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.
Liquidation of a foundation – the process of dissolving an entity
The Act on Foundations introduces an obligation for foundations to carry out a liquidation process in order to terminate its activity. However, with regard to the entire process of closing down the entity, it refers to its statutes. Therefore, the information on body authorised to decide on the foundation’s dissolution will be included in the foundations statute. The liquidation of a foundation must be finalised within one year of its opening.
The possibility to start the foundation’s liquidation depends on the occurrence of one of the following circumstances: accomplishment of the goal for which the foundation was established (e.g. construction of a specific building, collection of a specific amount of money – provided that this goal is specifically indicated in the statutes) or exhaustion of the foundation’s assets.
Unlike the liquidation of a company (and similarly to the liquidation of an association), the assets of a foundation after liquidation will not revert to its founders. In the case of a foundation, the assets remaining after the liquidation activities are allocated to a designated social purpose.
Opening of a foundation’s liquidation – when does it occur?
The liquidation of a foundation commences when an appropriate resolution is adopted by the authority authorised to do so. The body competent to adopt a resolution to open liquidation is indicated in the foundation’s statutes. Usually this body will be, for example, the Foundation Council, the Founders’ Assembly or the Foundation Board.
During the meeting opening the liquidation, the following resolutions are adopted:
Once the indicated resolutions have been passed, the opening (commencement) of the liquidation shall be reported through PRS (Portal Rejestrów Sądowych) or by paper filing (paper filing is possible only in the case of foundations which do not convene business activities). The deadline for reporting the opening of liquidation is 7 days from the date of the resolutions. The notification is made by the liquidator.
Foundation liquidator – who is it?
A liquidator is a person (or persons) appointed by the authorised body of the foundation to carry out all the actions necessary to close down the foundation’s activities. Their role will therefore be to terminate concluded contracts, pay and collect debts. The liquidator will also represent the foundation for the duration of the liquidation.
Opening of a foundation’s liquidation – what next?
Convening of an meeting on the opening of liquidation of a foundation makes it possible to take factual action to dissolve the foundation.
The first step after convening of a meeting on the opening of the foundation’s liquidation will be drawing up of a financial statement by the accountants for the period from the beginning of the financial year to the day before the opening of the liquidation. This is known as the opening balance sheet of the liquidation.
Once the opening of the liquidation has been registered with the National Court Register itself, the foundation must amend the information in the CRBO. The notification in the CRBO is made by the liquidator within 14 days of the entry of the opening of the liquidation in the KRS.
A public announcement of an opening of a liquidation of the foundation must also be made at that time. Such an announcement may take form of a notice on a website, in the press or, for example, at the foundation’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 foundation.
At the same time, while waiting for the date indicated in the announcement to pass, the liquidators should terminate any contracts to which the foundation is a party. This is, therefore, the moment to terminate any employment contracts or premises lease agreements.
After the expiry of the deadline for submitting claims, the foundation’s assets should be donated to an agreed social purpose.
Completion of the foundation’s liquidation
The formal completion of the liquidation allows the entity to be deleted from the National Court Register.
For this purpose, the accountants should prepare the so-called liquidation balance sheet – that is, a financial statement for the period from the opening of the liquidation until the day preceding the transfer of the assets to the chosen social purpose. The liquidator prepares the liquidation report – in which he will describe all the actions taken to finalise the liquidation.
The final step will be to convene a meeting of the competent body and adopt resolutions to complete the liquidation. If the sole body of the foundation was the management board – this meeting is conducted by the liquidator.
The following resolutions are adopted at the meeting:
The last step necessary to dissolve the foundation is filing an application to delete the foundation from the National Court Register. Such an application is submitted by the liquidator.
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.
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.
