TYPES OF BUSINESS ORGANIZATIONS: THE CASE OF ESTONIA

The most common forms or types
1. Sole Proprietorship
2. Limited Liability Company
OR: S Corporation
3. Corporation
4. Limited Partnership
5. General Partnership
6. Foundation
7. Non-Profit Organization
of business organizations in Estonia today are:
= Füüsilisest isikust ettevõtja, FIE (in Estonian)
= Osaühing, OÜ (in Estonian)
= Aktsiaselts, AS (in Estonian)
= Usaldusühing (in Estonian)
= Täisühing (in Estonian)
= Sihtasutus (in Estonian)
= Mittetulundusühing, MTÜ (in Estonian)

In addition to these, in Estonia you may also come across a business organization,
referred to as ühistu, for which the suitable equivalent in English is cooperative or co-
op, especially when talking about the farmers’ associations, e.g. Farmers Grain Co-op
(Est. Teraviljaühistu), Dairy Farmers Co-op (Est. Piimaühistu); Dairy and Meat
Farmers Co-op (Est. Liha- ja Piimaühistu). Also, in Estonia you may come across
Tarbijate Ühistu whose equivalent in English is Consumers Cooperative.
Other than those, in Estonia you can also come across the name hoiu-laenuühistu, for
which the English equivalent is Savings and Loan Association. Association is also the
English equivalent of Estonian tulundusühistu.

Thus, please beware that only the seven forms in the above list are the official types of
business organizations, according to the Estonian Commercial Code (Äriseadustik). All
the essence, liabilities, obligations and rights of the cooperatives and associations in
Estonia have been discussed in the Commercial Associations Act
(Tulundusühistuseadus). The commercial associations and co-ops are like consortiums
that associate individual members who share common goals and interests in their
professional fields of activity and, thus, commit themselves to conjoin and co-operate
together as a joint venture (= a new firm, which has been formed as a partnership,
with the objective to reduce risks associated with new market penetration).
Joint venture means ühisettevõte in Estonian, whereas market penetration means
entering into a (new) market, or turule sisenemine in Estonian.

When reading the text above, you came across the term venture. Venture in business
context implies activity that is associated with risk. The Estonian equivalent of a
business venture is äriettevõte or äriprojekt. Any business venture is always geared to
generating of profit (called kasumi teenimine in Est.). Thus, any business is a
venture, because it seeks to generate maximum profit possible (which is still not to be
identified with “greed”), and this, in turn, is associated with taking risks. The first and
major risk is associated with losing one’s money invested into the business or venture.
As any business, in order to get started, needs some capital, this capital is called start-
up capital, also: venture capital (called stardikapital, riskikapital in Est.) that enables
the entrepreneur (= a person venturing into business by starting her/his own
company; also a person constantly generating new ideas for expanding and diversifying
the business; ettevõtja in Est.) to take the reasonable risks incurred. Thus,
entrepreneurially minded people would often say that they venture into business.

TRY OUT YOUR SKILLS 1

by choosing the right term (from the right) for each description (in the left column)
1. Activity associated with risk in business Business

2. Amount of money to be initially paid in Entrepreneur

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3. Company that is oriented to profit To generate profit

4. One interested in starting and expanding business Venture

5. Seek an opportunity to earn Start-up capital /

Venture capital

6. To start up one’s profit-seeking company Venture into

business

The easiest type of business enterprise (today mainly referring to a small business, a
small company; called väikefirma, väike-ettevõte in Est.) to start is sole
proprietorship. The person venturing into sole proprietorship is a sole proprietor. In
colloquial language, the sole proprietor can also be called self-employed, individual
contractor, sole-trader (if the person is running a one-person-owned sales outlet,
etc.). Sole proprietors can be very flexible and enjoy maximum freedom in their work
schedule and decision making practices. These features can definitely be enjoyed as
advantages of this type of business.

The disadvantages, however, are the lack of necessary think-tank in situations where
more complex or critical decisions have to be made; and the shortage of funds if a quick
and bulkier investment shall be made. Unlike some other types of business venture, the
sole proprietor is held liable with all her/his personal property. In cases a bad loss has
been incurred and a loan from a lending company involved in it, the sole proprietor may
have to pay through the nose (= pay too much; pay an exorbitant price for it all), as
creditors (= those who give credit, called võlausaldajad in Est.) are justified to collect
that they feel is their due share receivable. Thus, their current capital (= current
assets less current liabilities, which leaves that amount of capital that is needed for the
company’s day-to-day operations; called käibekapital in Estonian). To venture into
business as a sole proprietor, the person has to obtain an Operating Certificate (a
license issued by a government agency that allows its owner to operate in a certain type
of business, called tegevusluba in Estonian).

