e-Business Register
Center of Registers and Information Systems

A. Problem Analysis

 1. What was the problem before the implementation of the initiative?
The Estonian e-Business Register that is legally binding including digital data from the Commercial register, the register of non-profit associations and foundations and the commercial pledge register also includes the Company Registration Portal, XBRL Annual Reporting System and the Visualized Business Register. Before the introduction of the e-Business Register’s Company Registration Portal in 2007 by the Centre of Registers and Information Systems (RIK), in order to establish a company in Estonia, regardless whether the founder was of Estonian or foreign background, it was necessary to pay a visit to the notary’s office. First, an appointment with the notary had to be taken. Once at the notary’s office, it was the notary who prepared the necessary documentation and sent it to an Assistant Judge in the Court for review. Only after the before-mentioned steps, the company was finally established and added to the Commercial Register. The whole procedure took approximately 5 days. Furthermore, once the company established, to amend or delete registry data and/or liquidate, the previously mentioned procedure had to be gone through again and again. Before the introduction of a new feature to the Company Registration Portal in 2010, that of XBRL (Extensible Business Reporting Language) Annual Reporting System, the procedure of filing and submitting annual reports in Estonia was heavy and time-consuming. The reports had to be prepared by the companies “in-house”, were then sent for scanning, after which the registrar checked the data. Only then could the data be manually input and added to the e-Business Register. The whole procedure took around three months. Not only was the procedure slow and heavy, but the data received was also of much poorer quality, it was not immediately comparable and mistakes were very common. The law stipulates that the information in the Commercial Register is public. Hence, it was already possible to see the relations between different companies through management and supervisory board members and shareholders before the introduction of the Visualized Business Register in 2011. However, due to the vast amount of information available and by going back and forth between different companies and related persons, it was easy to lose sight of the bigger picture and possibly not notice some of the relations, information available. As a result, it was more difficult to fight fraud and detect money-laundering schemes, a concern also addressed by the private banks. Last but not least, before the introduction of the Company Registration Portal together with its e-Annual Reporting system, the administrative costs and “red-tape” of the above-mentioned procedures were considerably higher compared to the administrative burden after launch of new systems.

B. Strategic Approach

 2. What was the solution?
One of the main goals of RIK by developing the e-Business Register was to simplify the lives of entrepreneurs. The aim was to create an innovative environment providing integrated e-services, so that entrepreneurs can concentrate on doing business, rather than spend time on heavy and time-consuming procedures. The other goal was to provide efficient e-governance services and cut “red-tape” and administrative costs, making the other target audience the Estonian public sector. The introduction of the e-Business Register’s Company Registration Portal changed fundamentally how companies are established and communicate with the government in Estonia. Thanks to the Portal, it is no longer necessary to visit a notary to establish or amend data on a company in Estonia. An Estonian citizen or resident who has an Estonian ID Card or Mobile-ID can establish a company online through the Portal from anywhere in the world. The Portal, available in Estonian and English, has a quick and easy entirely paper-free four-step procedure. All the information is inserted online into forms, enabling direct and automatic data checks. Ready-made template articles of association are automatically updated based on the inserted information. Once the data inserted, checked and confirmed by the founder(s), all the founders must digitally sign the entry ensuring everyone agrees with the inserted information. Only when every founder has signed digitally, the state fee can be paid directly via e-banking. The entry is then ready to be directly sent to the Court Registrar. Once the Court Registrar has double-checked the data, the company is added to the Business Register. As a result, the five days it took to establish a company before the launch of the Portal have shrunk to an average of one working-day. Furthermore, as of 2008, the Portal also accepts Portuguese, Belgian and Finnish ID-cards and Lithuanian Mobile-ID. Hence, citizens of these four countries can also establish a company in Estonia from the comfort of their home country through the Portal. To further simplify the lives of entrepreneurs, in 2010, the XBRL Annual Reporting System was launched. The created uniform e-reporting environment, accessible through the Portal, makes the entry and submission of data significantly more convenient for companies, as there is one specific place, form and way for submitting all required data. The new environment enables the companies to prepare, check and submit their annual reports in XBRL format. The e-reporting environment provides set forms based on which companies can prepare their annual reports. Entrepreneurs can digitally sign their reports with an ID card, have them audited by the auditor inside the system and submit them electronically to the Business Register directly. In 2011, the Visualized Business Register, giving an overview of connections between legal and natural persons registered in the Business Register, was introduced. The service enables to investigate the company background and make inquiries concerning the persons related to companies. The results are displayed as a figurative drawing. The service was initially created for banks to help prevent money laundering but is today available to all regular users of the e-Business Register, making it more convenient for entrepreneurs to check the background of partners and debtors. The new systems have considerably cut “red-tape” and improved data quality, making it significantly easier and faster to process business data and improve the work-efficiency of public servants. Since Business Register information can be reused free of charge by other government institutions, process and data quality of all government institutions improved. The security of the proposed solutions is ensured by electronic identity (eID) and electronic signature using Public Key Infrastructure and since information is sent via X-road, the secure layer to exchange information.

