What is the required share capital and when do I need to pay it?
When you register a private limited company in Estonia, you need to pay €2 500 as company share capital (the payment can be postponed and paid in instalments).
Do not confuse the required share capital with state fees – your company still owns the share capital and you’re free to use the sum in your business operations, once it’s been paid in.
To soften the blow, you have the possibility to postpone the actual payment of share capital, so you as the founder can pay for the shares either at the time of establishment or also later. Company managers tend to prefer the latter option. Please keep in mind that until you’ve paid the share capital in full, you’re liable to the company for the obligations of the company and you cannot pay any dividends. If you wish to pay out dividends from your company, the share capital needs to be paid and registered, and the annual report for the financial year needs to be submitted.
How can I pay share capital?
The share capital payment has to be made by you personally from your personal bank account. It cannot come from money received from customer revenues or similar. You can start using the share capital immediately and without any limitations.
Currently, share capital payments which are made to your company’s foreign business bank account or to another payment service provider account (e.g. TransferWise, Holvi etc) are in most cases not accepted by the Estonian authorities.
We do expect this limitation to be removed within 2019 – the authorities are already working on it. Meanwhile, you can still transfer sufficient funds to your company’s account and treat them as a loan from a shareholder to your company. This is a legal practice and loans of this nature can be taken at 0% interest and without a fixed due date.
The procedure for paying the share capital to your Estonian business bank account is as follows:
Create a share capital payment, or payments, to the company’s Estonian bank account from your personal account(s). When you create a payment order, please be sure to note that it is a share capital payment into the ‘details’ or ‘description’ field.
Once the payment has cleared, please ask the Estonian bank to send you a relevant notice of the transaction(s).
Once you have the bank notice about the share capital payment(s), we will instruct you on how to register the transaction into the Business Register using your digital signatures.
Share capital payments should be made to your business’ bank account, and the share capital contribution has to be in euros.
You can also pay the share capital payment in installments, but please make sure each installment has ‘share capital payment’ in the description.
The total share capital to be paid is €2 500. It can be registered at the Business Register only when the entire sum has reached the company’s bank account. If you happen to pay more (e.g. €2 550), €2 500 will still be registered as the share capital, and the remaining part will be classified as a loan from the shareholder. It’s important to know that in this case you need to instruct the bank to issue their notice for the sum of €2 500, not for the entire sum paid in.
Can I treat money that the company receives as customer revenues as share capital?
No. The share capital payment has to be made by you personally (it cannot come from billed customer revenues etc).
How can I increase/decrease share capital?
If you want to change the amount of your company’s share capital, please contact your accountant and they’ll help you. Please note that the minimum share capital for an OÜ (private limited liability company) is €2 500.
Can I pay share capital via TransferWise?
No, unfortunately not. Share capital payments to your TransferWise borderless business account aren’t accepted by Estonian Authorities.
Therefore, we’d recommend opening an account with LHV and transferring your share capital directly to your LHV bank account.
And if you’re not able to open an account with LHV right now, you can still operate your business using a TransferWise business account, by transferring your personal funds there. This can be considered as a shareholder’s loan, which can be reimbursed once you’re able to open an LHV account.
Please note that paying out dividends from your company is only possible when you’ve made your share capital payment. Therefore, when TransferWise or another virtual bank account is your main business account, you won’t be able to pay dividends from your company.
Can I pay share capital via Holvi business bank account?
Yes, you can. However, the Estonian authorities may or may not accept it.
You can transfer your share capital to your Holvi business account, and they’ll provide proof of your share capital payment, which (theoretically) should be accepted by Estonian authorities.
Unfortunately this isn’t always the case, and so far most of these proof documents haven’t been accepted, for unknown reasons.
We’re hopeful that in the future, Estonian authorities will accept all Holvi’s share capital certificates. For the time being however, just be aware that this isn’t a certainty.
What are the limitations for paying the share capital?
The limitations regarding your share capital payment (€2 500) are:
If the share capital isn’t paid:
The company cannot pay dividends to founders
The company cannot increase or decrease share capital
The payment of the share capital must come from the company founder. The payment cannot be taken from company revenues, settled via salary payouts to employees etc.
Until the founder has paid for the share capital in full, he/she is liable towards the company for the obligations of the company
How can I register the paid share capital?
Once you’ve paid your share capital in full (by default €2 500) to your company’s bank account, you need to register the share capital in the Business Register to make it official.
There are 2 major steps to be taken:
1) Get an official bank notice about the paid share capital
The Estonian Business Register requires written confirmation from your bank that you’ve made the share capital payment(s) into your company’s account. The accepted confirmation is a PDF document which lists all the relevant payments, and is signed digitally by the bank representative i.e. is in a .bdoc container.
You can read more detailed instructions depending on the bank account you made the payment to:
2) Submit the bank notice to the Business Register
The detailed instructions here depend on when your company was established officially.
How to get a bank notice of share capital payment from Swedbank?
In order to proceed with your share capital registration, you need to inform Swedbank of the amount you’ve paid. In order to receive the bank notice for the correct share capital amount (€2 500), please take the following steps:
Log into your Swedbank online bank
Under ‘Useful information’, select ‘Bank message’ and ‘Write new message’
Select subject ‘Other’ and ask to be issued a bank notice regarding your share capital contribution, referring to the transfer(s) date and amount(s). If your payment description does not mention “Share capital” specifically, then additional information should be included in your message to the bank so they know which payment(s) relate to your share capital contribution.
You should then receive an e-mail with a written bank notice as a PDF document which lists all the relevant payments, and is signed digitally by the bank representative (in a .bdoc container).
How can I get a bank notice of share capital payment from LHV?
In order to proceed with your share capital registration, you need to inform LHV of the amount you’ve paid. In order to receive the bank notice for the correct share capital amount (€2 500), please send an email to firstname.lastname@example.org (unfortunately we cannot complete this on your behalf).
An example of the email would be:
“Please issue a bank notice for my company (YOUR COMPANY NAME), regarding the share capital contribution of 2500 EUR” (And attach a screenshot showing the completed payment and it’s details).
Please also mention in your email that the bank notice has to be signed by a specific bank employee. You should receive an email with a written bank notice as a PDF document which lists all the relevant payments, and is signed digitally by the bank representative (in a .bdoc container).
What happens if I paid more than €2500 as share capital?
The total share capital to be paid in is €2500. If you happen to pay more (e.g. €2550), €2500 will be registered as your share capital, and the remaining amount will be classified as a loan from the shareholder. In this case you need to instruct the bank to issue their notice for €2500, not for the entire amount paid in.
If you do have a justified business need to increase your company’s official share capital from €2500 to a higher amount, and it was a conscious decision to pay the higher sum to your company’s account.