Estonian Company Tutorial: Increasing Share Capital
In this article, we’re going to talk about increasing share capital with the Estonian company.
If you’re wondering what might be the reasons for increasing the share capital, then it’s one of the ways to add new shareholders to the company without requiring a visit to the notary.
Adding Shareholders To The Estonian Company
Not being able to do transactions with company shares has always been one of the issues with the e-Residency card.
Selling the shares or adding new shareholders have always required a visit to the notary.
While there are changes on the roadmap and these transactions can also be done at Estonian embassies around the world (some locations already have that support, others will be added in due course), it’s still not as convenient as it would be doing it from your own home, fully online.
There’s another little known option for adding shareholders – by issuing new shares and subscribing these new shares to the new shareholders.
Issuing New Shares With Estonian Company
The first thing to take into account is the fact that you will need to have the share capital contribution done in order to increase the share capital.
The minimum share capital in Estonia is 2500€, and most of the entrepreneurs do not pay it in when they start the business (it’s possible to postpone the payment).
Without share capital payment it’s not possible to pay dividends. That’s a small trade-off as when you start, you won’t have any dividends to pay.
When you’re raising the share capital, let’s say to 4000€, then this 4000€ has to be paid in when registering the new share capital with the business registry.
In order to register the payment with the company portal, you need to get the proof of payment from the bank / Fintech. It has to be digitally signed if it’s sent to you via e-mail, or it can be sent by physical mail signed and stamped by the financial institution.
Many Fintechs aren’t capable of digitally signing these documents as required by the Estonian company portal.
If you’re making the share capital contribution, reach out to your banking provider and ask what is the process of getting the proof of share capital payment.
STEP 1. Make the share capital payment
As a first step, you have to make the share capital payment and obtain the proof of payment as explained above. This process is usually quick, but depending on the banking provider, it can take several days to a week or more.
STEP 2. Download Your Articles Of Association
As a second step, you have to navigate to the Estonian company portal and download your articles of association. You can click this link to read how you can obtain company documents from the business registry.
STEP 3. Alter the articles of association of your Estonian company
It’s likely that you have to convert the PDF to word document in order to alter the company AoA. There are different online tools for that, or you can just copy/paste the whole text and modify it as a Word file. It’s not convenient but gets the job done.
You need to change the share capital amount in the articles of association. If the document is in Estonian, it’s better if your accountant or support service takes a look at it before you convert it back to PDF and upload it to the company portal.
STEP 4: Prepare Minutes of The Meeting
Now you have to prepare the Minutes of The Meeting of your company. In this document, you’re going to decide that you’re going to increase the share capital, name the person who has the subscription rights to these new shares and decide to alter the Estonian company AoA accordingly.
STEP 5: Log-in to the Estonian Company Portal and start altering the data
Go to the Estonian company portal. Once you’ve logged, navigated to your company view, then click on the blue button that says “Start the petition for an entry regarding alteration”:
Click “Alter the capital” to change the company share capital amount:
Here you can insert the new share capital amount, and untick the box “Established without making contribution”.
Once these steps are successfully done, scroll down to upload the new documents. Upload the new AoA, proof of bank payment and minutes of the meeting. Choose “Add a document”. If you have any paper documents to add, follow the description in the company portal.
When you’re adding the documents, you will have a drop-down menu from where you have to choose the right type of document.
If you can’t find the type of document you need, you can choose “Other document”.
Now you can proceed by confirming the changes and paying the state fee to the Estonian government. The state fee at the time of writing this tutorial is 18€.
It’s fairly easy to increase the Estonian company share capital and add new shareholders by issuing new shares. If you use the instructions above, and the document template we provided, you’ll manage to do everything within one hour.
However, if you want to focus on your core business, don’t hesitate to ask for help. We can prepare all the necessary documents for you and all you have to do is to update the documents to the Estonian company portal. If you’re looking to obtain company documents from the Estonian company portal, then check out this tutorial.
For help and questions, please contact us.
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