 3. How did the initiative solve the problem and improve people’s lives?
The e-Business Register, one of the first in the world to use cross-border authentication and electronic signature, has an innovative approach by tackling the problematic from the entrepreneur’s perspective. An entrepreneur expects the communication with the government institutions to be easy, fast, secure and preferably through a single point of contact. The e-Business Register meets exactly the aforementioned expectations offering a secure single point of contact for entrepreneurs to communicate with the government. All the communication with the government through the Portal is 100% electronic, may it be to establish, report on or liquidate a company. Data on previous financial years is automatically pre-filled. New data is entered only once into set forms following easy procedures and directly checked by the system for possible mistakes, making the use of e-services easy and convenient. When doing business, knowing the background of partners is important. Thanks to the Visualized Business Register, background checks can be made fast, easily and displayed in a figurative form. The visualisation tool also helps to track the final beneficiary and is actively used by banks to detect money-laundering schemes and fight fraud. General data on companies is also available in the mobile version of the e-Business Register.

C. Execution and Implementation

 4. In which ways is the initiative creative and innovative?
The development of the Company Registration Portal finds its origins in the Coalition Agreement of 2003-2007. One of the goals of the aforementioned agreement was to simplify the business environment, including the establishment of a company. The Minister of Justice proposed to reach the goal by using technical means and a working group was formed under his aegis. The working group, formed in 2006, was responsible for the project from the beginning to the end - provision of a vision, finding solutions, coordination of the implementation, development – making the coordination of the project relatively easy. The Company Registration Portal was hence fully developed by the working group who met on a regular basis during a six month period. Both technical experts as well as experts with legal background from RIK and the Ministry of Justice participated in the working group. The vision and legislation were also introduced to and approved by other Estonian ministries. The Company Registration Portal went live on time in 2007. The law stipulates that data in the Business Register, including information on management and supervisory board members, is public. Hence, when developing the Visualized Business Register, there was no additional need for a strategy. The visualisation simply enables to view Business Register’s data in another form. Rather, it was a purely technical project, developed entirely in-house during a six month period by RIK, to respond to the request of banks who needed a tool to be able to better track the final beneficiaries and detect money-laundering schemes and fight fraud.After the formulation of the initial task and analysis, the XBRL Annual Reporting project took off with two parallel activities: drawing up of the procurement for development and application to apply for European Union funding. The development task already took into account the possibility of introducing the XBRL format. As a next step and in order to facilitate the implementation of the strategy, a committee at government level was formed. The work of the government committee, consisting of the representatives of different stakeholders, started at the end of 2008. The committee was responsible for coordinating the implementation of the strategy, setting deadlines and drawing up an action plan. The government committee met once a month and followed the agenda scrupulously, making necessary decisions at every meeting. Furthermore, two working groups, technical and taxonomy working groups, were also formed at the end of November 2008. The working groups were presided by project managers. Invitations to tenders were published at the beginning of 2009 and the development of the first of the three stages begun in mid-2009. The first milestone went live on the 1st of January 2010 as planned. The next two milestones also went live as planned, on the 1st of January 2011 and 2012 respectively. If the first two stages were financed by EU funds, the third one, further development, was financed by RIK’s own funds. Important aspects in the implementation of the strategy were also the collaboration established between the different working groups from the very beginning, the inclusion of different stakeholders and trainings offered to end users. Last but not least, a survey assessing whether the administrative burden and the amount of work for reporting obligors had decreased in 2010 compared to 2008 was conducted. At the beginning of 2012, the government committee concluded that the project had been fully and successfully implemented, submitted a final report to the Government and informed that the committee will finish its work in the current form.

