26.09.2022

HOW IS THE LIQUIDATION OF A COMPANY CARRIED OUT?

A company can be dissolved for many different reasons. This can happen, for example, when it is declared bankrupt. Or by court decision in cases strictly defined by law. Termination can also be on different grounds, depending on the type of commercial company. For example, a limited liability company (LLC) can be dissolved due to the expiration of the partnership agreement, by a decision of the partners, taken by a majority of 3/4 of the capital, in the case of mergers and acquisitions. A one-person limited liability company is terminated by the death of an individual, if he owns the capital, unless the heirs wish 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 registered capital, etc.

And here it is important to note that after the termination of the relevant company, it must be liquidated.

According to the Commercial Law, 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 commercial companies - by a unanimous decision of the unlimited partners. Such a term is also determined by the registration official at the Registration Agency when he appoints liquidators. If necessary, the specified period can be extended. The liquidators are entered in the commercial register, where notarized consents with samples of their signatures are presented. They bear the same responsibility for their liquidation activities as managers and other executive bodies of commercial companies.

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

Commercial law also obliges them to complete ongoing transactions, collect receivables, convert remaining assets into cash, and satisfy creditors. They can enter into new transactions only if this is required by the liquidation.

The liquidators may, in agreement with the partners, respectively with the shareholders and creditors, transfer to them separate objects from the liquidation property, if this does not damage the rights of the other partners and creditors. The Commercial Law expressly states that the liquidator must exercise his powers with the care of a good merchant.

It is important to note that they represent the company and have the rights and duties of its executive body. They draw up a balance sheet at the time of dissolution of the company and a report that explains the balance sheet. At the end of each year, they perform an annual closing and submit an annual financial statement and an annual report on their activities to the governing body. The governing body decides on the acceptance of the opening balance sheet, the annual closing and the discharge of liability of the liquidators.

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

When all debts are settled and the rest of the property is distributed, the liquidators ask for the company to be wound up. If it is later found that further action is necessary for the liquidation, the registration officer at the Registration Agency shall, at the request of the interested party, appoint the previous or other liquidators.