Negative share capital must be resolved as soon as possible.
Below is a practical roadmap that aligns with the requirements of theย Commercial Codeย (รriseadustik) and common market solutions.
1. When is equity โtoo lowโ?
Under Commercial Code ยง 176(2), the companyโs net assets must be at least:
- 50โฏ% of registered share capital, and
- not less than the minimum shareโcapital requirement (currentlyโฏโฌโฏ2โฏ500 for Oรs).
Example:
An Oร with a registered capital of โฌ2โฏ500 must keep equity โฅ โฌ2โฏ500 (100โฏ%).
If the balance sheet shows that equity is below either limit (often expressed as negative share capital), the board mustย convene a shareholders’ meetingย within three months after approval of the annual report to decide on remedies.
2. Practical ways to restore equity
- Issue new shares/owner cash injection โ quickest textbook fix.
- Convert shareholder loans into equity (setโoff contribution).
- Revalue (upwards) real estate or IP โ allowed if a fairโvalue report substantiates it.
- Cut costs & improve margins โ demonstrate turnaround in the next financial year.
- Sell nonโcore assets โ realise gains, book profit.
- Reduce share capital to a minimum (โฌ2โฏ500)ย and cover the 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.
3. Exit scenarios
- Sell the company โ shares can be transferred to a buyer who is willing to recapitalise. Ensure the SPA allocates responsibility for past debts.
- Liquidate โ 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 โ we can handle filings, creditor notices, accounting & tax clearance (fees start around โฌ300โโฌ1โฏ000).
4. When will the share capital be returned?
Only the paid-in share capital may be returned to the owner, and this may occurย no earlier than 4 monthsย after the liquidation process begins. The return can include both the registered share capital and any remaining funds in the companyโs bank account, provided all legal obligations have been fulfilled.
NB!
In Estonia, for a Private Limited Company (Oร), the โฌ2,500 minimum share capital requirement was abolished in February 2023, meaning the share capital can be as low as โฌ0.01; however, founders become personally liable for the difference if assets fall short of โฌ2,500 in bankruptcy. For a Public Limited Company (AS), the minimum remains โฌ25,000.
4
0
English 
Estonian