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[null,"Prepared By:","Contributors:"]
[null,"COBALT Law Firm"]
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["Social Enterprise Law Surveys"]
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["Report Generated: 11/19/2025"]
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["View your report results on next tab"]

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["Question","Estonia"]
["I. Enterprise Form"]
["What jurisdiction(s) do you practice in?","Estonia\n"]
["What are the most commonly used types of for-profit corporate organizational forms in your jurisdiction (e.g., corporation, limited liability company, benefit corporation, social purpose corporation, etc.) used by Enterprises operating a trade or business (rather than for investment or holding company purposes)? Please briefly describe these forms. a. Of these, which are the most common for-profit organizational forms used by Enterprises seeking financing from investors and that will have multiple owners? b. Other than organizational forms specifically designed for Social Enterprises (and discussed below under Question 4), which, if any, are the most common for-profit organizational forms used by Social Enterprises?","The most commonly used types of for-profit corporate organizational forms used in Estonia are private limited company („osaühing“, abbrev. „OÜ“) and public limited company („aktsiaselts“, abbrev. „AS“). The vast majority of all registered companies are private limited companies due to lower share capital requirements and more simple management structure.\nPrivate limited companies tend to be closely-held businesses formed and managed by a relatively small group of shareholders. The minimum share capital of a private limited company is EUR 2,500. Private limited company is characterized by a simple, 1-tier management structure, consisting of a management board and a shareholders’ meeting. A supervisory council is required only if the company’s articles of association require it. Auditing of annual accounts of the private limited company is not required, unless certain thresholds are exceeded. Private limited companies may, but are not required to register their shares with the Estonian Register of Securities (ECS).\nPublic limited company is characterized by greater capital requirements (EUR 25,000). It is required to register its shares with ERS. Public limited company’s account must be audited in case of more than 2 shareholders or in case certain thresholds (of sales revenue, assets and number of employees) are exceeded. The management structure of a public limited company must include a supervisory council in addition to the shareholders’ meeting and the management board.\nOther types of companies include general and limited partnership, neither of which is used much in practice due to unlimited personal liability of the general partner(s), and commercial associations, used mostly by agricultural and producers’ associations or various service recipients.\n \na. The vast majority of enterprises that seek financing from investors and will have multiple owners are private limited companies.\nb. Private limited companies.\n"]
["Do any of your jurisdiction’s traditional organizational forms require or permit the board or managers to consider, balance or prioritize interests other than shareholder value in decision making? What other interests, if any, are they required to or allowed to consider (e.g., interests of employees, customers, the environment, etc.)?","Limited liability companies have no requirement to consider interests other than shareholder value. Boards may be permitted to consider other factors by the articles of association, shareholders’ agreement or resolutions, but such other considerations are permissible only to the extent they do not harm the company or the interests of creditors.  \n"]
["Does your jurisdiction have organizational forms specifically designed for Social Enterprises? If so: a. What type(s) of organizational forms are they? b. How do they materially differ from the most closely analogous traditional organizational form? c. What are the main benefits for founders and funders of such organizational forms? d. Are there any restrictions on the use of these organizational forms (such as profit-caps, stakeholder involvement and impact reporting)? If there are, what are they? e. Are there any material differences in timing or costs for forming a Social Enterprise versus a traditional Enterprise? f. How prevalent and well known are Social Enterprise forms?","No.\n"]
["Are Social Enterprises permitted to be formed and operated as Nonprofits? If so: a. Are Nonprofits that are Social Enterprises treated differently under the law as compared to Nonprofits that are not Social Enterprises, whether from a corporate, tax or other perspective? b. Are there any material benefits of, and/or restrictions on, using a Nonprofit form for Social Enterprises that does not apply to Nonprofits that are not Social Enterprises? c. Is there any type of “hybrid” Nonprofit form that requires less reporting and/or allows for faster formation? If so, please describe the drawbacks of utilizing this form (i.e. fewer tax benefits). d. How prevalent is the use of Nonprofits for Social Enterprises?","Yes. Social Enterprises are permitted to be formed and operated as Nonprofits.\na. Nonprofits operating in the public interest or for charitable purposes can benefit from income tax incentives that are not available to other Nonprofits.\nb. Please see above.\nc. No, there is no lesser reporting or faster formation process for Social Enterprise Nonprofits as compared to other Nonprofits.\nd. Where their businesses fall in the category of activity permitted to Nonprofits, it is indeed very prevalent for Social Enterprises to form as Nonprofits.\n"]
