The regular liquidation process begins with the adoption of an appropriate resolution to dissolve the company, initiated before formal registration in the court register. When the liquidation resolution is adopted by the assembly, the company itself conducts the liquidation process, generally without the involvement of the court.
The main advantage of regular liquidation is that after the company is deleted from the register, shareholders are typically not liable for any remaining obligations of the company.
The liquidation resolution should include:
- The company name and headquarters
- Confirmation that the resolution was adopted by the assembly
- The reason for the dissolution
- The deadline for creditors to file claims
- The name, surname, and residence or company name and headquarters of the liquidator
Once the assembly adopts the liquidation resolution, it is sent to the registration authority to record the start of liquidation in the register. During the liquidation process, the company continues to be governed by the provisions of the Companies Act (ZGD-1).
Liquidator
The liquidator has the same powers to represent and manage the company in liquidation as the company’s management unless otherwise specified in the liquidation resolution. The assembly that appointed the liquidator can dismiss them at any time without explanation.
The liquidator is materially and criminally responsible for their work. After the company is removed from the register, the liquidator’s actions cannot be contested, but they may be required to compensate for any damages.
A liquidator, who takes over the tasks of the previous management, can also be an external (professional) liquidation firm.
Once the liquidation process begins, the liquidator represents the company and:
- Prepares the initial liquidation balance sheet
- Concludes ongoing business
- Pays off creditors’ claims
- Issues a public notice for creditors to submit their claims within a period of no less than 30 days from the date of publication
- May continue business operations by entering into new contracts, based on the consent of the body that adopted the liquidation resolution
- Collects the company’s receivables
- Liquidates (sells) the liquidation assets if necessary to pay creditors
Creditors’ claims against the company in liquidation
Creditors must file their claims against the company in liquidation within the period specified by the assembly in the liquidation resolution. The liquidator must ensure adequate security for claims that have not yet matured and known claims that the creditor has not filed, if necessary.
If the liquidator finds that the company’s assets are insufficient to fully settle all creditors’ claims with statutory interest, they must immediately halt the liquidation process. Additionally, the liquidator must propose the initiation of bankruptcy proceedings.
Before considering liquidation, the company/shareholders should review all legal, tax, and financial implications of such a process.
Shareholders can decide to continue the company’s operations at the assembly before the distribution of assets among shareholders begins, with at least a three-quarters majority of the represented share capital. In this case, the liquidator proposes the deletion of the liquidation entry from the register and submits the assembly’s resolution with the proposal.
Conclusion of company liquidation
After fully settling obligations, the company’s liquidation can be concluded. Business books, accounting documentation, and liquidation process documents must be stored by one of the shareholders designated by the liquidator. Creditors and shareholders have the right to inspect these documents for three years after the liquidation process ends.
We recommend consulting our team of experts at Unija Consulting before deciding on liquidation or company closure. They will help you find the right solution for your company.
Contact us via this LINK to book a consultation with a tax expert.