 5. Who implemented the initiative and what is the size of the population affected by this initiative?
In addition to the Centre of Registers and Information Systems, the different stakeholders involved in the design and implementation of the e-Business Register’s various solutions were the Ministry of Justice of Estonia, Ministry of Finance of Estonia, Statistics Estonia, the Estonian Accounting Standards Board, Estonian Tax and Customs Board, The Estonian Board of Auditors, Bank of Estonia, Ministry Of Social Affairs, Network of Estonian Non-Profit Organisations, Ministry of Agriculture, Ministry of Economic Affairs and Communications and the Estonian Chamber of Commerce and Industry. While the XBRL portal was developed by a private company Inversion Software OÜ, the Company Registration Portal as well as the Visualized Business Register were developed in-house by the Centre of Registers and Information Systems.
 6. How was the strategy implemented and what resources were mobilized?
A five person development team and two legal experts from the Centre of Registers (RIK) and Information Systems and the Ministry of Justice worked on the Company Registration Portal project for half a year to ensure both that the necessary legislation as well as the technical solution would be completed on time. It was possible to work under such a tight schedule since there was a strong political will and the Business Register already had legal significance. Since the project was fully carried out by the personnel of RIK and the Ministry of Justice, the overall cost equalled the labour costs of the project. The exact labour costs can unfortunately not be isolated from RIK’s and Ministry of Justice overall labour costs but the estimated overall cost of the project reaches 120 000 euros plus hardware costs. The Visualized Business Register had initially no budget. To tackle the problem of financing, RIK organised a brainstorm. One of the solutions offered during the brainstorming foresaw the inclusion of a trainee who would be responsible for the development. On one hand, this solution helped to solve the zero budget problematic first faced with. On the other hand, this enabled RIK to offer the trainee a possibility to get hands-on on a real problematic and come up with and develop a technical solution for it. The development team of the Visualized Business Register hence consisted of only two experts of RIK, a trainee and a supervisor how guided the trainee in his work. The project was carried out during a six month period. The solution developed by the trainee, i.e. the Visualized Business Register, proved to be so successful that in addition to the banks, the solution was adopted more widely and made available to the public. Taking into account the labour costs associated with the project, the overall cost, funded from RIK’s own funds, is estimated to be around 10 000 euros plus hardware costs. The XBRL Annual Reporting project is to a great extent a European Union Structural Funds’ funded project. The overall cost of the XBRL Annual Reporting project reaches 682 400 euros, excluding human resources’ and system’s maintenance costs. The previous costs can unfortunately not be isolated from RIK’s overall labour and systems’ maintenance costs. The XBRL Annual Reporting project consisted of three stages, the first two of which were financed from European Union funds, 554 700 euros, and the third stage from RIK’s own funds, 127 700 euros.