In Estonia, such a certificate is issued by the local office of IRS or Internal Revenue
Service (colloquially also called tax board, tax office meaning Maksuamet in Estonian;
Internal Revenue means “money that is raised, nationwide, through people’s taxation).
Mention must be made, that in Estonia the Customs Agency and IRS were merged a
number of years ago. Thus, it would be appropriate to refer to this government agency
(Est. valitsusasutus) as Customs and Internal Revenue Service, CIRS (though the
Estonian IRS is called Tax and Customs Board).

Also, sole proprietors are exempted (= have no liability or obligation to do sth.) from
double taxation (topeltmaksustamine in Est.) either. In the early 2000s, the Parliament
in Estonia waived (= refrained from insisting on or enforcing a rule upon sth.) the
corporate income tax (= the income tax levied on / imposed on companies) liability,
provided the companies plow their income back (= reinvest) into assets to increase
their Net Asset Value (= total value of the assets of a company less its liabilities and
capital charges, called puhasväärtus in Estonian).

In order to spread the risks (= reduce, lessen the risks; called riski hajutada, riski
maandada in Estonian), the entrepreneurs may decide to found a Limited Liability
Company (= company whose owners have limited personal liability and can be held
liable only up to the value of their assets) that can also be called S Corporation
(corporation = shareholders’ company, called aktsiaselts in Estonian) for the purposes

2
of clarity. This is because corporations’ owners also enjoy limited personal liability, and
in UK context the abbreviation Ltd. following the name, as in Vauxhall Motors, Ltd. the
reference is to a stockholders’ or shareholders’ company. Hence, in order to distinguish
between the LLC (= abbreviation of Limited Liability Company) and Ltd. (abbreviation at
the end of UK corporations’ names, meaning “Limited”, Limited Liability Companies have
come to be referred to as S Corporation (“S” stands for “small”).

In various countries, the criteria defining the S Corporation are different. S Corporations
tend to be smaller in terms of their revenue (= money paid to the company for the
purchase of its goods and services, called realiseerimiskäive in Estonian), employment,
and corporate tax rate, compared to those of a corporation. In many countries, the S
Corporation can have only one type of shares (share = a unit of ownership that
designates a certain proportion of the company’s capital, called aktsia in Estonian). The
Estonian equivalent of S Corporation is called Osaühing, and the debt instrument (=
documents giving evidence of the amount of money paid down by the instrument’s
holder and assigning to her/him the right to claim an amount of assets equivalent to the
value that is borne on the face of the debt instrument, called võlakiri in Estonian) of the
S Corporation in Estonia is called osak, which translates into English as “unit”. In other
words, the shares of an S Corporation is called “unit” in Estonia. Thus, the Estonian S
Corporation can be understood as a “unit holders’ corporation”. Please remember, that
the “unit holders’ corporation” is but a descriptive term, rather than a name of the
company’s type.

TRY OUT YOUR SKILLS 2

by choosing the right term (from the right) that corresponds to a description (in the left)
A A firm having limited obligations to pay in Are exempted from
cases of insolvency or bankruptcy

B A single owner and entrepreneur who, To waive one’s claim

ordinarily, goes self-employed

C A small version of stockholders or Corporate income tax

shareholders company

D Amount of cash generated by collecting of Creditors

taxes

E Be deemed responsible for payments and Current capital

dues

F Cash flowing to a company when selling Debt instrument

its products or services

G Current assets less current liabilities Double taxation

H Official written certificate proving the Enterprise

legitimacy of a business company

I Set free from some obligation or mandate Internal Revenue Service

J Tax levied on companies’ gross earnings Be held liable

3
K The government agency in charge of Limited Liability Company
collecting taxes

L The pooling of risks from more than one Net Asset Value
source

M Those trusting with funds, e.g. banks, Operating Certificate

distributors-wholesalers, etc.

