The termination of a registered association does not consist only of filing an application for the deletion of the entity from the KRS. In order to terminate the entity, a liquidation process must be carried out. It has been described below.
Liquidation of an association – the method of dissolution of an entity
Registered association – similar to a foundation or even a limited liability company – must undergo a liquidation process in order to terminate its activities. The body entitled to decide on the dissolution and liquidation of the entity is the General Meeting of Members of the association. The process of liquidation of the association should be finalised within one year of its formal opening.
The possibility to open a liquidation (unlike the liquidation of a foundation) is not conditioned by the occurrence of any ‘special’ circumstance. The dissolution of an association can therefore occur at any time when the General Meeting of Members passes a resolution on this matter.
As in the case of foundations, the assets of the association after its liquidation will not return to its founders. The assets remaining after the liquidation activities are allocated to a designated social purpose – i.e., for example, to another association or foundation carrying out activities of a similar kind.
Opening of the liquidation of the association – beginning
The liquidation of the association starts by the adoption of a resolution on dissolving the association by the General Meeting of Members. At the meeting starting the liquidation of the entity, the following resolutions should be adopted:
The next step after convening a meeting on opening the liquidation of an association is to file an appropriate application to the National Court Register. The opening of the liquidation shall be registered through PRS (Portal Rejestrów Sądowych) or by paper notification (the paper notification applies only to associations which do not convene any business activities). The deadline for reporting the liquidation is 7 days from the date of adoption of the indicated resolutions. The notification shall be made by the liquidator.
Liquidator – who is it?
A liquidator is a person (or persons) appointed by the General Meeting of Members of the association to carry out all the actual actions necessary to close down the activity of the entity. The role of the liquidator will therefore be to terminate concluded contracts, pay and collect debts. The liquidator will also represent the association for the duration of the liquidation.
Opening of liquidation of an association – what next?
The opening of liquidation allows for the factual steps to be taken to end the entity’s activity.
One of the first actions to be taken in the course of liquidation operations is the preparation by the accountants of a financial statement for the period from the beginning of the financial year to the day preceding the opening of liquidation. This is the so-called liquidation opening balance sheet.
When the relevant entry on the opening of liquidation is made in the National Court Register, the association must amend the information in the CRBO within 14 days. The notification in the CRBR is made by the liquidator.
Once an entry has been made in the National Court Register, a public announcement of the opening of the association’s liquidation must also be made. This may take the form of an announcement on a website, in the press or, for example, at the association’s registered office. The announcement should contain information about the liquidation being carried out – including the date until which interested persons may submit their claims against the entity.
While waiting for the date indicated in the notice, the liquidators should terminate any contracts to which the association is a party. This is therefore the moment to terminate any employment contracts or premises leases.
After the deadline to come forward with claims against the association, the entity’s assets should be donated to an established social purpose.
Completion of the liquidation of the association
In order to remove the association from the National Court Register, it is necessary to formally complete the liquidation of the association.
One of the necessary steps for this purpose will be the preparation of the so called liquidation balance sheet – that is the financial statement for the period from the opening of the liquidation until the day before the transfer of the assets to the chosen social purpose. In addition to the liquidation balance sheet (financial statement), it will also be necessary for the liquidator to prepare a liquidation report – in which all actions taken to finalise the liquidation of the association should be described.
The last activity preceding the application for the deletion of the association from the National Court Register will be the holding of a meeting to conclude the liquidation of the association.
The General Meeting of Members should adopt the following resolutions at this meeting:
The last action taken by the liquidator is the submission of an application for the deletion of the association from the KRS.
Decision to wind up a business sometimes appears to be necessary. But how do you dissolve a company? What is a liquidation? What does it involve? How is it carried out? The answers to these questions can be found below.
The decision to close a liquidation involves a number of formalities necessary to finalise it. Compared to the liquidation of a company, the process is de-formalised – but requires time, funds and an action plan.
