EURO IN ESTONIA: ALL ESTONIAN COMPANIES SHALL CHANGE THE SHARE CAPITAL
On January 1th, 2011 the currency in Estonia will be Euro instead of Kroon, which had been Estonian currency since 1992. Currency change brings within the other changes, some of them are obligatory for everybody, who are managing an Estonian company OÜ or AS.
In the night before January 1th, the Estonian bank accounts and loans will be converted to the Euro with the rate 1 EUR = 15,6466 EEK. In Commercial Register the conversion of share capitals is not made automatically, because it will cause the changes in proportions of shares of different share holders, which accordingly is prohibited. It means every company owner in Estonia shall change the currency in Commercial Register by himself.
The practical example will explaine the situation more clearly:
The share capital of Estonian company OÜ is 100 000 EEK.
Share holder A- 10 000 EEK and the proportion is 10%
Share holder B- 50 000 EEK and the proportion is 50%
Share holder C- 40 000 EEK and the proportion is 40%
CONVERTING: 1EUR = 15,6466 EEK
The share capital of Estonian company OÜ is 6 391 EUR.
Share holder A- 639 EUR and the proportion is 9.9984 %
Share holder B- 3196 EUR and the proportion is 50.0078 %
Share holder C- 2556 EEK and the proportion is 39.9937 %
Different proportions are prohibited!
In order to solve the situation, the share capital shall be changed- decreased or increased, in order to remain the proportions of shares of share holders as they were before. It is important to note, that making the decrease or increase- the share capital cannot be less than 2500 EUR (for OÜ) and 25 000 EUR (for AS).
The practical example will explaine the solution:
The share capital of Estonian company OÜ is 6391 EUR.
Share holder A- 639 EUR and the proportion is 9.9984 %
Share holder B- 3196 EUR and the proportion is 50.0078 %
Share holder C- 2556 EEK and the proportion is 39.9937 %
DECREASE OF SHARE CAPITAL WITH 1 EUR
New share capital of Estonian company OÜ will be 6390 EUR
Share holder A- 639 EUR and the proportion is 10%
Share holder B- 3195 EUR and the proportion is 50%
Share holder C- 2556 EUR and the proportion is 40%
The proportions are the same again.
The decrease or increase shall be done according to the amount of share capital and number of share holders and their stakes calculating the most closest result. It is important to note that if the change is connected only with the conversion share capital into Euros, no state fee will apply. If the application is submitted through the Notary (Estonian Members of Board may use the Portal of Enterprices[1] for submitting the application) the notary fee applies still.
The change of share capital makes it necessary to change of Memorandum of Association, where the new share capital should be reflected. In order to change the Memorandum of Association, the General Meeting of Share Holders shall be convened.
The Decision of share holders (Minutes of Meeting) shall be formed in writing, in order to submit it to the Commercial Register. The Application for changing the share capital of company shall be issued and signed by the Member of Board of company or the representitive person of Member of Board. In case of representation, the Power of Attorney shall be notarized.
Therefore the list of documents, required to prepare and submit to the Commercial Register are the following:
1) Application, signed by Member of Board, Notarized or issued through the Portal of Enterprises;
2) Minutes of Meeting/Decision of share holders- reflexes the list of share holders, the proportiones of shares (in EEK) and the Decision (to change the Memorandum of Association and increase/decrease the share capital);
3) New full text of Articles of Association- including the clause about share capital of company- in EUR.
All documents shall be in Estonian or equipped with the Estonian translation.
The changes are made within 5 days without state fee, the notary fee (if non of the Board Members are Estonians, who may use the Portal of Enterprises with their ID card) will be around 15-70 EUR, translation costs, if necessary very around 15 EUR per page.
There is no deadline for making the changes in share capital, but from January 1th, 2012 is not possible to make any other changes in Commercial Register, if the currency of share capital is still in EEK.
With any assistance, related to changes in Estonian Commercial Register or other questions, please feel free to contact with Gencs Valters Law Firm, info@gencs.eu.