N To make payments with intent to increase Plow back into assets

the value of corporate property

O To pay exorbitant price, to overpay so as Revenue

to feel like being ripped off

P To refrain from insisting on sb. doing sth., Tax revenue

forgo

R Usually negotiable debt instruments, S Corporation

issued by companies, that are redeemable

S Usually, a small company Shares

T When a taxpayer is taxed twice, on the Sole proprietor

company level and on personal level

U Worth remained when deducting total Spread the risks ( spread

liabilities from total assets of the risks

V Written evidence of debt that is To pay through the nose

redeemable in a stipulated time period

Both, S Corporation and Corporation have very much in common. Especially, as far as
their birth or starting is concerned. To get started, their founders assemble for their
general meeting. These founders can be referred to as incorporators. What they
actually do, is – they incorporate the venture capital (= pool in moneys, jointly).
Thus, the name corporation implies a company that runs on incorporated capital, or
joined assets, or joined stock (= cash and other tangible or nontangible assets that the
incorporators provide). That is why a corporation is oftentimes referred to as a joined
stock company, though the latter being used mainly in explanatory function, i.e. to
explain the essence of corporation. At their first meeting, the corporation founders draft
the Articles of Incorporation (in UK it is called Memorandum of Association), called
asutamise otsus, asutamisdokument in Estonian. Ordinarily, this document declares the
founders’ unequivocal decision to incorporate their invested capital for the common good
of a business company. This document indicates the corporation’s name or corporate
name, name, the purpose of the corporation, and the authorized capital (i.e. the
stock of shares i.e. 1-2-3 etc. shares make up stock); the total amount of share capital
/ stock capital and how many shares each shareholder holds; also location of the
corporation’s registered office. Other information to be included is: the corporation’s
objectives, the shareholders’ liability, and the agreements and contracts the corporation
can enter into.

4
Thus, whenever corporations’ holding and voting right (= right to make decisions with
regard to the corporation’s policies and operations) is determined by the number of
shares being held, in Limited Liability Companies / S Corporations it is determined
by the holding of units (as the LLC or S Corporation’s ownership shares are referred to
in Estonia; called osakud in Estonian). Though, “share” would be absolutely correct when
referring to “a part of ownership of the LLC or S Corporation’s assets”, the use of “unit”
would eliminate any equivocality, whenever the talk is about ownership of the two types
of companies: corporation and LLC.

Also, LLC and Corporation have to make up their Bylaws. Bylaws are statutory articles
that regulate rights, obligations and liabilities between corporation founders, on the one
hand, and between the particular corporation and other corporations it will be liaising.
The Estonian equivalent for it is põhikiri, whose verbatim translation into English is
“principal statements” OR “fundamental principles” the discussion about bylaws will
be resumed beneath, in conjunction with (Full, as opposed to S) Corporation.
Then the company has to be registered with the corporate filing office, which in Estonia
bears the name Commercial Registry, or Commercial Register. There the officer-in
charge makes an entry (which means kanne in Estonian) in the electronic corporate
registration form (ettevõtte registrikaart in Estonian) and issues to the corporation or
the Limited Liability Company / S Corporation its certificate of incorporation (Estonian
registreerimistunnistus), which together with the articles of incorporation constitutes
the corporation’s Charter (called tegevusluba in Estonian). Usually, charters are
possessed by business organizations, e.g. Corporations and S Corporations. Sole
Proprietors need barely an Operating Certificate as was mentioned above.

TRY OUT YOUR SKILLS 3

by choosing the right term (from the right) that corresponds to the description (in the
left)
A Alternative, non-formal term referring to Articles of Incorporation
a corporation

B Authority granted for making important authorized capital

decisions in a company’s strategy

C Capital amount pooled in and indicated Bylaws

upon the start of a business

D Capital amount pooled in and indicated certificate of incorporation

upon the start of a business

E Corporate constitutional articles Charter

developed, pursuant to legislation

F Corporate constitutional articles Commercial Registry

developed, pursuant to legislation

G Document that proves the corporate Corporate registration

essence and business being involved in form

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H Document that proves the corporate Entry
essence and business being involved in

I Founders of a company who gather at a Incorporate the venture

general meeting and establish a firm capital

J Goal and intent, whereupon a company Incorporators

has been set up

K Government agency in Estonia that files Joined stock company

the foundation of companies

L Government agency in Estonia that files The purpose of the

the foundation of companies corporation

M Initial document of founding a company, Unit

drafted by founders

N Initial document of founding a company, Voting right

drafted by founders

Resuming with the discussion about corporate bylaws, it has to be said that this
document is like company’s blueprint or structural guidance provider. Its provisions (=
law articles = seaduse paragrahvid ; provisions = sätted in Estonian) stipulate (=
establish as a norm or rule, reglementeerivad, sätestavad in Estonian) the company’s
/corporations governance = corporate governance (= policy of building up and
running or managing the corporate structure, thus “corporate governance” means
ettevõtte valitsemine in Estonian). Hence, unlike the LLC or S Corporation that is a kind
of hybrid corporate formation between Partnership (to be discussed later) and
corporation, the corporation’s bylaws are also, in a way, more complex. Corporation is a
legal entity (= juridical personality, juriidiline isik in Estonian) (except for Sole
Proprietorship, all the corporate forms are referred to as legal entities. Each sole
proprietor and sole proprietorship is regarded as natural person, meaning füüsiline isik
in Estonian. Hence, the Estonian FIE = Füüsilisest Isikust Ettevõtja – i.e. Sole Proprietor
– can be translated verbatim into English as “Natural Person as an Entrepreneur”). Thus,
the bigger and more complex the corporation as a legal entity is going to be
designed, the more complex is also its bylaws. However, the general items that every

