There are many different legal causes for the liquidation of companies in Europe. This article on timescales focuses on liquidation by a resolution by the general meeting of shareholders.
Timescales for the liquidation of most European companies can be broken down into four procedures:
Firstly, the speedy procedure; this has just two aspects. The shareholders’ resolution is the period for convocation unless there is a unanimous decision by all shareholders. This must be decided before registration with the Trade Register. Registration can take approx. 1 to 3 weeks to complete. Overall the speedy procedures will have a timescale of approx. one month, depending on the length of time the shareholders take to decide the resolution.
Secondly, the standard procedure; this is similar to the above process. The shareholders’ resolution must be realised before registration with the Trade Register. Again this registration process can take between 1 and 3 weeks. Additionally, the standard procedure requires the realisation of assets and settlement of debts.
Then there is the preparation of final accounts and a plan of distribution. This involves the deposit of final accounting and plan of distribution with the Trade Register, a notice of deposit in a national daily newspaper, and distribution to the beneficiaries. The final notice of completion with the Trade Register can take a further 1 to 3 weeks, giving the standard procedure a timescale of approx. 6-7 weeks, depending on the shareholders’ resolution.
Thirdly, the accelerated procedure; the standard liquidation procedure may be accelerated with the permission of the liquidator after the shareholders’ resolution and registration with the Trade Register. The debts of the company must also be settled, allowing the remaining assets of the company to be distributed amongst the beneficiaries. A distribution in advance is also possible after the two months’ period commences. An approval from the judge is necessary for this.
Other necessary paperwork involved in the accelerated procedure include the preparation of final accounts and plan of distribution, the deposit of final accounts and plan of distribution with the Trade Register, and notice of deposit in a national daily newspaper. The notice of completion with the Trade Register can take a further 1 to 3 weeks.
Fourthly, the involuntary procedure; Bankruptcies or involuntary liquidations are usually reported in one or more newspaper and noted in the Trade Register. Once a bankruptcy order is filed, the debtors lose control of their assets and court appointed trustee in bankruptcy is then the person who takes action. When the receiver has established what debts and receivables there are, the involuntary liquidation will be closed.
The bankruptcy judge will be asked to declare the involuntary liquidation closed. The judge will forward this to the court and if it agrees, the involuntary liquidation will be declared closed.
UK dissolution timescales
In the UK, in order for a company to be dissolved a Companies House (DS01) form has to be filed with Companies House.