Company information register Inforegister put together a list of companies with no board members in June and found that a fifth of the companies owed taxes. While such companies bet on forced removal from the register, the tax board is capable of finding debtors after their removal.
«Looking at insolvent companies, we found that quite a few of them also had no board. To determine whether this was an isolated incident or a wider problem, we pulled the records of all companies without active boards,» said head of marketing at Inforegister Kristiina Zadin.
The register found 750 such companies by the end of June.
«Resigning from the board is a method of shirking responsibility. Without a board, the company has no person liable, which means there is no one to bring to justice in case of malicious insolvency,» Zadin said.
Looking at the list, it is clear most companies on it are not active, at least not officially, whereas 160 companies owed taxes in June. Only 28 companies out of the total 750 had reported turnover by the end of May. Only 43 have been entered into the VAT register and only 27 have paid labor taxes this year.
The circle of companies and entrepreneurs on the list is very colorful. Biggest tax debtor, fuel seller SimCity OÜ that was established in 2007, has owed taxes since 2013.
By today the company owes more than 5.3 million euros in taxes. Äripäev has written about how the company has changed hands numerous times in recent years, and been involved in the Panama scandal. The company has been without a board since February 2015.
Tied for second and third place in terms of tax arrears are Rosneft Eesti OÜ (owes 1.65 million euros) and Maviar OÜ (owes more than 400,000 euros).
The former is tied to scandalous Valga entrepreneur Raivo Paala who has been on the biggest tax debtors list for years, sentenced to prison for tax crimes, and who has a temporary business ban. The company that lists service and repairs of motor vehicles as its main activity has lacked a board since August 2015.
Maviar OÜ, listed as a dealer of passenger cars and minibuses, was founded in 2010 by Hannes Rosin who specializes in selling shell companies. The company was sold a mere two months after its founding. The company has lacked a board since May of this year, and its tax debt was created in June 2012.
Head of the private law division of the Ministry of Justice Indrek Niklus said that the business register has dealt with problematic companies as they are discovered. Niklus admits, however, that there is no system to aid discovery. That is why the ministry has decided to put together a list of companies without boards in cooperation with the Registers and Information System Center once a year. «We have pulled a corresponding list as of September 9,» he said.
However, the number of companies without liable persons is changing rapidly. By September, the number of such companies had fallen to 667 of which 367 were in the process of being dissolved due to failure to present annual reports.
Therefore the register still has around 300 companies lacking boards at this time, Niklus said. «The registers department will launch supervision proceedings concerning them,» the ministry's representative said.
Kristiina Zadin said the discrepancy in the data pulled by the two registers is probably caused by different inquiry periods.
«It is possible the difference arises from the fact that the business register has set about removing companies that have failed to comply with reporting obligations,» she suggested. The register deleted more than 6,000 companies last year and has deleted as many in the first months of this year.
Indrek Niklus said, however, that neither the death nor resignation of a board member can exempt the company of obligations board members have entered into. «Contracts signed by former board members are still subject to performance and cannot be claimed to be void,» Niklus said.
The Tax and Customs Board agrees. «Lack of a board does not afford one additional room for fraud so to speak, nor does it exempt former board members of responsibility as tax fraud requires transactions which can only be entered into by a legal representative – a board member or authorized person,» said head of the tax board's income division Airi Jansen-Uueda.
Such behavior could also result in liability for third persons as the board holds responsible the person who caused the debt. Even though the Tax and Customs Board cannot comment on concrete steps taken against entrepreneurs and companies mentioned before, Jansen-Uueda says that debtors are under constant attention.
«We pay special attention to obstructing dishonest business activity,» she said. Jansen-Uueda added that measures of collecting tax arrears go beyond removal of companies from registers or transfer of responsibility to third persons.