When a company is wound up and the liquidation process starts, the directors cease to have powers to represent the company. Their powers are assumed by the liquidators, who are the people responsible for liquidating the company: collecting debts, paying creditors, continuing the company’s business and contracts until they are fully completed, preparing the final liquidation balance sheet, making the proposal for division of the company’s assets between the members, etc.
Within three months of the start of the liquidation the liquidators must prepare an inventory and a balance sheet for the company to the date on which it was resolved to wind the company up.
Once the liquidation procedures have been concluded, the liquidators must prepare and submit a final balance sheet to the general meeting for approval, along with a report on the operations undertaken and a proposal for division of the company’s assets between the members.
Save in the case of a public limited company, the final liquidation balance sheet approved by the general meeting does not have to be published in the Official Gazette of the Commercial Registry (B.O.R.M.E.) or in any newspaper.
The resolution of the general meeting approving the balance sheet, the report and the proposal for division of assets may be challenged by members who did not vote in favour of it within two months from the date on which the resolution was passed.
The liquid assets of the company after the liquidation are divided between the members pro rata to the value of their respective interests, save where the company’s articles of association provide otherwise.
Members have the right to have their share paid to them in cash, save where the members provide otherwise by unanimous agreement. If the articles of association so permit, it is possible for certain members to be paid their share by returning assets to them that they previously contributed to the company, provided that such assets continue to form part of the company’s estate. If that is going to be done and there is no surplus left to pay each member his share in cash after the rest of the assets have been sold and the company’s creditors have been paid, the member or members who are to receive their share in kind must pay the difference in cash to the other members.
Under no circumstances may the liquidators pay members their share unless all debts owed to creditors have been paid or a sum equal to such debts has been deposited with a credit institution in the municipal district in which the company has its registered office.
In the deed of dissolution the liquidators must record the following:
a) That the company’s general meeting has approved the final balance sheet, the liquidator’s report and the proposal for division of the company’s assets.
b) That the period for challenging the resolution approving the final balance sheet, the report and the proposal for division of the company’s assets has expired and no-one has challenged it or, if there has been a challenge, the judgment handed down in relation to it is binding.
c) That the company’s creditors have been paid or the amount owed to them has been deposited with a credit institution.
d) That the members have received the value of their interest or a sum equal to it has been deposited to their order with a credit institution.
The deed of dissolution of the company must be filed with the Commercial Registry so that the register entries relating to the company can be cancelled.