 7. Who were the stakeholders involved in the design of the initiative and in its implementation?
The success of the e-Business Register largely lies on the following five outputs. Firstly, the introduction of the Company Registration Portal in 2007 that marked the fundamental change in how companies are established and how they communicate with the government. Already in the first year nearly a third of the newly founded companies were established through the Portal, confirming that fast, secure and convenient e-services are not only needed but also wanted by the entrepreneurs. On average, it takes between a few of hours and one to two working days to establish a company through the Portal. In 2009, a World Record of establishing a company in 18 minutes through the Portal was established. Secondly, the introduction of foreign ID acceptance in 2008. The Portal also accepts Portuguese, Belgian and Finnish eID-cards and Lithuanian Mobile-ID. Hence, citizens of these four countries can also establish a company in Estonia from the comfort of their home country through the Portal. Thirdly, the launch of the XBRL Annual Reporting System in 2010, enabling an entrepreneur to compile, submit and sign digitally annual reports in XBRL format and allowing imminent access to data, made the communication with government even less heavy and time-consuming and also simplified the everyday work of state officials. Fourthly, the launch of the Visualized Business Register in 2011 that makes it easier to obtain information on and understand the different relations between companies. Furthermore, the tool also enables to make enquiries directly from the e-Land Register or the Official Publication. The opportunity to view information from several different sources at once makes it an effective tool for tracking the final beneficiary, making background checks and prevent money-laundering. Fifthly, the launch of the third generation register process management system offering a backbone between the Business Register and Company Registration Portal and the reporting environment in 2013. The process of the new system follows the logic of submission of electronic documents. The integrated control mechanisms ensure data quality and integrity, working procedures are optimized and technical functions automatized, resulting in better, faster and more secure e-services. The management system has also interconnection with other state registers, e.g. Population Register, Land Register etc. Information is securely and automatically exchanged via the X-Road data exchange layer with other registers enabling the automatic update of certain data in the Business Register. The system automatically divides proceedings between the registrars to ensure equal workload between them.

 8. What were the most successful outputs and why was the initiative effective?
To ensure adaptive development and fast delivery given the time constraint, the Company Registration Portal was developed using agile development. The working group formed, including representatives of the Centre of Registers and Information Systems (RIK) and the Ministry of Justice, was responsible for ensuring the strategy be implemented on time, including monitoring the progress of the project on a regular basis. The working group reported directly to the Minister of Justice of Estonia. The progress in the development of the Visualized Business Register was monitored by the supervisor of the trainee responsible for the project. The supervisor, Head of Court Registers Department, reported directly to the Director of the Centre of Registers and Information Systems (RIK). Since the XBRL Annual Reporting project included more stakeholders, the monitoring of the implementation of the strategy was also carried out at different levels. The first level monitoring and evaluation was carried out by the two working groups, taxonomy and technical working groups, including representatives of different stakeholders. The aforementioned working groups reported to the government committee who met once a month during a four year period. The committee not only drew up the action plan and set the deadlines but also evaluated the progress made and followed the adopted agenda scrupulously. The government committee, in its own turn, reported to the Government and submitted a final report of the project at the beginning of 2012.

 9. What were the main obstacles encountered and how were they overcome?
When developing the e-Business Register, the main obstacles encountered were the following: Firstly, development of the Company Registration Portal induced the elimination of notaries from the procedure of establishing a company. To overcome the resistance encountered, negotiations with notaries were carried out and new functions, to cover the lost revenue, were proposed. Secondly, since the business environment also uses English and to involve foreign investors, the English language option had to be added to the Portal. Two problems were encountered: how to authenticate investors without an Estonian ID-card and ensure registrars can continue working in Estonian, since the working language of the Estonian court system is Estonian. To solve the problematic of mutually accepted secure authentication methods, a sub-project between Estonia and Portugal was created. The mutual acceptance of electronic signatures deemed far more difficult than eID authentication since this had never been done before. Through bilateral and national collaborations, technically and legally feasible solutions were found. The process took a year, during which other countries were added. To tackle the language issue, free text entry in the Portal was brought to a minimum and standard forms and templates in two languages were introduced. As a result, the registrars can continue working in Estonian, despite the fact data has been entered by users in English. Thirdly, there was no budget for the Visualized Business Register project. To tackle the problem of financing, RIK organised a brainstorm. As a result, a trainee who would be responsible for the development, was hired. Fourthly, the fundamental change of only submitting data electronically, the XBRL Annual Reporting System brought about. To persuade end-users of the efficiency of the new system, trainings were organised. Over 30 000 entrepreneurs, accountants, auditors were trained by RIK in collaboration with the Estonian Chamber of Commerce and Industry.

