How to dissolve a limited liability company?
In practice, in vast majority of cases, a company is dissolved by a resolution of its shareholders recorded by a notary public.
The dissolution of a company follows liquidation. Liquidation is a mandatory procedure regulated by law – and it takes months to finish. In practice, this means that several months, and sometimes even a year or more, pass between the decision to liquidate the company and its actual deletion from the National Court Register.
Opening of liquidation of a limited liability company – when does it occur?
Liquidation is opened (i.e. commences) when a relevant resolution is adopted at a shareholders’ meeting held before a notary public. Alternatively – for companies incorporated through the S24 system, resolutions are passed in the S24 system itself.
The following resolutions shall be passed at the meeting:
- on the dissolution of the company and opening of liquidation
- on the appointment of a liquidator (who may be awarded a specific remuneration) – most often the liquidator is one of the members of the management board of the liquidated company, although there is no legal obligation to do so, and the function may also be performed by a person from outside the group of shareholders or the management board
- on the manner of representation of the company (when several liquidators have been appointed, they may represent the company jointly or separately).
Once the resolutions have been passed, the opening of the liquidation is reported through the Court Register Portal – Portal Rejestrów Sądowych (for “classic” companies) or through the S24 system (for companies established in this system), respectively. The deadline for reporting the liquidation is 7 days from the adoption of the resolutions. During this time, a change of information about the entity must also be reported to the Tax Office (on form NIP-8).
In the initial phase of liquidation, the accountants prepare financial statements for the period from the beginning of the financial year to the day preceding the day of liquidation and the so-called liquidation opening balance sheet. In turn, the shareholders approve these documents by resolution (this time without the requirement of the form of a notarial deed). The financial statements (together with the resolution approving them) are to be reported to the Repository of Financial Documents – Repozytorium Dokumentów Finansowych. The opening balance sheet of the liquidation will form the basis for the preparation of the next financial statements.
Another procedural requirement will be the passing of resolutions approving the management report on the company’s activities (if the company is not exempted from this obligation) and discharging the members of the management board.
Liquidator – who is it?
A liquidator is a person appointed by the company’s shareholders to effectively close down the company’s business and to represent it for the duration of the liquidation. Within the scope of their competences, they may be regarded as the equivalent of a member of the management board for the time of liquidation of the company. Thus, the role of the liquidator will be to terminate contracts concluded by the company, pay debts and collect receivables. The liquidator will also be the person representing the company. A member (or members) of the board of directors is usually appointed as liquidator, although there is no legal obligation to do so.
Entry of the opening of liquidation in the KRS – what next?
After opening of the company’s liquidation is entered into the National Court Register, a 14-day period starts for the report of changes (of the company’s name – the indication “in liquidation” should be added and of the representative person – from the management board to the liquidator) to the Central Register of Beneficial Owners. The notification to the CRBO is made by the liquidator.
At this point, the liquidation of the company must also be announced in the Court and Commercial Gazette – Monitor Sądowy i Gospodarczy. The announcement includes a summons to the company’s creditors to report their claims within 3 months from the date of the announcement.
Six months after the announcement of the liquidation in the MSiG, the remaining assets of the company after payment of creditors are distributed to the shareholders and the liquidation itself may be completed.
Completion of liquidation – what does it look like?
The completion of liquidation consists of a number of steps. The accountants should prepare a financial report for the period from the date of the opening of the liquidation to the date prior to the distribution of the assets by the shareholders – the so-called liquidation report. This document is subject to filing with the Repository of Financial Documents (together with an approval resolution).
After the distribution of assets, the shareholders of the company also adopt the following resolutions:
- on granting a discharge to the liquidator
- on approval of the liquidator’s report on the company’s activities
- on approval of the liquidation report
- on approval of the distribution of the company’s assets to the shareholders
- on dismissal the liquidator from his function
- on confirmation of completion of the company’s liquidation
- on appointment of a custodian of the company’s documents and books
The last step needed to dissolve the company is filing an application for deletion of the company from the National Court Register through the Court Register Portal or the S24 system.
What about liquidation of a company with debts?
In the course of liquidation, a situation may occur in which the company’s assets are not sufficient to pay off its debts. However, the law does not prohibit a deletion of a company with debts from the National Court Register. It is only the deletion of a company with assets that is prohibited – this, in practice, means the non-completion of liquidation activities.
In such a case, despite the deletion of the company from the register, the debt remains. Pursuant to Article 299 of the Companies Act – the members of the company’s management board or liquidators then become liable for the company’s debts.
Aleksandra Kostrzewa
attorney trainee