When does the so-called “closure of a company or termination of its activity” occur?
The liquidation of a limited liability company (LLC) is the process of terminating its activity, settling its liabilities, and distributing the remaining property among the partners.
Reasons for the Liquidation of an Ltd.
The liquidation of an OOD can occur for various reasons, including:
- Decision of the partners: The most common case is the voluntary decision of the partners to terminate the company’s activity;
- Expiration of term: If the LLC was created for a specific term and that term has expired;
- Achieving the purpose: If the company was created for a specific purpose and it has been fulfilled;
- Violation of law: When the company operates in violation of the law;
- Lack of registered manager: When the company has not had a registered manager for three months.
Basic Steps in the Liquidation Process
The liquidation of an OOD includes the following main steps:
- Decision on liquidation: The general meeting of partners must take a formal decision to liquidate the company.
- Appointment of a liquidator: The next step is the appointment of a liquidator, who may be a partner or an external party. The liquidator is responsible for managing the company during liquidation and settling all its liabilities.
- Notification of creditors: The liquidator is obliged to notify the company’s creditors of the liquidation and publish an invitation to them in the Commercial Register, setting a deadline for submitting their claims.
- Termination of contracts and settlement of liabilities: The liquidator must terminate the company’s current contracts and settle all liabilities, including paying debts to creditors, wages, and other obligations.
- Distribution of property: After settling all obligations, the remaining property is distributed among the partners according to their shares.
- Closing accounts and final reporting: The liquidator must close all the company’s bank accounts and submit the final financial statements.
- Deletion from the Commercial Register: The final step is submitting an application for the company to be deleted from the Commercial Register, after which the company is considered dissolved.
What Are the Legal Consequences of Declaring Liquidation?
From the moment liquidation is declared, the company can only perform actions necessary for the liquidation process itself. This means the company cannot take on new commercial commitments or carry out activities unrelated to its termination. Control bodies continue to function but with limited powers.
Given the legal deadlines and the specific documents that must be prepared and submitted to the Commercial Register, legal assistance is essential to ensure the proper course of the process and compliance with all legal requirements.
If you have questions or need legal assistance in the field of corporate law, feel free to contact us for a consultation.
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