Bylaws contains, are: inception of business (inception means “start, beginning,

commencement”), size and scope of responsibility of the Board of Directors (=
supervisory council, ettevõtte nõukogu in Estonian; Director = nõukogu liige in Estonian)
often just referred to as Board. Also, the number, positions and tenure (= term of
office, ametiaeg in Estonian) of Senior Officers (= top managers, senior management
members; called juhatus, juhatuse liikmed in Estonian) who will be in charge of building
up the management (= leading and managerial structure for coordinating the
company’s daily operations) and how many tiers (= strata, levels; tasandid in Estonian)
it will consist.

6
Likewise, bylaws provide information about the ownership of shares and their par value
or face value (= price at the corporation’s inception, called aktsia nimiväärtus in
Estonian), also stipulations regulating the issue of stock (= release of new shares on
public sale, called aktsiate emissioon in Estonian), procedure of tendering of shares (=
potential buyers calling in and subscribing to a number of shares each of them is going
to buy; called aktsiate märkimine in Estonian), also, perhaps the sharing of votes, and
defining majority stock or majority vote, majority voting right (= determining the
majority number or amount of the shares issued. The Estonian for it is aktsiate
kontrollpakk, enamushääle õigus.

Still other information in the bylaws may concern the types of shares to be issued, and
profit sharing (through paying out dividends, kasumijaotus in Estonian). Further, in the
bylaws, mention is made of the Certified Public Accountant (= external auditor, from
an accounting firm who verifies the authenticity of the corporation’s financial
statements; called audiiitor, vannutatud audiitor in Estonian). Hence, the bylaws also
determine the start and end of the corporation’s accounting period (= period, usually
12 months in length, may overlap with the beginning and end of each calendar year, or
start on 1 April and end on 31 March the following year. The Estonian equivalent of it is
aruande-aasta, aruandeperiood).
The last article included in the bylaws, usually provides regulations for terminating the
operations (= finishing the company’s activities), liquidation of assets (= selling off
the corporate property in order to satisfy the creditors’ demands) and going out of
business, i.e. closing down the company.

TRY OUT YOUR SKILLS 4

by choosing the right term (from the right) that corresponds to the description (in the
left)
A A juridical personality Accounting period

B A period of 12 months, after which every Board

legal entity makes its bottom lines

C An ordinary person, a biological person, Certified Public

as vs. juridical personality Accountant

D Calling in with an intent to purchase Corporate governance

shares of stock

E Close down ones company and quit the Directors

world of business

F Coordinating and supervising the daily Inception of business

operations in a company

G Distribution of company’s net income Issue stock

generated

7
H External auditor, who is qualified for Legal entity
verifying the financial statements

I Length or term of service in a position or Liquidation of assets

office

J Level, stratum (in company’s leadership Majority stock

structure)

K Members of the company’s advisory panel Management

L Nominal value of, book value of Natural person

M Philosophy and principles of managing Par value or face value

and leading operations in a company

N Selling off all the assets owned Profit sharing

O Set up as a precondition prerequisite or Provisions

rule

P Shareholders’ representatives who give Senior Officers

advice and guidance to management

Q Starting of a company or business Stipulate

R Stipulations set forward in a law Tendering of shares

document; clauses in an agreement

S To put company’s securities on public sale Tenure

T Top management, usually President and Terminate the operations

Vice Presidents

U Usually 50 percent of stock issued plus Tier

8
 one share

It is usually at their first meeting that Directors elect, select or appoint their Chairman
or Chairwoman, or even Chairperson of the Board (as the users’ preference pursuant
to using proper decorum with regard to the gender of the person appointed to or holding
this post. “Chairperson” may be given preference, if utmost neutrality in reference to the
persons’ gender is sought). Also, the second part ”man, woman, person” may be
dropped altogether and Chair of the Board be used instead (like it is in schools:
Department Chair, i.e. person who coordinates the work of teachers who teach the same
/similar subject(s), like Languages or Math, etc. Thus, there are Chair of Languages
Department; Chair of Math Department, etc.) It is the Chair of the Board who, on the
Directors’ approval, appoints the chief managerial officer of the company, titled as
President or Chief Executive Officer, CEO (peadirektor, tegevdirektor in Estonian). As
seen in some countries’ industrial practices, both President and CEO may be the top
executive leaders of the same company; or the two posts can be simultaneously held by
the same person who acts as President and CEO.