["Does your jurisdiction allow for worker-owned Enterprises, such as cooperatives? If so, please describe any material benefits of, and/or restrictions on, using such forms.","Yes, commercial association (“tulundusühistu”, abbrev. “TuÜ”). The main benefits relating to the use of this legal form relate to various grants available to commercial associations such as producers’ associations. On the downside, enterprises that form as commercial associations have limited rights to distribute profits to their members. Further, outside investors are also not incentivized to make investments since the level of financial investment does not determine control (each member can only have one vote). \n"]
["Are there unique reporting requirements for Social Enterprises? If there are, please describe them. Please also discuss what government bodies Social Enterprises are required to report to.","No. The same reporting requirements apply as to other entities.\n"]
["In your jurisdiction, has case law and jurisprudence evolved to address Social Enterprises? If there is meaningful jurisprudence around Social Enterprises, please provide some brief examples.","No.\n"]
["Does your jurisdiction have any ESG requirements for Enterprises generally? If it does, please describe.","No.\n"]
["Does your jurisdiction have any ESG requirements specifically for Social Enterprises? If it does, please describe.","No.\n"]
["Does your jurisdiction have any ESG requirements for investors? If it does, please describe.","No.\n"]
["II. Funding"]
["Are any major investor classes (e.g., pension funds, mutual funds, etc.) required to look at ESG issues when making investment decisions in your jurisdiction? a. If they are, please describe the requirements. b. If they are not, are they permitted to consider such factors? c. What other relevant factors do investors tend to consider (aside from profit motive).","Major investor classes are not required to look at ESG issues. However, since several studies have found that an approach based on ESG analysis has made it possible to better assess companies’ business risks, strategies and overall performance, and since ESG topic is widely discussed and recognized in the investment industry, major investor classes are likely to consider ESG factors in practice.\nThe principles of responsible investment and analysis of ESG factors are often part of the investment analysis process. ESG factors are assessed and considered alongside other traditional investment analysis methods, such as fundamental analysis and valuation.\nSome funds exclude companies involved in the production or distribution of weapons and the development or production of nuclear weapons programs. Alcohol, tobacco, gambling and / or porn industries may also be excluded.\nLast year, the first fully “green” pension fund was launched in Estonia, where the investments in index-based investment funds are marked as an index that considers ESG factors.\n"]
["What kinds of philanthropic funding do Social Enterprises in your jurisdiction commonly receive (e.g., grants, charitable investment, traditional investment)?","The type of funding typically varies based on the Enterprise form that the Social Enterprise chooses. Registering as a Non-profit has been the most common option for Social Enterprises, as over 80% of them have done so. The rest are registered as Foundations or limited liability companies.\nFor example, Social Enterprises formed as Non-profits commonly receive local government grants, state budget grants, project-based donations and sponsorships. Enterprises formed as limited liability companies received more traditional investments.\nThe main financial supporter for Social Enterprises is the National Foundation of Civil Society. It is important to note that Non-profit Social Enterprises registered as private companies or founded by public sector are ineligible for the grants of this Foundation.\n"]
["How prevalent, if at all, are new for-profit impact investments in your jurisdiction (e.g. traditional instruments with impact terms, new investment instruments, aggregation with philanthropic capital, community based funding, etc.)?","For-profit impact investments are not really prevalent, but they are on the rise in Estonia. Most impact investments still tend to be more philanthropic than profit-oriented.\nThe most significant impact fund is the Good Deed Impact Fund, which is the first venture philanthropy fund in Estonia. The fund mostly invests in education, social inequity, public health and the environment.\n"]
["What are the types of government funding and support available to Social Enterprises, if any, available in your jurisdiction (e.g., grants, investments, bonds, and guarantees)? a. How difficult is it for Social Enterprises to obtain government funding? b. Is any government funding limited to Enterprises incorporated using Social Enterprise forms?","There is no special government support specifically available to Social Enterprises as such. Social Enterprises often receive different state budget grants.\na. Obtaining government funding as a Social Enterprise is not overly difficult. In order to improve the development of Estonia's various regions, about a dozen regional development support programs are financed from the state budget every year. For example, the Ministry of Finance mediates national grants for the local initiative program. In addition to that, there are numerous social, educational, cultural and environmental project-based grants.\nb. N/A\n"]
["Are there any companies that are formed as a Social Enterprise listed on your jurisdiction’s leading securities exchange(s)?","No, there are no Social Enterprises listed on the securities exchange.\n"]
["To what extent are publicly traded Enterprises required to disclose ESG related factors in annual reports/public filings in your jurisdiction.","Publicly traded Enterprises are not required to disclose ESG related factors in annual reports/public filings. There are very few publicly traded Enterprises that choose to do so.\n"]
