Purchase of a ready-made company with the contributed authorized capital. What are the advantages?

It is better to establish a company without an authorized capital or to buy a ready-made company with the contributed authorized capital? What is the advantage of buying a company with already contributed authorized capital? We hear this quite often question from our customers. Well, let us try to figure it out…

In the Commercial code of the Republic of Estonia, the minimum possible amount of the authorized capital is EUR 2,500. Also, according to the law, the authorized capital can be contributed either immediately at the moment of the company establishment, or during the period established by the unitholders in the company’s Articles of Association (usually from 2 to 5 years) as a lump sum payment, or in parts. However, if you decided to establish a company without contributing the authorized capital – you and your activities will be subject to the following restrictions:

• You will be responsible for the activities of the company with your own funds and property equivalent to your share in the authorized capital of the company.
• Until the authorized capital is fully paid by all unitholders, none of the participants of your company will be able to receive dividend payments. This restriction does not apply to the payment of salaries to employees and members of the management board.
• Until the authorized capital is fully contributed by all unitholders – its size can neither be reduced nor increased.

Information on the amount and status of the authorized capital is publicly available in the Republic of Estonia. If the authorized capital will be left uncontributed, this action will clearly state to your partners and competitors that:

• You do not have enough free money.
• Most likely, you will not be able to be responsible for the activities of your company with liquid funds.
• Your financial situation can be quite precarious.

It is logical that many potential customers and partners will decide to play it safe and refuse to cooperate with you, or require to make an impressive deposit or guarantee the execution of the deal with liquid personal property.

This is all very inconvenient and will certainly create additional costs for you. To all the above, it is worth adding that sooner or later you will have to contribute the authorized capital to the bank account of your company and provide a confirmed bank statement to the registration department of the court. Therefore, leaving the authorized capital not contributed is not the best advice for a starting company.

Spend only EUR 75 more and buy from us aready-made company with already contributed authorized capital, where the above problems will be excluded, by definition, and you will never have to return to this issue.

Additional information by telephone: +372 677 5544 or e-mail klienditugi@kalashnikov.ee