In specific contexts, it is possible to dissolve a sole proprietorship with limited liability (EURL). There are many reasons for dissolution of an EURL, which may come directly from the partner or from other factors (end of term, detection of major losses, achievement or termination of the corporate purpose, etc.). here are the causes of disappearance of an EURL.
Reason 1: a decision taken by the sole shareholder
The dissolution of an EURL can be determined by the sole shareholder. He must be aware of his actions and have no intention of harming other people, in particular his creditors. This implies that the EURL is able to recover its receivables and repay its debts and that it is not in a state of insolvency.
In this case, the sole shareholder chooses to voluntarily dissolve his company. This decision will inevitably lead to the liquidation of the EURL and at its suppression legal records.
Reason n°2: The reduction of equity by half
The law provides protection for the creditors of limited liability companies, including the EURL. Thus, in case of heavy financial losses leading to a decrease to less than half of the share capital of equity, a replenishment of equity is setup. The shareholder, within four months following the approval of the accounts and the loss, will have to decide whether or not to continue the activity: dissolution or continuation of business. In the latter case, the shareholders' equity must be brought back to equilibrium at the end of the current financial year following that of the losses. Otherwise, interested parties can ask for it dissolution of the EURL in justice.
Reason 3: the term has been reached
Businesses have an intended end. In practice, the sole proprietor must specify, in the statutes of its EURL, the length of time he wishes to maintain it. This cannot exceed 99 years. At the time ofexpiration, the sole proprietor must decide (or not), to extend his company:
- Either he delays the end of this one and he determines a new duration (it is necessary, in this case, to modify the statutes of the EURL),
- Or he does not do so and the EURL is dissolved (various steps ensue).
If he does nothing, the clerk of the commercial court may, at the end of the year after the expiry date, automatically delete the EURL from the commercial and companies register.
Reason no. 4: achievement or termination of the corporate purpose
The activity of an EURL is specified in the statutes. This statement is called social object. It is possible that it is reached or becomes impossible to execute, which leads to the cessation of the society. In practice, extinction is very uncommon because the sole partners of EURLs generally define fairly broad corporate objects.
The fulfillment or extinction of the corporate purpose entails, by operation of law, the dissolution of the EURL, as it no longer has any reason to exist.
Reasons for dissolving an EURL
Dissolution may also occur for any EURL in the following situations:
- Presence of a cause for dissolution stated in the statutes (arrival of a particular event, resignation of the leader of the EURL, etc.);
- Going into compulsory liquidation (when the company fails to honor its debts and a recovery seems obviously impossible);
- Non-regularization of a state of EURL sleep within 2 years;
- Cancellation of the partnership contract;
- Pronouncement of a criminal sanction against the EURL (in the event of the commission of a crime or misdemeanor or the creation and/or misappropriation of its object with the aim of committing offences).
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Also to be discovered on the subject of the closure of an EURL:
- The price of closing an EURL
- Reasons for closing an EURL
- The consequences of the dissolution of an EURL
- The steps to close an EURL online
- Legal announcements of closure of an EURL
The dissolution of an EURL can occur for various reasons: end of its term, cessation of activity, extinction or accomplishment of its corporate purpose, loss of half of its equity, decision of the sole shareholder… It produces numerous and significant legal effects.
