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Reduction of share capital

Since the beginning of this year, amendments in law allow a company to have a minimum share capital of 1 eurocent. Since the minimum share capital of an Estonian company was previously 2500 euros it raises a question if those companies could lower the share capital as well? The answer is yes and the reduced amount can be paid back to the shareholder (if it has been paid in).

It is a process that requires some time and correct shareholder decisions. Also, the out-payment of the reduced share capital has to be correctly covered in the book keeping.

Firstly, a shareholder decision to lower the share capital (and also amend the articles) has to be taken - 2/3 of the votes are needed. In the decision the reason for reduction of share capital has to be stated (i.e the company does not need such a high share capital due to the field of activity).

After the decision to reduce share capital, it has to be published in the Official Gazette (Ametlikud Teadaanded), also known creditors have to informed directly.

The reduction can be registered in the Business Registry min. 3 months after the publishing in the Official Gazette. Also the payment to the shareholder can be made after that.


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