Liquidation of a Limited Liability Company in Slovakia
The decision to wind up a business is a significant step that entails a number of legal, accounting, and tax obligations.
In this article, we will focus on the dissolution of a company through liquidation and outline the individual steps leading up to its removal from the Commercial register.
What are the ways to dissolve a company?
The Commercial Code distinguishes between two basic methods of dissolving a business entity:
Dissolution of a Company with Liquidation
Liquidation takes place when a company is dissolved without a legal successor and it is necessary to settle its assets, liabilities, and other rights and obligations. The purpose of liquidation is to satisfy creditors, realize the company’s assets, and distribute any remaining liquidation proceeds among the shareholders.
Dissolution of a Company without Liquidation
Liquidation does not take place in cases where the company’s assets and liabilities are transferred to a legal successor. This applies in particular to mergers, consolidations, or divisions of companies. A special regime also applies in the case of bankruptcy, which is governed by separate legal regulations.
Procedure for liquidating a company
If you have decided to terminate your business activities by dissolving the company and liquidating it, you will find below a brief overview of the individual steps involved in the entire process.
1. Decision to dissolve the company
The process begins with the adoption of a resolution to dissolve the company and place it in liquidation. The resolution specifies the date on which liquidation begins and appoints a liquidator to represent the company throughout the process.
2. The deposit for liquidation
Before filing a petition to enter a company into liquidation, an advance payment for liquidation in the amount of €1,500 must be deposited with a notary, unless the law provides for an exception. This is not a fee but a statutory security deposit, which is used in the event that the liquidator does not receive his or her compensation. Confirmation of the advance payment is a mandatory attachment to the petition for entry in the Commercial register.
3. Registration of the commencement of liquidation and appointment of a liquidator
Once the legal requirements have been met, an application is filed with the Commercial Register to record the company’s entry into liquidation. From that point on, the company adds the suffix “in liquidation” to its business name. The liquidator then assumes the authority to act on behalf of the company and handles all matters related to the liquidation, including communication with creditors, asset management, and compliance with legal obligations.
4. Notice to creditors
The liquidator shall publish a notice of the company’s entry into liquidation in the Commercial gazette and shall invite creditors to file their claims within the time limit prescribed by law.
5. List of assets and list of receivables
The lists must be prepared no later than 45 days after the publication of the notice, as specified in paragraph 4, in the Commercial Gazette.
6. Preparation of financial statements and closing documents
According to the rules set forth in Slovak law, two extraordinary financial statements must be prepared. In addition, the liquidator’s final report and a proposal for the distribution of the liquidation surplus are required. These documents are then approved by the partners or the general meeting.
7. Completion of liquidation and dissolution of the company
Once the final documents have been approved, the liquidator will publish a notice of the completion of liquidation in the Commercial Gazette and subsequently file a petition to have the company removed from the commercial register. A company is definitively dissolved only on the date of its removal from the commercial register.
Once a company enters liquidation, it can no longer conduct its normal business operations. All business activities, including the issuance of final invoices, must therefore be completed before the company enters liquidation. A properly planned process and compliance with legal obligations will help ensure that the entire process runs smoothly.
