How can a company be liquidated in Germany?
The two ways a company can be liquidated in Germany are compulsory and voluntary.
The voluntary procedure can be initiated only by the members of the company during a general meeting while the compulsory procedure can be initiated by a competent court.
The main regulations used by the companies in the process of liquidation can be found in the Commercial Register Regulation, Commercial Code, the Civil Code, the Stock Corporation Act the Limited Companies Act and the Industrial Code.
What are the steps for company liquidation in Germany?
The voluntary liquidation is decided by at least 8/4 of votes in a general meeting (unless stipulated that is made differently in the articles of association).
Before beginning the process of liquidation it’s necessary to prepare a balance sheet which must contain the name and address of the person in charge with the liquidation (liquidator) and the name and address of the person responsible for keeping the books of the company after the liquidation. The liquidator is usually a former member of the management board and has the same powers as the management had but it can use it only if are in the interest of the liquidation.
The first step of the liquidation is sending a notification to the German Trade Register, containing the declaration of the liquidator that there are no reasons not to liquidate the company. The decision of liquidation must be published in the German Electronic Federal Gazette and the creditors must be notified regarding the decision of liquidation and the procedure of submitting the claims.
The claims from the creditors are the first to be covered and if in one year from the initial decision there are remaining assets, it had to be distributed among the shareholders, according to the articles of association’s provisions.
The cancelation from the German Trade Register cannot be made sooner than a year from the first notification sent to the creditors. The request for cancelation must contain the liquidation decision and a proof that the creditors were announced regarding the liquidation.
The compulsory liquidation is similar with the voluntary decision but the liquidator is appointed by the court and the whole process is supervised by it.
The company has the obligation to de-register from the local authorities, such as the German pension insurance scheme, Federal Employment Agency and tax authorities.
How long does it take to liquidate a company in Germany?
A liquidation of a company in Germany
takes more than a year, since the cancelation from the Trade Register cannot be performed earlier than a year from the first notification of the creditors. If you are interested in finding out about the liquidation procedure in other countries, such as Portugal, we may help you with information from our local lawyers