No matter how the case may be, whenever there are both, President, and CEO – post
held by another person, while that in the post of President may have senior advisory role
(oftentimes this person may be immediate past CEO, or immediate past President – the
post he or she was holding, before stepping onto the sidelines, after retiring while still
being requested to remain and give consulting service). The President (if in chief
executive functions) appoints the Senior Officers – Vice Presidents. A manufacturing
corporation may have the following senior officers’ positions: Financial Vice President
or Chief Financial Officer, CFO (Estonian: finantsdirektor, finantsjuht), Operations
Vice President or Chief Operations Officer, COO (Estonian: tootmisdirektor,
tootmisjuht), Sales Vice President or Chief Sales Officer, CSO (Estonian:
müügidirektor, kommertsdirektor, turustusjuht), sometimes even possessing two
functions in one and then referred to Sales and Marketing Vice President or Chief
Sales and Marketing Officer (Estonian: turustus- ja marketingidirektor; turustus- ja
marketingijuht); Vice President for Human Resources or Chief Personnel Officer,
CPO (Estonian: personalijuht, personalidirektor), Vice President for Administration
or Chief Administrative Officer, CAO (Estonian: haldusdirektor, haldusjuht), and Vice
President for Research and Development or Chief Research and Development
Officer (Estonian: arendusjuht, arendusdirektor, innovaatikajuht, innovaatikadirektor).
It is usually

Manager that works in the subordination of Vice President, for example Engineering
Manager (Est. peainsener, tehnikajuht) Power Supply Manager (Estonian:
peaenergeetik), Purchasing Manager (Estonian: ostujuht, varustaja) may, in case of a
large company, be subordinated to the Operations Vice President, also called Chief
Operations Officer. When a company produces something, the work operations are
done in different company units, each of which is called a plant (Estonian: tsehh), such
as processing plant (= the plant that uses raw material(s) e.g. lumber to prepare
elements or details for furniture, Estonian: ettevalmistustsehh, lõikustsehh), from which
the produced elements go to an assembly plant (where these elements are joined into
pieces or articles of furniture; called monteerimistsehh, montaasitsehh, koostamistsehh).
Further they will go to a finishing plant (where the assembled pieces of furniture
receive final sanding and coating with paint, polish, wax, gloss, called viiimistlustsehh in
Estonian), and thence forward to the packing plant where they receive some safe
covering, e.g. elastic protective film skin wrapped around, to make them mistproof and
dustproof until delivery to the ultimate consumer (= customer who buys a good with
an intention to use and not to re-sell; called lõpp-tarbija in Estonian). All the plants are
run by managers. Each manufacturing and/or sales company has at least one
warehouse, which is also run by a manager.

9
TRY OUT YOUR SKILLS 5
by choosing the right term (from the right) that corresponds to the description (in the
left)
A A buyer who purchases an item personal Assembly
use, not with an intent to resell

B A company manager in charge of the Chair of the Board

premises – buildings and grounds

C A managerial person responsible for Engineering Manager

innovations in the company

D A managerial person who supervises the Financial Vice President /

company’s commercial activities Chief Financial Officer,CFO

E A person in charge of coordinating the Finishing

work of a supervisory council

F A person in charge of coordinating the Manager

work of a supervisory council

G A person responsible for overseeing the Operations Vice President

company’s funds and accounting or COO

H A person responsible for overseeing the Plant

company’s funds and accounting

I A person who arranges and oversees Power Supply Manager

performing of job in his work area

J A person who oversees the issues of President or Chief

employees and labor in general Executive Officer

K A person who oversees the smooth Purchasing Manager

functioning of tools and equipment

L A person who oversees the smooth Sales Vice President or

functioning of tools and equipment Chief Sales Officer

M An engineering person responsible for Ultimate consumer

heat and energy systems

N An officer in charge of buying supplies; Vice President for

also called “company’s buyer”

10
 Administration or CAO

O An officer responsible for manufacturing Vice President for HR or

and production in companies Chief Personnel Officer

P Joinery, joining elements into a complex Vice President for R&D or

item or unit Chief R&D Officer

It may happen that two businesspersons from different companies are talking about
their corporate structures, management tiers, positions, etc. yet fail to place each
other’s positions exactly in the corporate hierarchy, especially if the management system
is fairly long vertically. In that case it is easier to find out on which tier of the
organizational chart the person’s position stands. Here is a classical model of a
vertical design of an organization:
Board (of Directors) Taryba
Chairperson of the Board

