Estonia has just made it even easier to start a business—🚀 As of February 2023 the Commercial Code has been changed to reduce the minimum share capital for a private limited company (OÜ) from €2,500 to €0.01.
Starting a Company in Estonia? Share Capital Now Only 1 Cent
This means you can now establish an Estonian entity with a one cent share capital – a big drop from the previous €2,500. But there are conditions and implications. Eesti Firma, a crecognized expert in company formation in Estonia and accounting services, shares on this page the details and professional advice 🔍 about the authorized capital of Estonian companies. 💡
We explain what share capital is, the new share capital requirements in Estonia, how to make a capital infusion and the legal and procedural aspects (including the 2023 changes to the Estonian Commercial Code). Whether you’re a foreign entrepreneur, startup founder or legal professional, you’ll find a comprehensive guide to help you navigate Estonia’s share capital. 🌎
A Complete Guide to Share Capital for Estonian Companies
When registering an Estonian private limited company (OÜ) the founders must specify and contribute the amount of share capital—the Estonian Commercial Code allows the minimum share capital to be as low as 1 cent.
This flexibility is good for entrepreneurs but requires understanding of legal terms like equity contribution, capital payment and minimum nominal value as well as potential liabilities and accounting requirements.
What is Share Capital?
Share capital is the sum of money invested by shareholders (natural or legal persons) in exchange for company shares and recorded in the company’s balance sheet as equity.
The main purpose of share capital is to provide funding and to ensure the private limited company has assets to meet its obligations.
In Estonian business environment share capital is seen as an indicator of credibility. It also defines own capital requirements for limited companies. Higher amount of capital can attract investors and partners, very low capital may raise concerns.
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Changes in the Estonian Commercial Code
As of February 2023, Estonia removed the fixed minimum share capital requirement of 2500 euros. Now, the minimum nominal value per share is one cent, meaning a company can be registered with 0,01 € per shareholder. However, a company cannot be established without making an immediate contribution.
Easier, Clearer, Faster: Estonian Companies Now Fund Capital Upfront
Previously, it was possible to defer share capital payment. Now, the capital contribution—whether monetary or non-monetary—must be made at the moment of company setup through the e-Business Register (also called the Commercial Register). While the new system simplifies access for startups, it removes the ability to postpone funding and increases the importance of planning the total amount of share capital.
Monetary and Non-Monetary Contributions
When founding a company in Estonia, you have to decide how you will contribute the required share capital. There are two main options—monetary contributions, which are usually paid into a bank account, and asset-based contributions—each with its own rules and procedures. Knowing these options helps to be compliant and to have smooth company formation.
Thus, you may make capital contributions in two forms:
- Monetary contributions: Typically made into a startup bank account with an Estonian bank or other institution in the EEA. After registration, this becomes the official company account. Founders confirm the capital payment digitally in the e-Business Register. A bank notice is required for monetary contributions over €50,000.
- Non-monetary contributions: You can contribute intellectual property, equipment, or other items of value. Estonian authorized capital rules require an independent valuation if the contribution is large—especially above €25,000.
Both types of contributions must equal or exceed the declared amount of share capital, and they become the company’s property.
Confirming Contributions in the Business Register
During online company registration, each founder must declare the capital payment. This replaces older requirements like presenting a bank notice, unless the capital value is unusually high (more than 50,000 euros). Thus, it is therefore no longer necessary to prove small capital contributions with a bank statement.
Straightforward Capital Funding, No Bureaucracy
For non-cash contributions, you must include valuation documents and transfer proofs. The management board is responsible for confirming that contributions are made correctly and reflected in the articles of association. Asset contributions of up to 25,000 euros can be made without an auditor’s assessment
Risks of Low Share Capital
Choosing a very low share capital makes registering a private limited company easier, but it carries specific risks. Throughout the financial year, founders of companies registered with minimal capital should carefully monitor potential liabilities, financial limitations, and market perception to ensure long-term success and stability.
Though the law allows companies with 1 cent share capital, there are several risks:
- Personal Liability (Below €2500): If the company’s share capital is below 2500 euros, the shareholders may face personal liability in bankruptcy proceedings. They can be required to pay the difference between €2500 and the contributed capital. This provision protects creditors when the capital is too low.
- Net Assets Requirement: the Estonian Commercial Code requires that net assets (assets minus liabilities) must be at least half of the share capital. For example, a company with €1 capital must always maintain €0.50 in equity. Even a minor expense could lead to non-compliance and potential dissolution.
- Restrictions on Dividends: dividends can only be paid from profit—not from the capital amount. If net assets fall below 50% of capital, dividend payments are not allowed. This limitation particularly affects companies that start with a very small amount of share capital.
- Market Credibility: a minimum capital requirement of 2500 euros was historically seen as a sign of seriousness. Many Estonian private limited companies still voluntarily choose that benchmark. Starting with 1 euro cent is legal, but banks, clients, or partners may view such companies with caution.
Thus, although a one cent company is possible, founders must carefully assess business needs, startup costs, and potential obligations before choosing the minimum amount.
Changing or Increasing Share Capital
The total amount of share capital you declare at the beginning isn’t permanent—Estonian company law and your articles of association provide ways to change it later. If your business grows, attracts investors or needs more financial stability you can increase your capital through additional contributions made directly to your company’s bank account or via a bonus issue without immediate share capital payment.
After registration, you can later increase share capital by:
- Additional Contributions: shareholders can inject new money or assets to raise the share capital. This process requires a shareholders’ resolution and updating the business register via the e-Business Register. A bank notice may be required depending on the amount.
- Bonus Issue: a bonus share issuance (or “fondiemissioon”) converts retained profits into paid-in share capital. No money changes hands—only a reclassification in the balance sheet. This can strengthen your company’s equity without new investments.
Both methods improve financial ratios and may eliminate the personal liability that applies when capital is below €2500.
Key Takeaways
Knowing how share capital formation works in companies registered in Estonia helps founders to make informed decisions from the beginning. Since Estonia has more flexible capital requirements, entrepreneurs have new opportunities—but also new responsibilities. Here’s a quick summary of what every founder should keep in mind.
- As of February 2023, the Estonian Commercial Code allows company formation with a minimum nominal share value of 1 cent.
- Companies must be established without making capital deferrals; contributions are required up front.
- Choose your capital value based on realistic business needs, not just legal minimums.
- Very low capital exposes founders to risks like personal liability, regulatory violations, and credibility issues.
- Future changes—such as a bonus issue or capital increase—are possible and often advisable.
- The articles of association and management board play key roles in maintaining compliance with share capital requirements.
Need Assistance?
Navigating share capital rules can be complex. Eesti Firma OÜ offers full support with company registration, advising on the appropriate capital sum, preparing documents, and managing filings in the commercial register. Whether you choose monetary contributions, in-kind contributions, or plan to increase share capital later, our experts will guide you every step of the way.
Estonia has recently overhauled its authorized capital regulations to make starting a business even more accessible. 🚀 As of 2023, the Estonian Commercial Code was amended to lower the minimum share capital requirement for a private limited company (OÜ) from €2,500 to just €0.01. This essentially means founders can establish an Estonian entity with a one cent share capital – a drastic reduction from the previous threshold of €2,500. However, this change comes with important conditions and implications. 💡
