Summary liquidation proceedings

Voluntary liquidation can currently take about a year, and in addition to the valuable time that can be lost, the procedure requires the expenditure of a considerable amount of money. The procedure involves a lot of documentation that has to be sent to the competent authorities such as the Trade Register, the NRA and the National Social Security Institute. In its explanatory memorandum to the draft law, the Council of Ministers notes that, according to information from the Registry Agency, there were more than 16 000 liquidation proceedings pending at the middle of last year. More than half of them have been pending for more than 5 years. Many companies that do not actually carry out any activity avoid liquidation proceedings for precisely these reasons.

The adopted draft law aims to create conditions for conducting the liquidation in a short time and to ease the administrative burden related to the proceedings.

The new Article 274a of the Commercial Law provides for six conditions that a trader must cumulatively meet in order to benefit from the faster liquidation, namely that the company must:

1. it has not carried on business or has ceased to carry on business more than 12 months ago;
2. has not employed or terminated the employment of employees more than 12 months ago;
3. has not been registered under the Value Added Tax Act or has terminated its registration more than 12 months ago;
4. has no outstanding debts to the state and municipalities;
5. there are no pending proceedings for establishing tax liabilities and liabilities for compulsory social security contributions to which the National Revenue Agency is a party;
6. it is not a defendant in court proceedings, a debtor in enforcement or order proceedings, or enforcement has not been commenced against it under the Pledge Act or the Financial Security Contracts Act.

For the six circumstances above, the liquidator must provide a declaration when applying for winding up and liquidation.

An extremely significant change is the one concerning the time limit for the satisfaction of creditors - the company's assets are distributed if three months have elapsed instead of six months from the day on which the invitation to creditors was announced in the commercial register.

The legislative changes also provide for shortened deadlines for carrying out the relevant inspections by the NRA and NSSI authorities and for issuing the necessary documents, which are conditions for the consideration of the application for registration of the opening of the summary liquidation proceedings and/or for the deletion of the company after the completion of the summary liquidation proceedings. In addition, the changes create "one-stop-shop" possibilities, with all applications being submitted through the Registry Agency at the same time as applications are submitted to the Commercial Register.

Summary liquidation proceedings of a dissolved company may be held by a resolution of the general meeting of the limited liability company, joint stock company and variable capital company (VCC), and for other companies - general partnership, limited partnership and limited partnership with shares, by unanimous resolution of the unlimited partners.

In conclusion, the changes aim to facilitate the interaction between the administration and the business, to stimulate economic growth by creating easier conditions for the termination of an enterprise and to strengthen legal certainty.