President / CEO
Prezidentas

Vice President / CFO, COO, CPO,

Vice prezidentas
CSO, CAO, CRDO

Manager
Vadybininkas
Plant Manager, Energy Supply
Manager, Purchasing Manager

Supervisor
Prižiūrėtojas/Konsultantas

Foreman / Forewoman /
Pavaduotojas (meistras)
Foreperson

Skilled employee
Darbuotojas

11
 Helper
Padejėjas

TRY OUT YOUR SKILLS 6

Having familiarized yourself with the tiers in corporate organizational chart (the left
column, above), please use the empty boxes in the right column and write / type in the
titles / positions used in the company you know (in your country of origin or residence).

Once the corporation has been expanding, with its operations diversified and
employment grown, the Board and Management may decide to introduce the position of
Comptroller (= the officer who audits accounts and supervises the financial
transactions made and results to be reported for making proper management decisions;
sometimes also referred to as “Internal Auditor”).
This also implies that the corporation has a fairly large Accounting Office (= unit in a
company where accounting is done; called raamatupidamine, raamatupidamisosakond in
Estonian). It may employ accountants doing cost accounting (= kuluarvestus in
Estonian), financial accounting (= finantsarvestus) and management accounting
or managerial accounting (= juhtimisarvestus). Als o, this office employs at least one
Budget Accountant (called eelarvestaja or ökonomist in Estonian), and a Payroll
Accountant (palgaarvestaja in Estonian). In very large corporations that refer to
themselves as Group (called kontsern in Estonian), the payroll accountants may work in
a specialized unit called payroll desk (= palgalaud in Estonian).
All the accounting transactions and bottom-lines development are supervised by Chief
Accountant who may also be called Accountant General or General Accountant.

TRY OUT YOUR SKILLS 7

by choosing the right term (from the right) that corresponds to the description (in the
left)
A A bookkeeper who does the employees’ Accountant General or
wages and salaries General Accountant,
Chief Accountant

B A bookkeeper who does the employees’ Accounting Office

wages and salaries

C A large, often transnational corporation Budget Accountant

D A large, often transnational corporation Comptroller

E An accountant in charge of capital budgeting Cost accounting

and tracking the budget expenditures

F An accountant in charge of capital budgeting Financial accounting

and tracking the budget expenditures

12
G Calculation of company’s expenditures that Group
are made or pend to be made

H Calculation of company’s expenditures that Management accounting

are made or pend to be made or managerial
accounting

I Division in a company’s office complex where Payroll Accountant

costs and expenses are being tracked

J Division in a company’s office complex where Payroll desk

costs and expenses are being tracked

In the business cycles, companies upsize (= keep growing ane expanding), downsize
(= reduce, decrease their corporate structure), until they finally (hopefully!) rightsize
(= attain their optimum, cost-effective dimensions, structure and revenue). A common
way for corporate upsizing is merger (meaning ühinemine in Estonian) and takeover
(with Estonian equivalent as ülevõtmine) whereby the stronger and solvent (= with
solid finances and high value of assets; meaning solventne, kindla maksejõudlusega,
heal finantspositsioonil) corporation merges with its own the assets and liabilities of a
defaulting (= frequently experiencing illiquidity or payment difficulties, current capital
deficit; called ebalikviidne, makseraskustes in Estonian) businesses. However, merger
need not be the consequence of default at all. Two companies may negotiate a decision
to merge in order to be more cost-effective (= operate with more effective or
reasonable costs; ökonoomne, kokkuhoidlik, ratsionaalne in Estonian).

Takeover may be forced or aggressive type of merging the defaulting or insolvent (=

with infinite inability to meet one’s liabilities, called maksejõuetu in Estonian).
In case of mergers, the company that merges the other company’s assets and liabilities
with those of her own, will maintain the role of parent company or holding company
(Estonian emaettevõte, holding-firma). The company, whose assets are merged, or
whose assets are owned by another company, at least, in the amount of 50 percent +
one share (which determines the majority voting right), assumes the role of subsidiary
(colloquially referred to as daughter company, meaning tütarfirma, tütarettevõte). At the
end of each accounting period, the holding company develops consolidated financial
statements (where the figures of the parent company and its subsidiary / subsidiaries
have been aggregated = summed up as a whole, with an intent to demonstrate the
solvency = financial health / financial position of the company. The Estonian equivalent
of it is konsolideeritud majandusaasta aruanded, konsolideeritud finantsaruanded).

