The liquidation of a company shall be conducted by liquidators. These are the persons who conduct the company’s business during the liquidation, represent the company (legal representatives of the company in liquidation) and they are responsible for the legality of operations of the company.
The Companies Act regulates the appointment and removal of the liquidators, as well as their rights, duties and responsibilities.
Appointment and Removal of the Liquidator
A company appoints a liquidator in the decision on initiating liquidation. The decision on initiating liquidation shall be made by:
- a unanimous decision of all partners, i.e. general partners, unless the memorandum of association stipulates otherwise
- the general meeting of a limited liability company
- the general meeting of stockholders.
Upon the appointment of a liquidator, the representation rights of all representatives of the company terminate. If the company fails to appoint a liquidator, all legal representatives of the company are becoming liquidators.
A company may have several liquidators. If a company has several liquidators, they represent the company jointly, unless otherwise stipulated by the decision on their appointment.
The general meeting of the company may dismiss the liquidator even prior to the expiry of the term of office for which he was appointed, without stating the reasons. New liquidator shall be appointed by the same decision.
A liquidator may resign in accordance with Article 396 of the Companies Act which regulates the resignation of the company director.
Authorizations of a Liquidator
A liquidator represents the company in liquidation and is responsible for the legality of the company’s operations.
A liquidator may undertake the following activities:
- Take actions aimed at completing the transactions begun prior to the commencement of the liquidation
- Take actions required for conducting the liquidation such as the sale of property, payments to the creditors and collection of claims
- Perform other tasks necessary for the implementation of the liquidation of the company.
Duties of a Liquidator
In accordance with the provisions of the Companies Act liquidator shall have the following obligations:
- Written notice to known creditors – Liquidator shall also send a written notice of the initiation of liquidation of the company to known creditors who file the claim under Companies Act, at the latest within a term of 15 days from the day of commencement of the liquidation of the company.
- Initial liquidation balance sheet – The liquidator compiles an initial liquidation balance sheet as an extraordinary financial statement in accordance with the regulations governing accounting and audit within a term of 30 days from the day of commencement of liquidation, and within the same deadline submits it to the partners, general partners, i.e. general meeting for adoption.
- Initial liquidation report – The liquidator compiles the initial liquidation report not earlier than 90 days, and not later than 120 days from the day of commencement of the liquidation and submits it within the same deadline to the partners, general partners, i.e. general meeting for adoption. The liquidator may neither commence with payments to satisfy the creditors, nor with payments to the company members prior to the registration of the initial liquidation report, save for payments of liabilities arising from the company’s daily operations.
- Initiation of bankruptcy proceeding – If on the basis of the initial liquidation balance sheet or the initial liquidation report it is established that the assets of the company are insufficient for settling all claims of creditors (insolvency), the liquidator shall file a motion with the competent court to initiate bankruptcy, within a term of 15 days as of the day of compilation of the initial liquidation balance sheet, i.e. initial liquidation report.
- Duties after satisfaction of creditors – After satisfaction of creditors, the liquidator compiles the following:
1) Closing liquidation balance sheet
2) Report on completed liquidation
3) Written statement that he had sent a notification to all known creditors in accordance with Article 534 of Companies Act, as well as that all liabilities of the company originating from filed claims and claims that are considered filed in terms of Article 534 paragraph 4 of Companies Act, are fully settled and that no other proceedings are ongoing against the company
4) Draft decision on the distribution of the company’s liquidation surplus.
Liability of the Liquidator for Damages
A liquidator is liable for damage he incurs in performing his duty to the members of the company and creditors of the company.
The claim referred to damages becomes statute barred within a term of three years from the day of deletion of the company from the register.
The liquidator is entitled to reimbursement of costs he incurred during the conduct of the liquidation, as well as to payment of remuneration for his work.
The remuneration for work and the amount of costs incurred during liquidation are determined by the partners, limited partners, i.e. general meeting, and in the event of a dispute or when the company fails to determine so, the liquidator may seek from the competent court to determine in non-contention proceeding the amount of remuneration and compensation of costs.
With regards to the claims referred to remuneration for his work and compensation of costs, the liquidator is considered to be a creditor of the company in liquidation.