["How prevalent, if at all, are impact bonds in your jurisdiction?","Impact bonds are not prevalent in our jurisdiction. About six years ago the Good Deed Foundation initiated a feasibility study and cost-benefit analysis for launching the first ever social impact bond in Estonia. However, the actual setup still requires additional preparations and efforts by all interested parties.\n"]
["In your jurisdiction, are there any restrictions on foreign investments or donations that are unique to Social Enterprises (whether incorporated as for profit entities or as Nonprofits)?","There are no restrictions on foreign investments or donations that would be unique to Social Enterprises. However, there is a legislative initiative for enacting stricter background checks on foreign investors.\n"]
["Is “crowdfunding” legal in your jurisdiction? Are there rules under applicable securities laws that make it easier for smaller businesses or Social Enterprises to take money from investors that are not sophisticated/accredited/qualified under applicable statutes?","Crowdfunding is legal and usually takes the form of joint sponsorship, loan-based co-financing, or investment-based co-financing.\nApplicable securities laws enable to attract financing from retail investors without prospectus and other public offering related regulatory requirements in certain exceptional cases. In the context of Social Enterprises, the following exceptions may be relevant: the total amount raised is less than EUR 2.5 million, fewer than 150 potential investors are approached per EU Member State, securities are issued by associations with legal status or non-profit-making bodies, recognized by the state, for the purposes of obtaining the funding necessary to achieve their non-profit-making objectives.\nSocial Enterprises have begun to utilize the possibilities of crowdfunding, especially through joint sponsorship platforms. For example, a Social Enterprise that offers mindfulness programs mainly for schools and kindergartens recently received funding through crowdfunding and was able to develop a mindfulness mobile application and a handbook for parents.\n"]
["III. Tax"]
["Are there any tax exemptions that are uniquely available for Social Enterprises? a. Please describe any tax exemptions that are available and whether they are partial or full. b. Are they dependent on the Social Enterprise utilized using a specific organizational form (e.g., for profit vs. Nonprofit form)? c. Please describe any other key requirements of the available tax exemptions (e.g., restrictions on sources or uses of funds, restrictions on commercial activities, etc.).","There are no tax exemptions available for Social Enterprises in particular. As per the general Estonian income tax system, Social Enterprises would be liable for income tax on all distributed profits (including hidden profit distributions) while no tax would be charged payments related to the objectives set out in the articles of association.\nThere are some tax incentives for Nonprofits from which a Social Enterprise established as a Nonprofit could benefit. To qualify for the incentives, the Social Enterprise must operate in the public interest, for charitable purposes, either acting primarily free of charge, not seeking revenue or being publicly accessible. Additionally, the Social Enterprise may not distribute its assets or income to its founders, members and other associated persons, including upon dissolution, in which case any assets must be transferred to a similar association or public body. Furthermore, the administrative expenses of the Social Enterprise must correspond to its activity and objectives, while the remuneration for the personnel must not exceed the common remuneration for similar work. The tax authority keeps a list of qualified associations.\nThe primary exemptions for listed Nonprofits are for scholarships and grants issued through public competitions, transferring assets during charitable activities carried out in the public interest and gifts and donations to other listed Nonprofits (full exemptions).\n"]
["Are individuals or other organizations able to provide tax deductible donations to for-profit Social Enterprises? If they are, please describe any restrictions applicable to tax deductible donations?","Tax deductible donations can be made to listed Nonprofits.\nDonations made by other listed Nonprofits are fully tax exempt. Other legal persons can provide tax free donations to listed Nonprofits up to a yearly cap. The cap is equal to either 3% of the total social tax paid during that year or 10% of the previous years’ profits (whichever is less).\nIndividual donors may deduct the amount from their taxable income up to a yearly cap of 1,200 euros (this amount is shared between all deductions).\n"]
["Are there any other tax benefits uniquely available for Social Enterprises? (e.g. deferrals, favorable tax rates, business deductions, etc.)","No.\n"]
["Does your jurisdiction provide for reciprocal recognition of tax-exempt status that has been granted under the law of any other jurisdictions?","No. Organizations established within the European Economic Area may benefit from the incentives provided to listed Nonprofits, provided they meet the same requirements.\n"]
["IV. Governmental Infrastructure"]
["Does your jurisdiction have Regulatory Sandboxes or similar policy frameworks for Social Enterprises? If it does, please describe.","No.\n"]
["What government operational support, resources, training or services, are available for small businesses or Social Enterprises?","There are government grants, trainings, loans and guarantees available for start-ups as well as operating companies. Kredex, administers the respective loan and guarantee programs as well as much of the COVID-19 relief in Estonia. Enterprise Estonia provides various grants and services, such as training programs. None of these measures are specifically designed for Social Enterprises.\n"]
["Are there different compliance requirements for different types of Social Enterprises than for traditional Enterprises? Please provide examples if there are.","No, same rules apply.\n"]
