Dissolution of a Limited Liability Company (LLC)
Dissolution and Liquidation of Companies Registered in the National Court Register
In this article, we will introduce you to the process of dissolving and liquidating commercial law companies registered in the National Court Register (KRS), using a limited liability company (LLC) as an example.
When Can a Limited Liability Company Be Dissolved?
- According to current regulations, a company may be dissolved due to:
- reasons provided for in the company's articles of association;
- a resolution by shareholders to dissolve the company or relocate its headquarters abroad, documented by a notarial protocol, unless the relocation is to another member state of the European Union or a party to the European Economic Area Agreement, and the law of that state allows it;
- for a company established using a template contract, a resolution by shareholders to dissolve the company, signed by all shareholders with a qualified electronic signature, trusted signature, or personal signature;
- the company’s declaration of bankruptcy;
- other reasons provided for by law.
Step-by-Step Procedure for the Liquidation of a Limited Liability Company
The liquidation of an LLC is finalized by removing it from the National Court Register (KRS).
However, the removal of the company must be preceded by the so-called "opening of liquidation," which occurs, for example, when shareholders pass a resolution to dissolve the company.
During the liquidation process, the company operates under the name with the added designation "in liquidation."
Example
Let’s assume the company’s previous name was:
ABC LLC
Upon the resolution to open liquidation, the company will operate under the name:
ABC LLC in liquidation
During the liquidation process, the company retains its legal personality.
When passing the resolution to liquidate the company, shareholders should appoint liquidators, who are typically the existing members of the management board. Liquidators have the same rights as the management board, including the right to represent the company.
The opening of the company’s liquidation must be reported to the registration court, providing the names of the liquidators and the method of representing the company, even if it changes.
Along with the application to the court to register the liquidation in the KRS, the company must submit a request to the Court and Economic Monitor (MSiG) to publish an announcement of the company’s dissolution and the opening of liquidation. This is also a call to creditors to submit their claims within three months of the announcement’s publication.
Furthermore, liquidators must prepare an opening balance sheet for the liquidation, which should be approved by the shareholders’ assembly.
The distribution of assets among shareholders, after satisfying or securing creditors, cannot occur before six months from the date of the announcement of the liquidation and the call to creditors. The assets are divided among the shareholders in proportion to their shares, although the company’s articles of association may provide for different rules of asset distribution.
Next, the company must prepare financial statements for the day preceding the distribution of assets remaining after satisfying the creditors; this is called the liquidation financial statement.
Subsequently, liquidators must make the liquidation financial statement publicly available at the company’s headquarters and submit it to the registration court.
Moreover, liquidators must notify the relevant tax office of the company’s dissolution, providing a copy of the liquidation financial statement.
As you can see, the process of liquidating a company is not easy and can present many challenges. Therefore, we encourage you to contact and entrust the liquidation process to lawyers specializing in this area.