TRY OUT YOUR SKILLS 8

by choosing the right term (from the right) that corresponds to the description (in the
left)
A A company, whose majority of stock Consolidated financial
outstanding is held by another company statements

B A company, whose majority of stock Cost-effective

outstanding is held by another company

C Accounting statements where the figures of Defaulting

two companies have been aggregated

13
D Accounting statements where the figures of Illiquidity
two companies have been aggregated

E Assuming control over corporate activities, Merger

esp. by seizure of power

F Assuming control over corporate activities, Parent company

esp. by seizure of power

G Expenditure that is reasonable, rational, that Solvent

earns back desired, positive results

H Expenditure that is reasonable, rational, that Subsidiary

earns back desired, positive results

I Experiencing deficit of solvency; lacking of Takeover

cash / current capital needed

J Experiencing deficit of solvency; lacking of To downsize

cash / current capital needed

K Holding firm, a company that owns the To rightsize

majority voting right in another business

L Holding firm, a company that owns the To upsize

majority voting right in another business

When a corporation has been doing well and been upmarket or upscale (= esteemed,
high-quality, notable, prestigious, renowned; also prominent, appealing or attractive to
high-income customers; in Estonian tunnustatud tegija, tuntud firma, reputatsiooniga
ettevõte; also konkureerivates hindades kauplev firma), its owners may decide to go
public (= to change its status from private corporation to public corporation; minema
turule, muutuma börsiettevõtteks). To that end, the corporation must issue shares of
stock and put the on public sale. Public sale means that the company’s stock will be
enlisted in the stock quotation table (official table in the financial market giving daily
reports on the highest and lowest price of share traded that day, with the number of
shares traded; in Estonian it is called börsi noteeringu tabel, börsitabel, which means
that the shares will be quoted on the stock exchange (= carried on the stock
quotation table as financial instruments to be traded; Estonian for it is börsil noteeritud).
For that, the corporate owners need to recheck the bylaws about the authorization of
shares and find out what types of shares of stock the corporation can issue for public
sale and tendering. Commonly, the shares can be of two types: common shares /
stock (that give votiing rights; called üldaktsiad in Estonian) and preferred shares /
stock that give no voting rights but pay interest = dividends. Thereafter, it will be time
to make and publish the prospectus of stock issue (= lengthy information about the
legal entity, its business background and reasons for the decision of public offer; also its
financial statements in order to spread all that information needed to build trust with
intending and potential public shareholders. In Estonian it is called aktsiate emissiooni
prospekt), and to negotiate with a lead underwriter (= investment bank that, among

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other things, is also specialized in taking companies public; in Estonian referred to as
emissioonipank).

TRY OUT YOUR SKILLS 9

by choosing the right term (from the right) that corresponds to the description (in the
left)
A Be listed in the stock market’s table of share Be quoted on the stock
information exchange

B Be listed in the stock market’s table of share Common stock

information

C Be listed in the stock market’s table of share Lead underwriter

information

D Esteemed, high quality, renowned company Preferred stock

E Esteemed, high quality, renowned company Prospectus of stock

issue

F Information journal informing interested Stock quotation table

parties about new shares

G Information journal informing interested To go public

parties about new shares

H Information journal informing interested Upmarket / upscale

parties about new shares company

With the most essential (language) aspects about the Corporation covered, as had been
planned, it is time to push ahead to shed some light on these forms of business
organizations in Estonia that were mentioned at the very beginning, but have not yet
been focused on.

Limited Partnership is a company that has unlimited liability (unlike LLC or

corporation; in Estonian called piiramatu vastutus). As a partnership, it is constituted by
a minimum of two partners. One is general partner (Estonian: piiramatu vastutusega
osanik) , also called agent. “General” means here full, or unlimited, or infinite
liability. The other partner called principal (Estonian: piiratud vastutusega osanik) has
limited liability, up to the amount of capital (s)he has paid in.
In General Partnership, all partners bear unlimited individual liability for any activity
or debt that their partnership may be concerned with.
The both partnership types occur as very rare in Estonia. Those interested in the
reasons, why?, are more than welcome to use the Internet and find writers’ opinions as
answers. Thus, please go for it!

