Liquidation of a limited liability company in Poland involves the termination of existence by the legal entity and its removal from the National Court Register. The course of the successive stages of extinguishment is determined by the provisions of the Commercial Companies Code. How does the liquidation of a limited liability company proceed step by step?
What are the reasons for liquidation of a limited liability company?
The liquidation of a company is preceded by its dissolution. Usually the reason for the dissolution of a legal entity is the adoption of an appropriate resolution by the shareholders, but the provisions of the Commercial Companies Code also list:
- reasons provided for in the articles of company agreement;
- a resolution of the shareholders to transfer the company abroad, as stated by a protocol drawn up by a notary public;
- declaration of bankruptcy of the company;
- fulfillment of the prerequisites listed in special regulations.
It is worth pointing out that while in the case of a limited liability company contract concluded in the classic form of a notarial deed the resolution must also be notarized, for companies concluded in the S24 system it is sufficient that the resolution is signed by all shareholders using a qualified signature, trusted signature or personal signature.
The fulfillment of the premise of dissolution of the company does not mean that it is automatically deleted from the KRS. The registry court deletes the entity only after the liquidation proceedings are completed.
How does the liquidation of a limited liability company in Poland proceed step by step?
Liquidation of a limited liability company in Poland is a complex process that consists of a number of steps. It is important to follow their proper order.
Shareholders’ resolution to dissolve the limited liability company
If the termination is the result of a shareholder decision, the first step should be the adoption of a resolution to dissolve the company and open liquidation. According to Article 246 §1 of the Code of Commercial Companies, such a resolution should be adopted by a 2/3 majority, unless the articles of company agreement stipulate stricter conditions.
Already from the moment the resolution is adopted, the company is obliged to use the name with the addition “in liquidation”. The resolution should include the decision to dissolve the company, initiate liquidation and the establishment of liquidators.
Establishment of liquidators of a limited liability company
As a rule, liquidators are members of the company’s board of directors, pursuant to Article 276 §1 of the Code of Commercial Companies, while the company’s board of directors as a body ceases to function on the day liquidation opens. However, nothing prevents the shareholders from deciding to appoint third parties to perform this function. If necessary, liquidators may also be appointed by the court.
Shareholders who appointed liquidators may dismiss them by resolution. Liquidators appointed by the court may only be dismissed by the court. In any case, the liquidators may be dismissed by third parties with a legal interest in doing so, such as creditors of the company who believe that the company is being mismanaged during the liquidation period, but also shareholders or their personal creditors.
Notification of opening of liquidation of a limited liability company.
The opening of liquidation should be notified to the National Court Register within 7 days from that date, at the same time indicating the persons of the liquidators (with their names, surnames, PESEL numbers and addresses) and any changes in the scope of representation.
The relevant form (KRS-Z61) shall be filed through the PRS, or, if the company has been incorporated using a template, through the S-24. The notice of the opening of liquidation shall be accompanied by the relevant documents, viz:
- resolution of shareholders on dissolution of the company;
- resolution on the establishment of liquidators;
- statements of the liquidators containing their consent to take office.
Shareholders should remember to attach to the notice a request for publication of information about the event in the Monitor Sądowy i Gospodarczy along with a fee, the amount of which is calculated taking into account the length of the notice. The publication of the MSiG must include a summons to creditors to report the claims to which they are entitled.
Preparation of the balance sheet of the opening of liquidation of the limited liability company
Pursuant to Art. 281 §1 of the Civil Code, liquidators draw up a balance sheet of the opening of liquidation, which they then submit to the shareholders’ meeting for approval. If the winding-up is not completed within one year, the liquidators shall submit a report on their activities and a financial report to the meeting of shareholders in each subsequent financial year.
Implementation of liquidation activities
The next stage of liquidation proceedings is to carry out liquidation activities. They can be divided into activities aimed at:
- termination of current interests of the company, e. g. sale of goods, termination of contracts with employees;
- fulfilling obligations incumbent on the company, e. g. repayment of debts to creditors;
- recover debts owed to the company, either by amicable means or by bringing an action or initiating enforcement proceedings;
- the distribution of liquidation assets remaining after creditors have been satisfied.
It is worth noting that, as a rule, liquidators are not entitled to take on new interests related to the company’s activities, unless this is necessary for the termination of existing interests.
The scale of liquidation activities is strongly related to the size of the company being closed. For entities with large economic activities, they may last for several years. However, it should be borne in mind that the distribution of assets between shareholders may not take place before 6 months after the announcement of the opening of liquidation in the MSiG and the invitation to creditors to submit their claims.
After satisfying the creditors, but before dividing the liquidation assets, the liquidators should submit the liquidation closure balance to the registry court. Together with the opening balance sheet, it forms a “buckle” that allows the assessment of the state of assets before and after the commencement of liquidation and the assessment of its correctness.
Application for removal of the company from the register of entrepreneurs
The final step is for the liquidators to submit an application to the registry court for the removal of the limited liability company from the register. The application shall be accompanied by:
- the balance sheet or winding-up report at the date of completion of the winding-up;
- statements by the liquidators on the completion of the winding-up activities;
- a statement that all claims have been satisfied and that there are no judicial, administrative or bailiff proceedings pending against the company;
- a resolution on the appointment of a keeper of accounting books;
- a resolution of the shareholders’ meeting approving the financial statements as of the date of completion of the liquidation.
The application must be submitted via the PRS or S-24, depending on how the company was incorporated. After receiving the set of documents and confirming their correctness, the court of registry issues a decision on the removal of the company from the register. As soon as the resolution becomes effective, the limited liability company loses its legal existence. The fee for an application for deleting a company is 400 PLN (300 PLN for an entry and 100 PLN for an announcement in the MSiG).
What happens to the documentation of a liquidated limited liability company?
Pursuant to the wording of art. 288 §3 of the Polish Commercial Companies Code, books and documents of a dissolved company should be handed over for safekeeping to a person indicated in the company’s articles of association or a resolution of the shareholders. In the absence of a designation, the custodian is appointed by the registry court. The length of time for which records should be archived depends on their type. As an example:
- accounting books are kept for 5 years;
- the approved annual accounts shall be kept for a minimum of 5 years;
- records of the adopted method of accounting shall be retained for 5 years from the date of expiry.
The custodian of the documents can be either the shareholder or an external company.
Obligations related to liquidation towards the Social Insurance Institution and the tax office
First and foremost, the company’s details should be updated at the tax office on the NIP-8 form, and a copy of the financial statements should be provided. Taxpayers paying VAT should deregister from the VAT register by submitting a VAT-Z.
A company that employed employees is obliged to deregister them from the Social Insurance Institution, as a payer of contributions, by submitting the ZUS ZWUA form. The deadline in this case is 7 days from the date of termination of employment.
Liquidation of a limited liability company can be a process that will take many months, effectively involving the shareholders and making it difficult to pursue alternative business intentions. In order to shorten the duration of the whole procedure as much as possible, it is worth considering outsourcing it to a law firm with many years of experience in legal services for companies.