How to increase the share capital of an Estonian Company
General
To increase the share capital:
The company’s shareholders must sign the resolution about increasing the share capital.
There must be a document or confirmation proving payment/transfer of the monetary or non-monetary contribution.
Usually, increasing the share capital requires amending the articles of association.
To file an increase of the share capital, the board member must sign and submit the application to the Business Register. This must be done within 6 months from the date the decision to increase the share capital was made.
Three ways to increase the share capital
1. Monetary Contribution
A monetary contribution made to increase share capital must be fully paid into the private limited company's bank account before submitting the application for increasing share capital to the Commercial Register.
Proof of a monetary contribution must be submitted to the Commercial Register with a bank confirmation only if the contribution exceeds 50 000 euros. If the share capital contribution is less than 50 000 euros, a confirmation from the management board that the contribution has been transferred to the private limited company is sufficient.
2. Non-Monetary Contribution
For a non-monetary contribution made to increase share capital, a contract for the transfer of the contribution to the private limited company and documents proving the value of the non-monetary contribution must be submitted. An auditor must assess the value of the non-monetary contribution if the private limited company's share capital is at least 25 000 euros or the nominal value of the share obtained through the non-monetary contribution is at least 25 000 euros.
3. Bonus Issue
Shareholders may decide on a bonus issue after the approval of the annual report and the decision on the distribution of profit. A bonus issue may also be carried out based on an interim balance sheet, which must be prepared and approved in the same manner as the annual report.
The decision and application for increasing the share capital must be made no later than 8 months after the preparation and approval of the annual report or interim balance sheet.
Three different options to sign required documents
1. Signing with an e-residency card or an Estonian ID card
This is the most natural and most effortless way, and all paperwork can be prepared in a matter of hours. Documents can be signed and submitted to the Business Register quickly.
2. Signing with EU digital ID (signature)
Available for most EU residents. It might require some dedication to find a suitable service provider who can support “Qualified Electronic Signature”. Once documents are signed, it is relatively easy to submit them to the Business Register. Read more about using EU Digital ID in Estonia.
3. Signing documents by the local notary + apostille
Notary must certify your signature, and in most countries, an apostille must be added. Later documents must be (partly) translated by a sworn translator into Estonian. Once this is done, these documents can be submitted to the Business Register.
Practical advice
The most complicated is to increase the share capital via non-monetary contribution. We recommend avoiding this. Usually, it is possible to achieve the same result (transferring the non-monetary contribution to the company) in a much easier way, without valuation and without involving an auditor.
When increasing the share capital through a monetary contribution (less than 50 000 EUR), it is sufficient for the board members to confirm that the payment has been made.
As the shareholders’ resolution requirements are quite strict and the process has specific requirements, it is advisable to consult an experienced consultant or a lawyer to guide you and prepare the required documents.
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