Non-profit organization, as the name implies, is not seeking profit (= is not

oriented to generating profit; Estonian: ei taotle kasumit) but is needed for organizing
certain activities (e.g. lots of athletic clubs and performance groups such As choirs and
dance groups, in the country are registered and operate as non-profit organizations).
They may earn their revenue surplus (= savings or positive balance; called lisatulu in

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Estonian)m yet it is used for expanding and diversifying the activities and not to pay any
dividends. Non-profit organizations raise their funds (= generate their disposable
resources; Estonian: hangivad kapitali; rahastavad end) from two principal sources: per
capita payments (= a token sum of money per each participant, annually paid by the
local government; called in Estonian: pearaha). The other source is participation fee,
paid monthly or quarterly.

Foundations (also: charitable foundations) are mostly educational (e.g. open

universities = people’s universities, rahvaülikoolid in Estonian), culture (e.g. Estonian
Song and Dance Celebrations = Eesti Laulu- ja Tantsupeo Sihtasutus, which organizes
all-Estonia choral singing, orchestra and folk dance festivals every four years) and
healthcare institutions (e.g. municipal and research hospitals and outpatient clinics (=
medical reception complex to be walked in on the preliminary appointment made with a
healthcare specialist; called in Estonian: polikliinikud). The foundations, with the
Estonian abbreviation SA, designating SihtAsutus), raise their funds from endowments
(= funds or property donated to institutions, often for special purpose; called
sihtannetused in Estonian). Other sources for incoming funds may include ticket sales
(by festival organizers, theaters and museums), consultation fees (charged by outpatient
clinics), and contractual payments (earned by research institutes for their consulting and
investigation services provided).

TRY OUT YOUR SKILLS 10

by choosing the right term (from the right) that corresponds to the description (in the
left)
A A doctoral reception complex, where one can Endowments
walk in and consult with an health adviser

B A doctoral reception complex, where one can General partner / agent

walk in and consult with an health adviser

C A token sum of money paid to cover some General Partnership

expenses of each participant

D A token sum of money paid to cover some is not seeking profit

expenses of each participant

E A two-person(as minimum) company, Limited Partnership

whereby one has partial responsibility

F A two-person(as minimum) company, Outpatient clinic

whereby one has partial responsibility

G Capital paid in, with special purpose, for per capita payments
meeting particular objectives

H Capital paid in, with special purpose, for Principal

meeting particular objectives

I Capital paid in, with special purpose, for Revenue surplus

meeting particular objectives

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J Company’s operations are not geared to Unlimited liability
generation of maximum income

17
Let's take a look at the stock/quotes table:

Columns 1 & 2: 52-Week High and Low.

These are the highest and lowest prices at which a stock has traded over the past 52 weeks (1
year). This typically does not include the previous day's trading.

Column 3: Company Name and Type of Stock. This column lists the name of the
company. If there are no special symbols or letters following the name, it is common stock.
Different symbols imply different classes of shares. For example, "pf" means the shares are
preferred stock.

Column 4: Ticker Symbol. This is the unique alphabetic name which identifies the stock. If
you watch financial TV, the ticker tape will quote the latest prices alongside this symbol. If
you are looking for stock quotes online, you always search for a company by the ticker
symbol. If you don't know a particular company's ticker symbol, you can search for it at
Yahoo Finance.

Column 5: Dividend Per Share. This indicates the annual dividend payment per share. If
this space is blank, the company does not currently pay out dividends.

Column 6: Dividend Yield. The percentage return on the dividend, dividend yield is
calculated as annual dividends per share divided by price per share.

Column 7: Price/Earnings Ratio (P/E ratio). This is calculated by dividing the current stock
price by earnings per share from the last four quarters. (For more on how to interpret this, see
Understand The P/E Ratio.)

Column 8: Trading Volume. This figure shows the total number of shares traded for the
day, listed in hundreds. To get the actual number traded, add two zeros to the end of the
number listed.

Column 9 & 10: Day High and Low. This indicates the price range in which the stock has
traded throughout the day. In other words, these are the maximum and the minimum prices
that people have paid for the stock.

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Column 11: Close. The close is the last trading price recorded when the market closed on the
day. If the closing price is more than 5% above or below the previous day's close, the entire
listing for that stock is bold-faced. Keep in mind, you are not guaranteed to get this price if
you buy the stock the next day because the price is constantly changing, even after the
exchange is closed for the day. The close is merely an indicator of past performance and,
except in extreme circumstances, it serves as a ballpark of what you should expect to pay.

Column 12: Net Change. This is the dollar value change in the stock price from the previous
day's closing price. When you hear about a stock being "up for the day," it means the net
change was positive.

Read more: Financial Tables: Stock Tables/Quotes

http://www.investopedia.com/university/tables/tables1.asp#ixzz4wPyEiVNI
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