Winding up - Portugal
A business may need to be wound up for a variety of reasons. However, the process can be much simpler if the business has no debts on the date when it is wound up.
The Companies Code (CSC) and the Civil Code deal with various issues relating to the winding-up of companies.
Chapter XXIII (Winding-Up of the Company) of the Companies Code provides that, unless otherwise stipulated by law, a company that is to be wound up will immediately enter into liquidation.
The company in liquidation will retain its legal personality and, unless otherwise determined by subsequent provisions or the type of liquidation, will continue to be subject, with the necessary adaptations, to the provisions governing companies that have not been wound up.
As a result of the winding-up, the words ‘sociedade em liquidação’ (company in liquidation) or ‘em liquidação’ (in liquidation) must be added to the company’s name. The articles of association can stipulate that the company must be wound up by the courts, or the shareholders can decide this by the majority required for amendments to the articles of association.
Types of liquidation
A company can be liquidated in a variety of ways:
- immediate winding-up (no assets or liabilities);
- simultaneous winding-up and liquidation (no assets or liabilities);
- winding-up and liquidation with distribution (with assets but no liabilities);
- winding-up with entry into liquidation (with liabilities or with assets and liabilities);
- winding-up with liquidation by wholesale transfer (with liabilities).
Immediate winding-up can be used where there are no assets or liabilities. In this procedure, the winding-up request can be immediately granted by a decision declaring the winding-up and completion of the liquidation. This will then be registered and the appropriate certificate issued.
Simultaneous winding-up and liquidation can be used where there are no assets or liabilities. This method can be used where not all the requirements for immediately winding up the company are met.
If, on the date when the company is wound up, there are no debts, the shareholders can immediately distribute the company’s assets.
Winding-up with entry into liquidation is used where, on the date of winding-up, there are assets and liabilities or only liabilities, which need to be liquidated. A liquidator will be appointed for this purpose.
Winding-up with liquidation by wholesale transfer is used where, on the date when the company is wound up, it has liabilities. The shareholders can decide that all the company’s assets will be transferred to one or more shareholders, with the others being paid in cash. The transfer will be preceded by written consent from all the company’s creditors.
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.
The process of winding up a company has been simplified by the adoption of new simplification measures and the elimination of registration and notarial acts and procedures. It is now possible to opt for ‘on-the-spot winding-up and liquidation’.
It is also possible to carry out On-the-Spot Winding-Up at a Trade Registry or at one of the Business Centres, provided that the company has no assets or liabilities to be liquidated and that the winding-up decision has been made unanimously by the shareholders.
Social security deregistration
As with registration, the suspension or cessation of the professional or business activities of employers must be notified to the District Social Security Centres within whose geographical area these businesses have their head office or place of business.
Declaring the cessation of activities to the Directorate-General for Taxation (DGCI) is one of the additional obligations of persons liable for Personal Income Tax (IRS), Corporation Tax (IRC) and Value Added Tax (VAT).
Persons liable for IRS must, within 30 days of the date of cessation, submit the respective declaration to a Tax Office, using the official form (Article 112(3) of the Personal Income Tax Code).
Persons liable for IRC must submit the cessation declaration within 30 days of the date when the activity ceases (Article 110(6) of the Corporation Tax Code).
Individuals or companies engaged in an activity subject to VAT must, within 30 days of the date of cessation, submit the cessation declaration to the competent Tax Office (Article 32 of the Value Added Tax Code).
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