D. Impact and Sustainability

 10. What were the key benefits resulting from this initiative?
The e-Business Register’s project changed fundamentally how companies are established and communicate with the government in Estonia. The initiative has proved to be extremely beneficial both for the private as well as for the public sector mainly thanks to the following benefits: First and foremost, it significantly simplifies the lives of entrepreneurs. It enables to securely register a new company over the internet, change data in the business register, file and submit annual reports, liquidate a company and make detailed and visualized inquiries about other companies all in one place and over the internet. User satisfaction of the Company Registration Portal is over 90%. Secondly, the e-services are not only accessible from one place, but they are also very easy to use. Company registration or liquidation can be done 100% electronically in an easy step-by-step procedure needing no additional documentation nor a visit to the notary. The data on a company can also be amended electronically. Annual reports can easily be prepared, automatically checked by the system, audited by the auditor and submitted through the Company Registration Portal. Already in the first year into the launch of the Portal, 30% of the companies were established online, confirming that the new services had been very well received by the public. This percentage has been increasing ever since. In the first three quarters of 2014, 90% of the companies were established online. Since the law stipulates that annual reports must be submitted through the Portal in Estonia, nearly 100% of the annual reports are submitted through the system. According to an XBRL Annual Reporting satisfaction survey, over 85% of the respondents were satisfied with new taxonomy based report forms. Thirdly, the easy-to-use e-services save a lot of time and money for the entrepreneurs. Indeed, since all the procedures are 100% electronic, cutting out notaries from company registration and allowing automatic checks by the system to detect possible errors, the time spent on administrative tasks and reporting was considerably reduced. 60% of the respondents to a survey indicated that the time spent on reporting had decreased in 2010 compared to 2008. According to a survey conducted by Estonian Ministry of Finance, the system has helped to reduce annual private sector spending on reporting by € 4.5 million. Fourthly, the acceptance of foreign electronic signatures increased the number of potential users up to 20 million. In 2012, 29 companies, for which at least one of the founders was a foreign citizen of one of the four countries for which electronic signature is accepted, were founded through the Portal. In 2013 that number was 18 companies. Fifthly, the data quality improved drastically. Indeed, since data is inserted online into set forms, enabling the system to automatically check for mistakes and asking to correct the mistake directly if one was to be found, the quality of the data submitted improved with the introduction of the Company Registration Portal together with the XBRL Annual Reporting system. Data quality was even further improved thanks to the data exchange between different state registers, e.g. it became no longer possible to make mistakes when entering the names of the persons. The system automatically checks the data in real time. Last but not least, the overall administrative burden was substantially reduced. The founder(s) of a company and the reporting entity submit the data and figures required by the state only once in the agreed format and in one place. The data thus submitted is then promptly available and comparable. Thanks to the improved quality the number of warnings and fines issued every year to reporting entities for their reporting faults also decreased. As a result of the above mentioned, the proceeding times became more efficient and were shortened, less human resources were needed, since there was no longer a need to enter data manually, and paper files were eliminated saving archive space and on transportation. While the number of reporting entities has roughly doubled from 80 000 to 160 000 entities compared to the pre XBRL Annual Reporting System era, the human resources needed to control the reports have not changed.

