The rules on the winding up of the company are contained in the Civil Code, Articles 2484-2496 cc, except as may be provided in the single statute of the company; and one will report to the special rules of the sector for the regulation of specific issues.
Types of dissolution
Article 2448 of the Civil Code states that joint stock companies, limited partnerships and limited liability companies may dissolve in the following cases:
- company term expiry;
- the company has already fulfilled or cannot fulfil its business purpose unless it specifically changes its statutes;
- operations become impossible or remain inactive for a prolonged period of time;
- capital falls below the legally required minimum;
- Board decision;
- other reasons listed in the articles of incorporation or the bylaws of the company.
- Hypothesis specifically provided for by Article 2473 and Article 2437-quater of the Civil Code, in case of withdrawal of one or more members.
For partnerships, article 2272 of the Civil Code allows winding-up of the company in the following cases:
- company term expiry;
- achievement of the company or impossibility of the same;
- unanimous will of the partners;
- partners who resign are not replaced within six months;
- other causes listed in the Social Contract.
The winding up procedure is governed by articles 2275-2283 and 2309-2312with regards to the partnership. The regulation, however, is not mandatory, since the winding up procedures can be freely determined by the shareholders in the shareholder agreement or at the time of dissolution.
Compulsory winding up
Compulsory winding up is a bankruptcy proceeding, to which certain categories of companies are subject. These can be both public (government-owned businesses) and private, subject to public scrutiny for their significant and economic social nature. In particular, the procedure is scheduled for banking companies, for companies that form part of a banking group, for insurance companies, for cooperatives and their consortia, for real estate brokerage companies, for asset management companies, investment companies with variable capital, fiduciary companies, auditing and centralized management of financial instruments.
The objective conditions for initiating the proceedings are:
- Serious mismanagement,
- breaches of laws or regulations,
- in some cases, reasons of public interest can justify the suppression of the organisation.
When filing for bankruptcy is the only option left for a business owner, it pays to cut losses, initiate proceedings sooner rather than later, and move on to a new business project.
Entrepreneurs and partners must follow various administrative procedures in order to wind up a company; starting with paying off all debts and ending with removing the name of the business from the Business Register.
Winding up, like bankruptcy, is developed through the stages of assessing the liabilities, the liquidation of assets and the allocation of the proceeds among the competing creditors, but it takes place in the administrative office, and with some differences in the formation of the liabilities.
Businesses must submit winding-up applications online using FedraPlus software. For the time being individuals still have to submit applications in paper form.
Applications must completed and submitted online using the Telemaco software.
In the near future, all main administrative tasks regarding the closing down of a business will be carried out through a unified online procedure, the Single notice (ComUnica).
For Telemaco users it is possible to find out more about this procedure using the software “ComUnica “.
Several Chambers of Commerce are testing the Single notice (ComUnica) (unified procedure).
Removal from the register
Once the final liquidation of the partners has been approved the partners have to use the services of the Notary, who will draw up the Winding-up document. Contrary to what is required for limited liability companies, in partnerships it is not necessary for the liquidators to proceed to the actual distribution of assets among the shareholders.
When the registrar's office notices certain circumstances which indicate the absence of social activity, it can, of it own motion, remove the business from its register. This refers precisely to: unavailability at the registered office, failure to perform acts of management for three consecutive years, lack of fiscal code, failure of recovery within six months, and the expiry of the term without tacit renewal.
The dissolution of a business must be recorded in the Business Register following one of the following manners:
- the company managers verify one of the causes of winding-up, then register the dissolution declaration in the Business Register. A shareholders' meeting must then appoint a liquidator, recording this in the Business Register;
- the AGM votes for dissolution. The liquidation and the appointment of a liquidator must be registered in the Business Register.
In any case, the appointment of the liquidators should be entered in Business Register within 30 days of the appointment.
For the purpose of removing a company from the Business Register, entrepreneurs must submit their application to the Chamber of Commerce jurisdiction. Administrative procedures vary according to the type of business and the nature of business activity carried out.
In partnerships, conducting a liquidation procedure is necessary to achieve dissolution of the company, while the observance of applicable laws is optional (eg, the shareholders may fail to appoint the liquidators because they are themselves responsible for defining relationships with third parties.