, Lithuanian, and Belgium ID-Card with Estonian and Lithuanian Mobile-ID.

Steps:

  1. You have to go to rik.ee
  2. Log in to the Estonian company portal
  3. Click on the name of your Estonian company
  4. Start the alteration petition

As the first step, you can navigate to the tab called “Business name”, and pick the new company name you want to use.

It’s not bad to check that the new name is usable. Fortunately, the system itself automatically announces whether companies with similar names already exist or whether a trademark is registered under a similar name.

Once this is done, you need to upload some documentation. By scrolling down, you can find the tab called “Add Documents”

You need to upload:

a) The updated articles of association of the company
b) The shareholder decision of the meeting

All the new documents should be digitally signed. Usually, it’s sufficient if one member of the management board signs the document, but sometimes there might be an additional approval required if you’ve added this clause to the representation rights of your company’s articles of association.

How to update the articles of association? 

  1. You can copy the existing AoA which you have in the business registry
  2. Paste it to the Word file
  3. Make the desired name change
  4. Convert it back to the PDF file
  5. Sign it with the e-residency card
  6. Upload the signed documents to the business registry

That’s it.

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