The partners of a merchant company can terminate early to their business, i.e. prematurely from the date provided for in their statutes. We then speak of voluntary early dissolution. This procedure is governed by numerous legal provisions and must comply with a certain formalism. Foundation-company-ricard offers you a complete file on the early dissolution answering the following questions:
- What is an early dissolution ?
- Why dissolve a company prematurely ?
- What are the consequences of an early dissolution ?
- What are the stages of an early dissolution ?
What is premature dissolution?
Every business is created for a fixed term. The statutes define the duration, generally 99 years but this is not always the case. The end of a company's life can be triggered by an event. We are talking about premature dissolution when it occurs before the term provided for in the statutes.
There are mainly 3 cases of early dissolution :
- The partners, after noting significant losses reducing the shareholders' equity to less than half of the share capital, decide not to continue the activity,
- A clause of the statutes offers the possibility of dissolving the company at the end of a fixed period,
- The associates choose de dissolve prematurely the company, at any time and under the majority conditions required for extraordinary decisions.
Reasons to close a company early
The shareholders must make the decision to dissolve a company before its fixed date. Several factors may lead them to make such a decision. They are notably financial and strategic.
First, they can prevent a decline in profits and financial problems possible. If orders are down, they can opt to shut down the business peacefully while it is still able to repay its debts.
Then, the interest of the partners and their infatuation for their project can decrease with time. They can therefore choose to move towards other objectives…
What are the consequences of an early dissolution?
A early dissolution train her suppression legal of a company. When the partners decide to liquidate their company, it immediately enters into a liquidation period. If it has few debts and sufficient assets, it can opt for amicable liquidation. Otherwise it will have to “file for bankruptcy” and place itself under compulsory liquidation.
During this period, the liquidator will sell resources of the company (stocks and fixed assets). He will recover the receivables and will pay the debts, as far as possible. In the event of an amicable liquidation, he will have to repay all of them.
At the end of the process, the liquidator will establish final liquidation accounts with a bonus or a mali. It will proceed with the sharing of equity. Then the company will no longer exist and will have to request its removal from the RCS (Register of Commerce and Companies).
Is it necessary to follow legal procedures for early dissolution?
The answer is yes, of course. As part of an “amicable” procedure, the legal formalities are divided into two stages:
1- Steps related to early dissolution
- Decision of the partners on the early dissolution and appointment of a liquidator,
- Drafting of the act of the extraordinary general meeting,
- Publication of a legal announcement of dissolution,
- Filling the declaration of dissolution M2,
- And filing of an application for amending registration in the Trade and Companies Register (RCS).
2- Steps related to the closing of liquidation operations
- Approval of the liquidation accounts by the partners,
- Drafting of the minutes of the ordinary general meeting,
- Recording of the minutes (in the event of a liquidation bonus)
- Payment of sharing rights (in case of liquidation bonus)
- Publication of a legal notice of closure of liquidation,
- Completion of an M4 deregistration declaration,
- Filing of a deregistration request with the RCS.
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