In life it often happens that we decide to start a business, but by coincidence the idea or project does not materialize, even though we have already registered a company. In other cases, we set up a company for a certain period of time, for example for the duration of a project, after which its existence in the legal world has to be terminated. It is also possible that the company we opened years ago was then working regularly and intensively, but is now defunct and we are no longer interested in maintaining it. The practice is varied in terms of different life and legal situations as to the reasons for opening and terminating a company registration.
In general, the legal registration of a company in the Commercial Register is not a difficult process and can be completed within even a few days. On the other hand, the winding up of a company or, to put it “legally”, the liquidation of a trading company, goes through several mandatory legal phases and is distinguished as a relatively time-consuming procedure. On average, the process of liquidating a company takes 8 to 10 months, and in special cases it may take longer. Circumstances may become more complicated during the process, which is why it is advisable in all cases to turn to a specialist to be entrusted with the liquidation of your company.
ФHE LIQUIDATION PROCEEDINGS
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1.1. Grounds for dissolution of a company
As we pointed out above, the reasons for proceeding with the closure of a company can be manifold. The law generally distinguishes them into two types – voluntary and compulsory liquidation. As can be seen from the name, voluntary liquidation is resorted to:
- by a resolution of the sole owner of the capital, respectively by a resolution of the general meeting of the shareholders or of the shareholders of the company, adopted by the appropriate majority;
- when the term specified in the Memorandum of Association or the Memorandum of Incorporation expires or a condition specified therein comes to pass, and
- in the event of a merger and amalgamation into a public limited company or other limited liability company.
On the other hand, the law provides for compulsory liquidation of a company in expressly defined cases, for example when the company is declared bankrupt, as well as by a decision of the district court in the cases provided for.
Regarding the dissolution of a sole proprietorship, it should be borne in mind that if the capital is held by a single individual, the company is dissolved on his death unless otherwise provided or the heirs request to continue the business. Similarly, where the capital is held by a body corporate, the company must be wound up on its dissolution.
We advise to analyse the state of the company at the time of liquidation – whether the company is active or not, whether it has employees under an employment contract, what commercial relations it is in – before starting the voluntary liquidation procedure. It is particularly important to examine the property situation of the trader, whether there are any debts or claims on creditors and debtors and what are their number, type and amount.
1.2. Registration of the dissolution of a company
In order to register the termination of the trader in the Commercial Register, it is necessary to notify the competent territorial directorate of the NRA of our intention, respectively the occurrence of the relevant legal reason. After the relevant checks have been carried out, the TD of the NRA issues a certificate of notification. This certificate is one of the mandatory documents to be attached to the application to the Commercial Register announcing the decision to dissolve the company.
The decision on the dissolution of the company has explicit legal requisites, the main of which concern the determination of the liquidation period (minimum legal period of 6 months) and the appointment of a liquidator, who is most often the company’s manager.
If the company is registered for VAT, it is necessary, after the entry of the dissolution in the Commercial Register, to carry out a VAT deregistration procedure with the NRA.
- Actual liquidation proceedings
The main role here is played by the appointed liquidator, who has the functions of the company’s manager for the duration of the liquidation until the company is deleted from the Commercial Register. His rights and duties include the following:
- to invite the company’s creditors to submit their claims,
- to complete the current transactions,
- to collect the receivables,
- to convert the remaining property into money,
- to satisfy creditors,
- to draw up a balance sheet at the time of the winding up of the company and a report explaining the balance sheet, and at the end of each year it shall make an annual closure and submit an annual financial statement and an annual report on its activities to the governing body.
The liquidator may conclude new transactions only if the liquidation so requires.
The liquidator should terminate the employment relationship with the employees, if any, and hand over to the National Social Insurance Institution all employment books, certificates of employment/insurance period and insurance income issued and other documents kept by the insurers on the basis of which the insurance period and/or insurance income and/or category of work can be established. For the latter, the Social Insurance Institution shall issue a certificate, which must be submitted to the Trade Register with the application for deletion of the trader.
The assets remaining after the satisfaction of creditors shall be distributed among the shareholders.
3. Company deletion
When all debts have been settled and the remainder of the property has been distributed, the liquidator shall request the company’s cancellation by filing an application in the form and accompanying documents with the Commercial Register, which may be:
- Certificate from the Social Insurance Institution under Art. 10 of the CSR;
- the balance sheet at the date of completion of the liquidation with an explanatory report,
- annual report of the liquidator,
- decision to discharge the liquidator,
- declaration under Article 273 of the Commercial Law, etc.
If everything is in order document-wise, the application is examined and entered by the registration officials in the Trade Register within a few days, which completes the procedure for closing the trader.
Fees and expenses (on company closure)
During the liquidation proceedings, various fees and expenses related to the liquidation proceedings are collected, including (but not limited to):
- Commercial Register fees,
- notary fees for certification of documents,
- accountant and lawyer fees.
Please note that when applications are prepared and submitted electronically by an attorney with a qualified electronic signature, you save significant time and pay lower state fees.
Due to the specifics of each case, the legal requirements may be different. In view of this, we advise you to consult a lawyer who will consider your case from every legal perspective.
The lawyers of Concordia Law Firm are available to respond to inquiries by phone +359 878583010, e-mail, or through the contact form, as well as for comprehensive assistance in connection with the closure (liquidation) of your company.
