Dissolution and liquidation of a company / Serious disagreements between partners (court decision) / Dissolution of the company at the commercial register / Other cases of dissolution (bankruptcy of the company) / How we can help you
Dissolution and liquidation of a company
Commercial companies in Romania are entities with legal personality that come into existence under the conditions imposed by law (e.g. drawing up the articles of association, registering and authorising the company’s officials at the trade register, etc.).
For more details on how to set up a company, please visit the section Setting up a company.
The law also regulates how a company can cease to exist.
The termination of a company’s existence is achieved by going through several stages:
- dissolution of the company;
- liquidation of the company;
- striking the company off the commercial register.
The first stage, the dissolution of the company, can be decided:
- of the associates/shareholders of the company;
- by the trade register office;
- by the court.
When a decision is taken to dissolve a company, there is a change in the activities that can be carried out by the company, in the sense that its object of activity is restricted to the activities necessary to carry out the second stage of the company’s winding up, i.e. the liquidation of the company.
The liquidation of the company consists, in principle, of collecting debts from debtors, paying creditors and distributing the remaining assets (benefits) among the shareholders.
Once the liquidation procedure is completed, the company is struck off the commercial register. When the company is struck off the commercial register, it is deemed to have ceased to exist.
For more information on entries in the commercial register please visit the section Registering in the commercial register.
In practice, there are a number of reasons that lead to the dissolution of the company.
Serious misunderstandings between partners ( court ruling )
In the case of limited liability companies (LLCs), one of the reasons for the dissolution of the company may be disagreements between partners.
In this case the dissolution of the company is decided by the court at the request of any of the partners.
In order for the court to order the dissolution of the company, several aspects must be proven:
- the fact that there are a number of misunderstandings between the partners (the law does not impose a minimum number of situations, the court will have to assess on a case-by-case basis);
- the fact that disagreements between shareholders are serious (the law does not define what is meant by seriousness, but in practice a number of reasons are encountered: disagreements concerning the amendment of the articles of association, disagreements concerning the distribution/non-distribution of profits in the form of dividends, disagreements concerning the increase in share capital, disagreements concerning decisions taken by the majority shareholder, etc.);
- the fact that misunderstandings prevent the proper functioning of the company (e.g. the company cannot conclude certain contracts, the company cannot participate in certain tenders, etc.).
In the practice of the courts a number of cases have been encountered which have led to the dissolution of companies, of which we mention without limitation: the existence of several disputes between the partners concerning the legality/unlawfulness of the decisions of the general meeting of partners, the existence of multiple criminal cases between partners concerning the management of the company, repeated failure to appoint a joint administrator of the company, repeated refusal to submit the documents on which the annual financial statements were based, opacity in taking certain decisions concerning the company’s activity, fraudulent misappropriation of the company’s budget, etc.).
Dissolution of the company at the trade register
Another way in which a company can be dissolved is through the procedure carried out by the Trade Registry Office.
The dissolution of the company can be initiated through the procedure before the commercial register:
- on request (request of the associates or of an interested third party);
- or ex officio (on the initiative of the trade register office).
The procedure is non-adversarial and is settled on the basis of the documents required by law.
The advantage of this procedure is that it is carried out quickly.
Other cases of dissolution (bankruptcy of the company)
The law regulates a number of other cases that may lead to the dissolution of the company, of which we mention without limitation:
- the expiry of the company’s period of operation (to the extent that according to the articles of association the company was established for a certain period of time which has expired);
- declaration of nullity of the company (if the court finds that a number of mandatory legal rules were infringed at the time of the company’s establishment);
- failure to comply with certain requirements imposed by law (e.g. expiry of the duration of the registered office, reduction in the number of shareholders below the legal limit, etc.);
- the company’s entry into bankruptcy proceedings.
How we can help you
Our team of lawyers, together with relevant specialists in the fields of interest (e.g. insolvency practitioners, receivers, accountants, etc.) can provide you with legal advice, legal assistance and representation in any proceedings concerning the dissolution, liquidation and deregistration of a company, both in proceedings before the courts and in proceedings before the commercial registry office:
- drawing up the company documents concerning the dissolution of the company;
- registration of the dissolution documents with the trade register;
- assistance in the liquidation of the company’s assets and liabilities;
- obtaining the removal of the company from the commercial register.
Additional information on company dissolution