Buying an Estonian OÜ: what warranties and indemnities should I demand in the SPA?

A seller can keep the SPA short, but not hollow. For a 70% acquisition of an Estonian OÜ, the real issue is not page count, it is whether the SPA still contains full business warranties, a separate tax indemnity, a disclosure mechanism, and payment security. In Estonia, OÜ transfers also need a structural check before you sign: the articles may give other shareholders pre-emption rights or require consent, and the transfer is generally notarised and deemed completed upon entry in the commercial register and list of shareholders unless the company has validly waived the notarisation requirement.

The non-negotiables are these. First, fundamental warranties: valid title to the 70% stake, authority and capacity, accuracy of the cap table, no undisclosed options, pledges or encumbrances, no side agreements, and no breach of the articles or shareholder arrangements. Second, business warranties covering accounts, tax, employment, material contracts, litigation, permits, IP, data protection, related-party dealings, compliance, and insolvency risk. Longstanding Estonian M&A practice uses representations and warranties, indemnities, conditions precedent, and holdback or escrow style protections precisely because the buyer inherits the company with all of its hidden issues still inside it.

Tax should never be left to a general warranty package alone. Hidden payroll taxes, VAT issues, undeclared fringe benefits, transfer-pricing exposures, or late filings should sit under a separate tax indemnity covering all pre-closing periods and all taxes arising from pre-closing facts, regardless of when the authority assesses them. Ask for a certificate of no tax arrears, a certificate of arrears, filing confirmations, and a clean explanation for any disputes or payment schedules. Estonia’s Tax and Customs Board issues public certificates on absence of arrears and arrears, and its arrears inquiry can also show unpaid claims and missing returns.

Employment risk also deserves standalone protection. Do not accept a soft knowledge qualifier here. Require a warranty that all employees and management arrangements have been disclosed, all employment registrations have been made, all salary, vacation pay, taxes and social charges are paid, and there are no pending terminations, labour disputes, misclassified contractors or undocumented bonus promises. In Estonia, employment data sits in the Employment Register kept by the Tax and Customs Board, and employers are required to register employment there.

Because you are buying 70%, not 100%, the SPA is only half of the protection package. You should also require a shareholders’ agreement giving you board control or veto rights over debt, related-party transactions, budget, dividend policy, key hires and fires, business plan changes, new share issues, asset sales and settlements. Also require bring-down of warranties at closing, an ordinary-course covenant between signing and closing, access to books and records, and a clear third-party claims procedure so the seller cannot disappear once a tax audit, employee claim or contract dispute appears. Estonian acquisition practice also treats change-of-control consents and other closing conditions as normal parts of deal protection.

My practical view: if the seller insists on a very short SPA, keep the core agreement short but move the substance into schedules, a disclosure letter and specific indemnities, backed by escrow or holdback. Public checks are only a baseline. The Estonian e-Business Register gives access to company data, beneficial owners, annual reports and tax debt information, which is useful for diligence, but it will not reveal every employee promise, side letter, off-book liability or seller knowledge issue. If the seller refuses a real tax indemnity, real employment protection and real liability mechanics, that is usually not a drafting preference, it is a risk signal.