Equity & Shareholder Structure for Estonian Start-ups

Yes. An OÜ can have multiple share classes defined in its articles of association at any time — before or after external investment. Most founding teams set up only ordinary shares initially and add preferred share classes when the first VC investor joins. However, if you are planning to take angel money and want to grant the angel preferred economics without a full preferred share structure, a convertible note or SAFE is usually simpler than amending the articles pre-round.

Issued shares are the shares that have actually been issued and are currently held by shareholders — recorded in the Business Register. Fully diluted shares include all issued shares plus all shares that would be issued if all outstanding options, warrants, SAFEs, and convertible notes converted or were exercised simultaneously. Investors always calculate ownership percentages and valuations on a fully diluted basis. A founder who owns 40% on an issued-share basis may own only 28% on a fully diluted basis once the ESOP pool and convertible instruments are included.

When an employee exercises an option and receives shares, the gain — the difference between the fair market value of the shares and the exercise price — is treated as employment income. It is subject to income tax (20%) and social tax (33%), withheld and paid by the company. The valuation of the shares at exercise is typically based on the most recent funding round valuation or a formal independent valuation. For private companies with no recent transaction, the company must determine a defensible FMV — EMTA has the right to challenge this valuation.

Yes, but it is significantly more complex than setting it up at incorporation. Founders who already hold their full share allocation need to agree to a reverse vesting arrangement — effectively granting the company a buyback right over shares they already own. This requires consent from all shareholders, an amendment to the shareholders’ agreement, and careful drafting to avoid triggering a taxable event (if shares are deemed to be transferred, income or capital gains tax may apply). The later you leave it, the more expensive the legal and tax work. Investors routinely require founder vesting as a closing condition — negotiate it before they ask.

This depends on what the shareholders’ agreement and ESOP plan rules say — and what the acquirer agrees to. Common outcomes are: (1) accelerated vesting — all unvested options vest immediately on the acquisition (single-trigger acceleration); (2) double-trigger acceleration — options accelerate only if the acquisition closes AND the employee is terminated within a set period; (3) rollover — unvested options are exchanged for unvested options in the acquirer; (4) cancellation with cash payment — the acquirer pays the in-the-money value for unvested options and cancels them. Founders should ensure the ESOP plan documents explicitly address this before any acquisition conversation begins.