Grounds for dissolution of companies : Many reasons can lead to the closing of a business. Among them, we find the clauses of the articles of association, the decision of the partners or the decisions of the courts.
Causes of the disappearance of a company : Multiple explanations can be at the origin of the dissolution of a company. A distinction is made in particular between those resulting from regulations (presence of a clause, expiry of the term, fulfillment or extinction of the corporate purpose), , (early voluntary dissolution) or courts (judicial liquidation, judicial dissolution for just cause, penal sanction). Here are all of the reasons for dissolution of companies.
Reasons for the end of societies : Many can be the causes of the closure of a company. We distinguish among others the provisions of the articles of association, the decision of the partners or the decisions of the courts.
Early termination of the company by the vote of the partners
Before the deadline, the partners can break the contract that binds them. Please note that this decision is exclusive jurisdiction of associates/shareholders. No other body can take this initiative, not even the leader if he is not associated.
The threshold to be reached for the draft resolution is adopted is that provided for the amendments to the statutes. It varies according to the legal form of the company and is assessed in the context of extraordinary general meetings.
There are legal and regulatory provisions protecting the rights of third parties. Partners cannot close prematurely their company to avoid debt. In the event of proven default, the court may open collective proceedings.
Termination or achievement of the corporate purpose
A company can also end before the scheduled term if it achieves its corporate purpose (accomplishment of the corporate purpose) or if the latter becomes impossible to reach (termination of the corporate purpose). In this case, the dissolution can only be pronounced if the corporate purpose has completely expired.
The fact of achieving the achievement or the extinction of the corporate object entails a automatic dissolution of the society. The partners do not have to decide on the question. However, they must implement liquidation of their society. They can, as such, ask the judge to appoint a liquidator.
These causes of dissolution are quite rare in practice. Indeed, the drafters of articles of association generally define very broad corporate objects – including an “umbrella” clause – to limit the risks of seeing the company extinguished.
All social property in the hands of one person
Generally, a company consists of at least two partners. However, there are two exceptions, namely one-person simplified joint-stock companies (SASU) and one-person limited liability companies (EURL), which may have only one partner.
However, if all property rights are concentrated in the hands of one person, anyone interested can request the liquidation of the company. However, you have to wait for a one year period before the situation is rectified.
This applies to limited companies, general partnerships and civil companies, with the exception of SAS and SARL.
The firm is in liquidation proceedings following the intervention of the court
A company which encounters financial problems can request a suspension collective procedure. The magistrates can place it in legal redress if they think it is possible to save her. Otherwise, they order her judicial liquidation.
If the company does not have enough assets to repay its debts, the court decides on a judgment of closure of judicial liquidation for lack of assets. This judgment automatically and immediately leads to the dissolution of the company.
Equity is reduced to less than half of share capital
In SARL, SAS, SA or EURL, it is necessary to trigger a special procedure when the shareholders' equity falls to less than half of the capital.
The directors must call the partners to a meeting within 4 months of the one which approved the accounts. They are responsible for seeking their advice to determine whether the dissolution of the company is required or not. The shareholders are free to decide to cancel the company or, on the contrary, to continue the activity.
In the second case, this company must restore equity before the end of the financial year following that which recorded the losses so that they reach at least half of the capital or reduce capital by the amount of losses.
In the event of non-consultation of the partners or non-compliance with the regularization deadline, any interested person may apply to the commercial court to order the dissolution of the company. The judge can then grant the company up to 6 additional months to remedy this situation.
Company Violation: Criminal Penalty
The criminal court can decide to dissolve a company that has committed a punishable offence. This may apply in the event of trafficking in illicit substances, fraud, abuse of weakness, breach of trust, etc.
There is also dissolution if a firm is created for the purpose of committing illegal acts for which the law provides a punishment.
Judicial dissolution for legitimate reasons of a company
The notion of "just cause" is relatively subjective. It is the role of judges to determine whether a reason is sufficiently important to justify the dissolution of a company. In this case, the pattern must have a severity level , promising prevents its proper functioning.
There are two main reasons that can lead to judicial dissolution for legitimate reasons:breach of obligations by a partner and discord between partners. Sometimes abuse of majority can also be considered a legitimate reason.
It should be noted that only a partner can request the dissolution of his company for legitimate reasons. He will then have to submit a request to the commercial court.
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