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.
While the process of liquidation of a company is compulsory, sustaining its legal personality until its removal from the register, the liquidation of partnerships is set forth quite otherwise. Namely, the liquidation process is merely optional – the partnership may be simply removed from the register without initiating the formal process. It should be borne in mind, however, that limited join-stock partnerships are an exception in this respect since they are subject to the same formal procedures of liquidation as joint-stock companies.
An important aspect of carrying out a liquidation process of a partnership is the occurrence of the cause of liquidation (e.g. the lapse of time for which a partnership had been formed). Liquidators are assigned (all the partners or only some of them) who notify the competent register court of the initiation of liquidation. In the meantime, the liquidators are obliged 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 and 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.
When liquidating a company, the cause of liquidation must also occur. The liquidators are usually the 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). They are also obliged to prepare a balance sheet of initiation of liquidation, which is needed for arrangement of division of the company’s assets. Once the sheet is confirmed by the meeting of shareholders, the liquidators must finalize the ongoing undertakings, collect the due receivables and only then can they divide the remaining portion of the assets – according to the shares they hold. The finalization of the liquidation process must be followed by applying 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.