["Is there a dedicated government agency or department that oversees Social Enterprises? If there is, please describe its mandate and effectiveness.","There is no dedicated government agency or department that oversees Social Enterprises.\nEstonian Social Enterprise Network, which is a Non-profit association, offers practical support to Social Enterprises. The Non-profit develops programs for Social Enterprise development and currently has 54 Estonian Social Enterprises as its members.\n"]
["Is there a different bankruptcy system available for Social Enterprises?","No.\n"]
["VI. Miscellaneous"]
["What are the average time and filing fees to form an Enterprise in your jurisdiction?","Most Enterprises in Estonia are formed online within a single day. This accelerated procedure is not applicable to Nonprofits and Cooperatives the registration of which can take up to 5 business days (generally takes less).\nState fees levied upon forming an Enterprise fall between 20 and 190 euros and are dependent on the type of entity formed, whether documents are submitted online or through a notary and whether or not the accelerated procedure fee is paid.\nBeing listed as a Nonprofit benefiting from tax incentives requires filing an application with the tax authority which should be reviewed within 4 weeks.\n"]
["What government or third-party certifications or accreditations, if any, are available for Social Enterprises that allow for access to benefits e.g. funding, beneficial tax status, etc.? Please provide examples and briefly describe them as well as the standards there are to maintain them.","Being listed as a Nonprofit benefiting from tax incentives can provide some advantages, perhaps the most relevant being the possibility to receive tax deductible donations (for additional information, please refer to answers 1 and 2 in Section III).\n"]
["Please describe whether, in your opinion, startups and other entrepreneurial Enterprises generally can easily form and flourish in your jurisdiction.","Yes, startups can easily form and flourish in Estonia. Forming an Enterprise is quick and relatively low cost, particularly due to the possibility of establishing an Enterprise without making a capital contribution. General operating costs are low, there are relatively few reporting obligations and almost all operations can be done online using a digital ID. There is no traditional corporate income tax as profits are only taxed upon distribution (including hidden profits distributions), while reinvested profits are not taxed, resulting in low tax burden for new businesses (provided they refrain from distributing profits e.g., paying dividends or having expenses unrelated to business etc.).\n"]
["Please describe whether, in your opinion, Social Enterprises, in particular, can easily form and flourish in your jurisdiction.","Social Enterprises do not enjoy any significant benefits compared to other Enterprises, but considering Estonian current legal landscape, there are no significant obstacles to Social Enterprises forming and flourishing in Estonia.\nAs one example, public procurement participation can in some cases be linked to social objectives (participation can be limited to certain Social Enterprises, particularly those employing people with disabilities).\n"]
["Please describe whether in your opinion there are any laws that are obstructive to the formation of Social Enterprises (i.e. that actively disfavor or penalize, or otherwise discourage their formation) in your jurisdiction (for example, are Social Enterprises subject to legislation prohibiting inclusion of Social Enterprises in government contract procurement)?","The legislation does not actively penalize the formation of Social Enterprises, however, all forâ€‘profit Enterprises are managed with a view to increase profits for the shareholders and thus social and environmental objectives are given less prominence.\nCooperatives could benefit from amendments providing a greater degree of flexibility, i.e., making the supervisory board a voluntary body, removing limitations on dividend payments, waiving the minimum capital requirement, enabling transformation into another type of entity etc.\n"]
["In your jurisdiction, are there any major fraud concerns or defects due to corruption or fraud that should be addressed? If there are, please briefly discuss the concerns or defects.","No.\n"]
["What changes to the law do you think would be most beneficial to enabling Social Enterprises to flourish in your jurisdiction?","Although there is no specific type of Enterprise available for Social Enterprises to set themselves up in Estonia, most Social Enterprises operate in the form of Nonprofits in Estonia. Operating in the form of Nonprofits is considered to be suitable for Social Enterprises and no significant amendments to laws are intended.\nIntroducing additional tax incentives for Social Enterprises established in the form of for-profit Enterprises may, however, prove useful in increasing the number of Social Enterprises in Estonia.\n"]
["What changes to the law do you think would be most beneficial to enhancing the social and environmental responsibility of Enterprises generally (whether or not Social Enterprises)?","Implementing a uniform set of standards for ESG policies and reporting of public companies would make it easier for investors and consumers to compare and evaluate which enterprises are in fact doing good in the world, which would drive companies to perform better.\nThere are other ideas that are too “pie-in-the-sky” to implement in this country (for example, one could amend the corporate code to require that any publicly traded company have at least one director elected by the workers of the company, but this would not be a realistic change for our jurisdiction).\n"]
["Is there anything else you would like to add or guidance you would like to provide? Are there any questions we should have asked but did not?","No.\n"]