Estonia 105 - Acquisition and Sale of Business


  • In the next chapter of our introductory series, we discuss the acquisition and sale of a business in Estonia.

    Share Transfer

    The shares of a public limited company (“AS“) are freely transferable. A pre-emptive right of other shareholders may be established in the articles of association.

    In the case of a private limited company (“OÜ”), the other shareholders have the right of pre-emption upon transfer of the shares to any third person. However the shareholders can enact in the articles of association other restrictions for the transfer of the shares.

    Completion of the Share Transaction

    Unless registered in the Estonian Central Register of Securities (“ECRS”), contracts for the transfer of shares in OÜ must be notarised.
    Shares registered in the ECRS (always the case with respect to the AS) must be transferred to the securities account of the acquirer in order to complete the transaction. Both the transferor and the transferee must have securities accounts with the ECRS.

    The securities accounts are opened by account operators, who also mediate transaction orders, or by the registrar of the ECRS. All major Estonian credit institutions are registered as account operators. A securities account can be opened also to a foreign persons or entity. It is possible to use a nominee account.

    Related Costs

    A major cost related to share transfers is the notary fee, if the notarised form is required. The fee depends on the value of the transaction which may not be less than the fair value.

    The stamp duties for the registration of share transfer are not significant. E.g. notary fee for a sale of a share for EUR 2,560 is approx. EUR 43 + VAT of 20% and for EUR 1,000,000 approx. EUR 2,422 + VAT of 20%.

    Transfer of a Business

    An alternative to share transfer is a transfer of a business unit of a company. The unit includes things, rights and obligations relating to the business. Along with the transfer of a business unit related contracts are also transferred, unless expressly prohibited by the contract. Permits and licenses are usually not transferred and must be applied for again.

    The consent of creditors is not required for the transfer of a business unit. The acquirer must notify creditors of the company about the transfer of obligations to him and the transferor has to do the same to the debtors regarding the assignment of claims. The employees of the business unit must be notified and consulted regarding the transfer at least one month in advance. Within five years from the transfer of the business unit, the transferor will remain jointly and severally liable for the obligations arisen before the transfer.

    Control of Concentration

    Both transfers of shares and transfers of business may be subject to concentration control if control over a company or a business transfers as a result of the transaction.

    Threshold for Control of Concentration

    Concentration is subject to control in case the turnover in Estonia of the parties to a concentration together exceeds approx. EUR 6.4 million and the turnover in Estonia of each of at least two parties to a concentration exceeds approx. EUR 1.9 million.

    Approval Process

    A concentration must be notified to the Competition Authority before the closing of the transaction and after conclusion of the agreement for the acquisition of shares or assets.

    The Competition Authority must make a decision regarding the approval of the concentration within 30 business days from the date of the concentration notification or within 4 months if a supplementary proceeding is required.

    Key statutes:
    Commercial Code 1995
    Estonian Central Register of Securities Act 2000
    Law of Obligations Act 2002
    Employment Contract Act 2009
    Competition Act 2008

    Information posted above is intended as a general guide and does not constitute legal advice.


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