 11. Did the initiative improve integrity and/or accountability in public service? (If applicable)
In terms of financial and technical sustainability, the e-Business Register is sustained from the budget of the Centre of Registers and Information Systems (RIK), constituted of RIK’s one funds, state financing and foreign funds. Inquiries to the Business Register on oneself are free of charge as is the viewing of a company’s B-card, general and tax arrears data and the verifying of business and entrepreneurship prohibitions of Estonian persons. The viewing of annual reports, statutes, personal and commercial pledge data is fee based, the fee being collected by RIK. To use the Visualized Business Register, a subscription agreement with RIK has to be concluded. However, all the data is free of charge to all the other state institutions. As a result, all the e-government systems are integrated with the Business Register and use the data directly from that register to validate companies’ data. RIK’s solutions have received worldwide recognition and also attracted other governments’ attention. RIK receives some 30 delegations each year to introduce our best-practices and is always open for any form of collaboration. At the beginning of 2013, RIK started a cooperation project with the Ministry of Commerce and Industry (MoCI) and the Information Technology Authority (ITA) of the Sultanate of Oman. The main goal of the project was to broaden and improve the range of online services offered and enhance the business processes related to company registration and licensing using best e-governance practices from Estonia, i.e. the Estonian e-Business Register as an example. Or in other words, make doing business and investing in Oman easy, transparent and efficient. After an initial three month process of mapping and reengineering, both countries proposed a development plan for an improved online One-shop-stop (OSS) and e-services. The OSS system is one of the first e-government initiatives that has been launched in the Sultanate of Oman. A new reengineered service is being developed during a two year project as of the beginning of 2014 by an Estonian development company Nortal OÜ. RIK still participates in the project through a collaboration with Nortal OÜ. Our experts consult and share knowledge on best-practices applied to the Estonian e-Business Register to Nortal and the Ministry of Commerce and Industry whenever needed. RIK’s experts offer consultations both onsite in the Sultanate of Oman as well as remotely from Estonia. This project is an excellent example of fruitful cooperation between two countries having similar objectives - a better environment for SMEs via e-governance.

 12. Were special measures put in place to ensure that the initiative benefits women and girls and improves the situation of the poorest and most vulnerable? (If applicable)
The main lesson learned is that the bigger picture, the whole-of-government view to simplify the lives of entrepreneurs in present context, should be kept in mind from the beginning of a project. At the same time, it should not be forgotten that the overall goal can only be gained step by step by reaching the intermediate objectives that are as important as the overall goal. The final goal could not have been reached without the following: Firstly, one should not be taken aback from obstacles and setbacks. Rather, they should be taken as an opportunity to find other innovative solutions. As the Visualized Business Register project proved, it is also possible to develop a very efficient tool with practically no budget at all. Furthermore, the inclusion of students also has another non quantifiable nevertheless a fundamental benefit. It gives the students the possibility to gain experience and link theory with practice. Secondly, the inclusion of various stakeholders is of vital importance in the successful implementation of a strategy. Despite the fact it will be more difficult to reach agreements when more parties are involved, it is the one and right way to bring about a change. The earlier the stakeholders are involved in the project, the more easily they accept or even welcome the change. Thirdly, if the launch of a new system is the basis of a fundamental change, like in the case of the XBRL Annual Reporting System, communication and trainings to end-users are crucial. The better the end-users understand how the new system operates and how it will simply their everyday (working) lives, the more easily they accept the change to be implemented. Fourthly, if a project is a priority having political support, it is possible to implement changes, including legal ones, in a very short time span. Likewise, it is very difficult to implement cross-border solutions without political support. Fifthly, good data quality is of vital importance. It is not possible to create secure and innovative solutions with poor quality data. Last but not least, a system ought never to be deemed ready. Meaning, once the project has been finalised and system gone live, the bigger picture view should be reminded of. On one hand, an already in place system needs further development and constant maintenance to avoid legacy systems. On the other hand, needs and possibilities for new developments may also arise. New features have been added year after year to the e-Business Register. Lastly, after the launch of the XBRL Annual Reporting System, it was seen that the lives of SMEs could further be simplified by proposing an accounting software in the Company Registration Portal. Since April 2014, an entrepreneur has the possibility to do everyday accounting in the e-Financials Portal where it is also possible to import data to annual report and send it to the register. The e-Financials system went live in April 2014 and is currently only available in Estonian. The English language option should become available as of 2015.

Contact Information

Institution Name:   Center of Registers and Information Systems
Institution Type:   Government Agency  
Contact Person:   Kätlin Kattai
Title:   Head of International Relations  
Telephone/ Fax:   +3726636337
Institution's / Project's Website:  
E-mail:   katlin.kattai@just.ee  
Address:   Lõkke str 4
Postal Code:   19081
City:   Tallinn

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