causes sarl dissolution

What are the causes of dissolution of an LLC?

limited liability company (SARL) can suffer a dismantling. Of internal reasons ou external represent the main sources. It may be the expiration of its existence, the achievement or abolition of the corporate purpose or even a collective decision of the partners. The concentration of all the parties in a single entity is not, in itself, a justification for the dissolution of the SARL. In this case, the company automatically switches to the EURL form. Below the origins of dissolution of an LLC.

causes sarl dissolution

End of life of an LLC = reason for dissolution

All companies are imposed for a fixed period. The LLC is no exception. When it is incorporated, the partners must decide on the period during which they will operate the company. More often than not, it manifests in years, but it doesn't have to be; it cannot exceed 99 years.

When the LLC term approaches, the partners meeting in an extraordinary general meeting must make a choice on the future of the SARL. They can extend its duration (we then speak of an extension) or do not do it. If it is the first case, they will make changes to the statutes of the LLC. If it is the second, they will proceed to its dissolution followed by its liquidation.

When significant losses lead to a drop in equity of less than half of the capital, the SARL must be dissolved

The SARL is a company whose partners are not personally responsible for the debts. But in order to protect the people with whom it interacts, the Act provides for a equity restoration when the company registers negative income which reduce the internal resources at less than half of the capital.

In these circumstances, the partners must decide whether to continue the activity or terminate it and dissolve the SARL.

If they choose to maintain the activity, they must restore the situation before the end of the second following exercise. Otherwise, anyone with an interest can go to court to request the dissolution of the company.

Terminating an LLC prematurely by voluntary dissolution

This procedure is derived from the decision of shareholders who wish to stop the society they have created. We can then speak of early voluntary dissolution.

When the company can settle its debts, this leads to a amicable closure of the LLC. If there is a state of cessation of payments (not being able to pay the debts due with the available assets), it must apply for judicial liquidation.

Additional reasons for the dissolution of an LLC

There are other causes which justify the dissolution of an LLC and its suppression legal records. It can be:

  • Le lack de correction for the mothballing of the LLC within 2 years;
  • La stagnation caused by a disagreement between the partners or the non-respect of the commitments of one of them;
  • The appearance of a incidents which leads to the dissolution of the SARL, by virtue of a clause in its articles of association;
  • THEcancellation of the partnership contract established between the partners by a court;
  • Or the application of sanctions (including criminal sanctions).

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Dissolution encompasses all LLCs that find themselves in one of the following situations:

  • Their term is about to expire and the partners do not vote for its extension,
  • They suffer considerable losses and choose to stop operating their business,
  • Their social objective is achieved, vanishes or becomes impossible to achieve,
  • His associates decide to put an end to their joint project before the scheduled deadline.

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