Both companies and partnerships (hereinafter jointly referred to as “companies”) may be subject to liquidation. The main goals of this process are to terminate the operation of the company, finalize its ongoing undertakings and also monetize the company’s assets. The provisions on liquidation of companies and partnerships are stipulated in the Commercial Partnerships and Companies Code.
The process of liquidation of a company is compulsory, sustaining its legal personality until its removal from the register. However, the liquidation of partnerships is set forth quite otherwise. Namely, the liquidation process is merely optional. This means that one can simply remove the partnership from the register without initiating the formal process. It is worth keeping in mind, however, that limited joint-stock partnerships are an exception in this respect. They are subject to the same formal procedures of liquidation as joint-stock companies.
Liquidation of partnerships
An important aspect of carrying out a liquidation process of a partnership is the occurrence of the cause of liquidation. One example cause is the lapse of time for which a partnership had been formed. Assigned liquidators (all the partners or only some of them) will notify the competent register court of the initiation of liquidation. In the meantime, the liquidator’s obligation is to finalize the ongoing undertakings, collect the due receivables and monetize the assets. The assets gathered thereby are used to cover the liabilities of the partnership. Only the portion remaining can be divided between the partners in line with the provisions of the partnership agreement. Having performed the foregoing, the liquidators may apply for removing the partnership from the register.
Liquidation of companies
When liquidating a company, the cause of liquidation must also occur. The liquidators are usually a member of the managing board. They report the initiation of liquidation to the competent register court and announce it in the Court and Commercial Gazette (Monitor Sądowy i Gospodarczy). Their other obligation is to prepare a balance sheet of initiation of liquidation, which is necessary for arrangement of division of the company’s assets. Once the meeting of shareholders confirms the sheet, the liquidators must finalize the ongoing undertakings and collect the due receivables. Only then can they divide the remaining portion of the assets – according to the shares they hold.
After the finalization of the liquidation process, it is necessary to apply for removal of the company for the register. It is worth noting that there are certain differences in liquidating joint-stock companies and limited joint-stock partnerships. The latter does not require announcing the fact in the Court and Commercial Gazette (Monitor Sądowy i Gospodarczy).
CGO Legal law firm renders services on liquidating companies and partnerships. We support the entire procedure – starting from reporting the liquidation, through preparation of necessary documentation and conduct of required actions (such as finalizing the ongoing undertakings), ending with applying for removal of the entity from the register.
Please do not hesitate to contact us to obtain more details.