Board Member Duties and Liability in Estonia

The management board member of an Estonian private limited company (OÜ) — in a one-person company often the owner — represents and manages the company and answers for doing so with care. This guide sets out the board member's main duties and liability under the Commercial Code: who may serve, what the board must do every year, the prohibition on competition, the rules when the company runs into financial difficulty, and how long a claim can be brought.

The guide is general information, not legal advice for a particular company.

Who may be a board member

The management board represents and manages the company; it may have one member (a director) or several (Commercial Code § 180(1)–(2)).
A board member must be a natural person with active legal capacity and need not be a shareholder (§ 180(2)). A foreigner may serve — see a foreign director of an Estonian company.
A person under a court's prohibition on acting as a board member or on business, or otherwise prohibited by law or a court decision, may not serve (§ 180(3¹)).
The shareholders elect and remove the board members (where there is no supervisory board); the person's consent is required (§ 184(1)). A board member is elected for an unspecified term unless the articles of association prescribe one (§ 184(2)).

The board's ongoing duties

Due diligence. A board member performs their duties with due diligence (§ 187(1)).
Accounting. The board organises the company's accounting (§ 183).
The annual report. After each financial year the board prepares the annual report and submits it, approved by the shareholders, to the commercial register within six months (§ 179(1)–(4)).
No competing business without consent. Without the consent of the shareholders (or the supervisory board), a board member may not run a competing business as a sole proprietor or partner, or sit on the managing body of a competing company outside the group (§ 185(1)); the company may then claim the income from it and damages (§ 185(2)).

When the company is in financial difficulty

Likely insolvency. When the economic position has deteriorated and insolvency is likely, the board must take steps to overcome the difficulties and restore liquidity, including considering a reorganisation petition (§ 180(5¹)).
Insolvency that is not temporary. The board must file a bankruptcy petition promptly, and not later than 20 days after the insolvency became evident (§ 180(5¹)).
No careless payments. After insolvency has become evident, the board may make payments only where this conforms to due diligence; payments that do not must be compensated to the company by the board members jointly (§ 180(5¹)).

Where the net assets fall below one-half of the share capital, the shareholders must decide on a capital measure, other measures, or the dissolution, merger, division or transformation of the company, or a bankruptcy petition (§ 176).

Liability

Board members who cause damage to the company by breaching their obligations are jointly and severally liable; a member is released if they prove they acted with due diligence (§ 187(2)).
The limitation period is five years, unless the articles of association or an agreement with the board member prescribe another (§ 187(3)).
If the company's assets do not cover a creditor's claims, the creditor may also bring the company's claim against the board member; in bankruptcy only the trustee may (§ 187(4)) — even if the company itself waived the claim (§ 187(5)).

A board member who also receives a dividend paid without a basis is liable for its return together with the shareholder (§ 158(6)) — see paying a dividend from an Estonian OÜ.

Setting it out in writing

A board member's tasks, pay, term and the period for claims can be agreed in a service agreement with the company — see the management board member service agreement. An agreement cannot remove the creditors' right under § 187(4)–(5).

What we do

a management board member service agreement — €180;
monthly accounting — from €150 / month, and the annual report — from €450;
a change of the board in the commercial register — register entry, €490 when every signer signs digitally.

Prices exclude VAT. All communication takes place by email.

Ready to start? The board member's tasks, pay, term and the period for claims, set out in writing. Order.

Official sources

The laws this article names, by the name of their official text, as read on 9 October 2026. For the Estonian acts we read the English translation in Riigi Teataja; the legally binding text is the Estonian one.

Commercial Code — Riigi Teataja, English translation

Sources are named in the text, without links. To see which of our services your company needs, open the Business Navigator.

Frequently asked questions

What is a management board member liable for?

A board member must act with due diligence. Board members who cause damage to the company by breaching their duties are jointly liable unless they prove they acted with due diligence, and the claim expires after five years unless the articles or an agreement say otherwise (Commercial Code § 187). If the company is insolvent and this is not temporary, the board must file for bankruptcy within 20 days (§ 180). Our guide sets out the duties.

Duties and liability of a management board member