15.06.2022

HOW IS THE LIQUIDATION OF A COMPANY CARRIED OUT?

A company can be terminated for many different reasons. This can happen, for example, when it is declared bankrupt. Or by court decision in strictly defined by law cases. Termination may be on different grounds, depending on the type of company. For example, a limited liability company may be terminated due to the expiration of the company contract, by decision of the partners, taken by a majority of 3/4 of the capital, in case of merger and acquisition. A sole proprietorship Ltd. is terminated with the death of a natural person, if he owns the capital, unless the heirs want to continue the activity. A joint-stock company is terminated by a decision of the general meeting, by a court decision, if it does illegal things, if the net value of the company's property falls below the amount of the subscribed capital, etc.

Here again, it is important to note that after the dissolution of the company in question, liquidation must take place.

According to the Commercial Act (CA), the term in which the liquidation must be completed is determined by the general meeting of the limited liability company and the joint stock company, and for other companies - by unanimous decision of the general partners. Such a term shall also be determined by the registration official at the Registry Agency when he appoints liquidators. If necessary, the specified period may be extended. The liquidators shall be entered in the commercial register, where notarized consents with samples of their signatures shall be submitted. They have the same responsibility for their liquidation activities as the managers and other executive bodies of the companies.

The liquidators are obliged, by announcing the termination of the company, to invite its creditors to present their claims. The invitation is sent in writing to the known creditors and is announced in the commercial register. The liquidators are obliged to notify the National Revenue Agency of the commencement of the liquidation.

The CA also obliges them to complete current transactions, collect receivables, turn the remaining assets into money and satisfy creditors. They may enter into new transactions only if required by the liquidation.

The liquidators may, in agreement with the partners, respectively with the shareholders and creditors, transfer to them individual objects of the liquidation property, provided that this does not infringe the rights of the other partners and creditors. The CA explicitly states that the liquidator is obliged to exercise his powers with the care of a good trader.

It is important to note that they represent the company and have the rights and obligations of its executive body. They compile a balance sheet at the time of the dissolution of the company and a report that clarifies the balance sheet. At the end of each year, they carry out an annual closure and submit an annual financial report and an annual report on their activities to the governing body. The governing body shall decide on the adoption of the opening balance sheet, the annual closure and the discharge of the liquidators.

The property that remains after the satisfaction of the creditors is distributed among the partners, respectively among the shareholders. However, this distribution takes place only if six months have elapsed since the day on which the invitation to creditors was published in the commercial register. The governing body of the company may, after satisfying the creditors, write off the receivables of the company, which are uncollectible. The decision shall be taken by a simple majority.

When all obligations are settled and the rest of the property is distributed, the liquidators want to delete the company. If it is later determined that further liquidation actions are required, the Registrar of the Registry Agency shall, at the request of the person concerned, appoint the current or other liquidators.