Companies Act

Compulsory liquidation of companies

The procedure of compulsory liquidation and deletion from the register of business entities of companies shall be initiated and conducted ex officio by the Agency for Business Registers of the Republic of Serbia when there are reasons for creating the procedure of compulsory liquidation prescribed by the Companies Act.

The provisions of Articles 546, 547 and 548 of the Companies Act prescribe the reasons for initiating compulsory liquidation proceedings, the manner of starting and terminating proceedings and the consequences of deleting a company from the register of business entities in case of compulsory liquidation.

Reasons for Initiating the Proceeding of the Compulsory Liquidation

The company’s compulsory liquidation is initiated if:

  1. A following measure has been imposed against a company by a final ruling:
    a) Prohibition of conducting business and the company fails to initiate liquidation within 30 days from the day of finality of such ruling;
    b) Prohibition of conducting registered business activity, and the company fails to register the deletion, i.e. change of that activity or fails to initiate liquidation within 30 days from the day of finality of such ruling;
    c) Revocation of a permit, license or approval for the performance of a registered business activity, and the company does not register the deletion, i.e. change of that activity or does not start liquidation within 30 days from the day of finality of that ruling;
  2. Within 30 days from the day of expiry of the period of duration for which the company is incorporated, the company fails to register an extension of the period of duration of the company, or fails to initiate liquidation within the same time limit;
  3. Only one partner remains in a general partnership in case of death of the partner, and none of the heirs of the deceased partner in accordance with the Article 119 of the Companies Act. gets inscribed in the register as the member of the company within three months from the day of final conclusion of the probate proceedings, i.e. a general partnership is left with one partner due to other reasons, and the missing member fails to accede to the company within three months from the day the status of the partner terminated, or the company fails to change its legal form within the same time limit, or fails to initiate the liquidation within that time limit;
  4. In case of the death of the general partner, the limited partnership remains without general partners, and none of the heirs of the deceased general partner in accordance with Article 137 of the Companies Act does not get registered in the register as a member of the company within three months from the day of the final settlement of the probate proceedings, i.e. the limited partnership is for other reasons left without general partners or limited partners, and the missing member does not accede to the company within three months from the day of termination of the status of the member, or within that time limit the company does not change the legal form or does not start liquidation within the same time limit;
    a) If the buyer of the bankruptcy debtor as a legal entity, in accordance with Article 45, paragraph 5 of the Companies Act does not pay the missing amount up to the minimum share capital within six months from the date of termination of the bankruptcy proceedings;
  5. A final judgment established the nullity of the registration of the company’s incorporation in accordance with the registration act, or nullity of the company’s memorandum of association in accordance with Article 14 of the Companies Act;
  6. A final judgment instructed the dissolution of the company in accordance with Arts. 118, 138, 239, and 469 of the Companies Act., and the company fails to initiate the liquidation within 30 days from the date of finality of the judgment;
  7. A company is left without legal or temporary representative, but fails to register a new one within three months from the day of deletion of the legal i.e. temporary representative from the business entities register;
    a) The company does not register a new address of the seat within 30 days from the day of finality of the act of the competent authority rejecting the application for registration of a change of seat;
  8. A company in liquidation is left without the liquidator, and fails to register a new one within three months from the day of deletion of the liquidator from the business entities register;
  9. The adopted initial liquidation report is not submitted to the business entities register in accordance with Article 536 paragraph 6 of the Companies Act.;
  10. A company fails to submit to the competent register the annual financial statements up to the end of the previous business year for the two consecutive business years preceding the year in which the financial statements are submitted;
  11. A company fails to submit to the competent register the initial liquidation balance sheets in accordance with the law governing accounting;
  12. In other cases prescribed by law.

Reasons for compulsory liquidation that cannot be remedied are:

  1. if the company does not register a new registered office address within 30 days from the day of the judgment, which orders the deletion of the registered address of the registered office of the company;
  2. if the company violates the provisions of Article 27 of the Companies Act, which regulates the restrictions regarding the business name within 30 days from the finality of the judgment, do not change the name of the company;
  3. if the company violates the provisions of Article 28 of the Companies Act, which regulates the protection of the name of the company within 30 days from the finality of the judgment, do not change the name of the company;
  4. if the following measure has been imposed against a company by a final ruling:
    a) Prohibition of conducting business and the company fails to initiate liquidation within 30 days from the day of finality of such ruling;
    b) Prohibition of conducting registered business activity, and the company fails to register the deletion, i.e. change of that activity or fails to initiate liquidation within 30 days from the day of finality of such ruling;
    c) Revocation of a permit, license or approval for the performance of a registered business activity, and the company does not register the deletion, i.e. change of that activity or does not start liquidation within 30 days from the day of finality of that ruling;
  5. If a final judgment established the nullity of the registration of the company’s incorporation in accordance with the registration act, or nullity of the company’s memorandum of association in accordance with Article 14 of the Companies Act;
  6. If a final judgment instructed the dissolution of the company in accordance with Arts. 118, 138, 239, and 469 of the Companies Act, and the company fails to initiate the liquidation within 30 days from the date of finality of the judgment.
  7. If a company fails to submit to the competent register the annual financial statements up to the end of the previous business year for the two consecutive business years preceding the year in which the financial statements are submitted.

Notification and Initiation of Compulsory Liquidation Proceedings

Before initiation of the procedure of compulsory liquidation, the registrar maintaining the business entities register shall publish a notification on the internet page of that register about the company which fulfills the conditions for compulsory liquidation that, in accordance with the provisions of the Companies Act are impossible to remedy. The notification shall be published on the website of the register of business entities for a period of 30 days.

Before initiating the procedure of compulsory liquidation, the registrar who keeps the register of business entities shall publish on the website of that register a notification on the company where the reasons for compulsory liquidation were fulfilled with an invitation to that company to, within 90 days from the day of publishing that notification, remedy the stated reasons that can be eliminated in accordance with the Companies Act and register the changes in the relevant data in accordance with the law on registration.

Upon expiration of the time limit of the 30 days and 90 days the registrar who keeps the register of business entities in cases where the reasons for compulsory liquidation were fulfilled shall ex officio issue an act on initiating the compulsory liquidation proceedings which translates the company into “compulsory liquidation” status and at the same time shall publish compulsory liquidation announcement on the website of the register of business entities for a continuous period of 60 days.

The announcement shall include:

  • Date of publication of the announcement
  • Business name and registration number of the company
  • Reason for compulsory liquidation.

In addition to the business name of the company, the following designation is added: “in compulsory liquidation”.

Status of a Company in Compulsory Liquidation Procedure

From the day of publication of the announcement of compulsory liquidation, the bodies of the company continue to operate, but the company may not undertake new transactions, hence it may only complete the commenced transactions, including the satisfaction of matured receivables, as well as payments for the company’s current obligations, and liabilities towards its employees.

During the compulsory liquidation of the company, no participation in profit i.e. dividend is paid out, and no company’s assets are distributed to members of the company before the company is removed from the register.

From the day of the initiation of the procedure of compulsory liquidation, all judicial and administrative proceedings in relation to the company which is in the process of compulsory liquidation are suspended. Notwithstanding, if during the compulsory liquidation procedure:

  1. Preliminary bankruptcy procedure is opened – the compulsory liquidation procedure shall be suspended, and if after that the proposal for initiating the bankruptcy procedure is refused, i.e. the procedure is terminated due to the withdrawal of the proposal for initiating the bankruptcy procedure, the compulsory liquidation procedure shall continue;
  2. Bankruptcy proceedings are opened – the compulsory liquidation proceedings shall be terminated.

The suspended proceedings may be continued after the deletion of the company from the register, at the request of the members, i.e. creditors of the deleted company in accordance with Article 548 of the Companies Act.

As of the day of publication of the announcement of compulsory liquidation, the company may not register changes of data in the register of business entities and the Central Registry.

Finalization of the Compulsory Liquidation Procedure

After the expiration of the time limit of 60 days in which shall be publish compulsory liquidation announcement on the website of the register of business entities for a continuous period, the registrar keeping the register of business entities, in the further time limit of 30 days, ex officio passes an act on deleting the company and deletes the company from the register, in accordance with the registration act.

Consequences of the Company’s Deletion from the Register in the Event of Compulsory liquidation

The assets of a deleted company shall become the assets of company members in proportion to their shares in the company’s capital, and in the case of a general partnership that has no capital, it is evenly distributed among the partners.

After deletion of the company from the register of business entities, the members of the deleted company shall be liable for the obligations of the company up to the value of the received assets of a deleted company.

The controlling member of a limited liability company and the controlling stockholder of a joint stock company shall be jointly and severally liable without limits for the company’s obligations, even after the company is deleted from the register.

The claims of the company’s creditors towards the controlling member of a limited liability company and the controlling stockholder of a joint stock company shall become statute-barred within three years as of the day of company’s deletion from the register.

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