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What Is the Share Capital of a Company?

Share capital is the money that guarantees the protection of the partners of a limited company. Share capital establishes the maximum responsibility that can be attributed to a company when it incurs debts or problems with justice.

It is the company, not its members, the one liable to pay for these problems, to the maximum of the share capital. This, therefore, protects the business partners.

As of February 1st, , 2023, companies are no longer required to have a minimum share capital of 2500 Euros, and now the minimum is 1 euro cent/founder or shareholder. This allows the founders/shareholders to tailor the capital financing needs of their company and not be restricted by the state's predetermined rules.

⚠️ But keep in mind these essential points:

You don’t need to provide the e-Business Register with proof of the payment of share capital to the company’s bank account and it is not neccessary to modify the entry in the registry if it does not exceeds €50,000.

The shareholders must pay the share capital in the appropriate contributions (%) and from their personal accounts. E.g., Paul and Jhon own a company. The share capital is €1. Paul has 30% of the shares and Jhon 70%. Therefore, Paul has to pay €0.30 from his personal account and Jhon €0.70.

The owners' liability in case of bankruptcy is still limited to 2,500 Euros for the costs related to bankruptcy proceedings, even if the company's share capital is less than 2,500 Euros. Suppose the share capital is below 2,500 Euros. In that case, the owners must respond with their personal finances for the company.

You must confirm the payment of your share capital contribution. After the transfer of the share capital to your company's bank account, which should be done through a credit or payment institution within the European Economic Area (EEA), and registration of the transaction in the Estonian Business Register, you will be allowed to utilize these funds for expenses related to your business.

You cannot pay dividends from your share capital contribution. You can only pay dividends from the company's revenue once you have paid and registered the share capital.

It is essential to declare your share capital at the Estonian Tax and Customs Board. If you decide to close your company at some point, this will allow you to pay out the share capital tax-free. If you're a Companio customer, our accountants will declare your share capital.

If you are starting a cryptocurrency company that requires a license, the minimum share capital is €12,000.

Updated on: 16/05/2023

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