Closing down a limited liability company is a complicated process that requires following strict rules and conducting a multi-stage liquidation. While it may be relatively straightforward to establish a company, terminating its activity is a matter that must be undertaken with caution.
When a limited liability company can be liquidated?
There are no strictly defined conditions that automatically lead to the need to liquidate a limited liability company. Nevertheless, certain factors can be identified that may result in the termination of the existence of this entity. These include:
- reasons specified in the articles of association,
- a resolution of the shareholders to dissolve the company or to transfer the entity’s headquarters abroad, confirmed by a protocol prepared by a notary public,
- a resolution of the shareholders to dissolve the company approved by all shareholders through a qualified, electronic, trusted or personal signature,
- declaration of bankruptcy of the company.
How to liquidate a limited liability company?
The dissolution of a limited liability company involves its removal from the KRS register of entrepreneurs. With the formal completion of the liquidation process, all legal relations that existed between the company and other companies or investors cease. Along with this, the company’s liabilities and debts cease, which in this phase of liquidation should have already been realized and the funds distributed. There are several ways to remove a company from the KRS, depending on the economic and ownership situation of the company. It is possible to conduct liquidation proceedings (often the preferred solution), as well as deletion without liquidation or after declaring bankruptcy. In principle, dissolution by conducting a liquidation process of the company should apply to companies that are financially liquid and have sufficient funds to cover the costs associated with the work of liquidators.
Stage I
1. Opening liquidation of a limited liability company
Under the provisions of the Commercial Companies Code, one of the legal ways to open the liquidation process is to pass a resolution to that effect. This resolution should be included in the minutes in the form of a notarial deed. It is necessary to organize a meeting of shareholders, notifying each of them by registered mail at least 14 days before the scheduled meeting. The minutes must include an attendance list, be signed by the chairman and the recorder, and indicate the number of votes cast for each resolution. From now on, the company shall operate under a name containing the additional term “in liquidation.”
2. Appointment of liquidators
If is up to the shareholders to choose a liquidator who will guarantee the proper conduct of the process. The person acting as liquidator must have full legal capacity. In addition, he or she must not be charged with a final judgment for the offenses specified in Article 18 § 2 of the Commercial Companies Code. It is up to the shareholders to choose a liquidator who will guarantee the proper conduct of the process. In the case of the statutory model, liquidators often become members of the board of directors, but this does not involve amending the articles of association.
3. Notification to the register
The responsibility of the liquidator of a limited liability company includes reporting the opening of liquidation to the KRS register. As of July 2021, the only acceptable means of submitting such a request is to use the platform provided by the Ministry of Justice – PRS.
In order for the document to be successfully processed, it is necessary to include several attachments, such as:
- CREWAN number of the notarial deed containing the resolution to open liquidation,
- declarations of the liquidators agreeing to perform this function, and a
- a list of delivery addresses for all liquidators.
4. Announcement in the Court and Economic Monitor (MSiG)
Stage one of the liquidation of a limited liability company ends with the publication of an appropriate announcement in the MSiG by the liquidators. This announcement calls for creditors to file claims against the company.
Stage II
1. preparation of the liquidation balance sheet
Liquidators needs to prepare an opening balance sheet for liquidation, showing the current state of the company. In the case of assets, it is necessary to value them according to current market principles, such as real estate, machinery or electronic equipment. In the liability category, it is necessary to combine all the company’s capitals and present a single monetary value. This process is crucial for satisfying potential claims of creditors. If the company has no debts, the opening balance sheet can be used to distribute assets among the shareholders.
2. Terminate current business and liquidate the company’s assets
At this stage, all liabilities must be settled, debts must be paid, and all administrative, judicial and enforcement proceedings must be completed. Otherwise, deletion of the company from the KRS is not possible, and the application filed will be rejected as premature. Liquidators must also see to the liquidation of the company’s assets, that is, the conversion of fixed assets into cash. The purpose of this operation is to facilitate the payment of creditors and the subsequent distribution of assets to shareholders.
Stage III
The final stage of the company’s liquidation process involves the preparation of reports for the period before the opening of liquidation, liquidation (as of the day before the distribution of assets) and standard financial statements covering the entire liquidation period. It is also required to attach accounting documents and place them in the Financial Documents Repository of the National Court Register. The liquidators should hold a final shareholders’ meeting to adopt the necessary resolutions.
SKLAW comprehensively supports Polish and foreign entrepreneurs in the liquidation of a limited liability company in Poland. We provide an individual approach to the entrepreneur’s needs and comprehensive services in the process of liquidation of a limited liability company.