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Liquidation of Companies

The liquidation of a commercial company consists of all the operations aimed at concluding the ongoing commercial transactions at the date of the company’s dissolution, converting the company’s assets into cash, settling its debts, and distributing the net assets among the shareholders.

According to Law no. 31/1990, for the liquidation and distribution of the company’s assets, even if the articles of incorporation provide norms for this purpose, the following rules are mandatory:

  • Until the liquidators take over their functions, the administrators and directors, or members of the board of directors, continue to carry out their duties, with the following exceptions:
    • From the moment of dissolution, they cannot undertake new operations. Otherwise, they are personally and jointly liable for the actions taken;
    • The above-mentioned prohibition applies from the day following the expiration of the term set for the company’s duration or from the date on which the dissolution was decided by the general assembly or declared by a court judgment.
  • The appointment of the liquidators, as well as any subsequent acts that bring changes regarding their identity or powers, must be filed, through the care of the liquidators, with the commercial registry office, to be recorded in the commercial registry. These are published in the Official Gazette of Romania, Part IV, or, as the case may be, in the electronic bulletin of the commercial registry.
  • Only after registration in the commercial registry can the liquidators exercise this function.
  • In addition to the above-mentioned rules, the rules established by the articles of incorporation and by law apply to liquidating companies, to the extent that they are not incompatible with the liquidation.
  • All documents emanating from the company must indicate that it is under liquidation.

Who can be a liquidator?

Liquidators can be individuals or legal entities. Individual liquidators or permanent representatives (individuals of the liquidating company) must be authorized liquidators, according to the law.

It is important to note that liquidators have the same liability as administrators or members of the board of directors.

Immediately after taking over the function, the liquidators, together with the directors and administrators, or members of the board of directors of the company, are required to conduct an inventory and draw up a balance sheet, which accurately states the situation of the company’s assets and liabilities, and sign them.

Liquidators are also obliged to receive and keep the company’s assets, registers entrusted to them by administrators or members of the board of directors, and the company’s documents. Likewise, they will keep a register of all liquidation operations, in chronological order.

Liquidators carry out their mandate under the control of auditors. In the case of joint-stock companies organized according to the dualistic system, liquidators carry out their mandate under the control of the supervisory board.

Can shareholders request the amounts due from the liquidation?

Liquidators cannot pay any amount to shareholders on account of their shares due from the liquidation before paying the company’s creditors.

However, shareholders can request that the retained amounts be deposited with the Savings and Loan Corporation – C.E.C. – S.A. or a bank or one of their branches, and the distribution of shares or social portions be made, even during the liquidation, if, in addition to what is necessary to fulfill all the company’s obligations, due or forthcoming, there remains a surplus of at least 10% of their amount.

Creditors of the company can object to the decisions of the liquidators.

Liquidators who have paid the company’s debts with their own funds cannot exercise rights against the company greater than those belonging to the paid creditors.

What is the deadline for completing the liquidation?

The liquidation of the company must be completed within a maximum of one year from the date of registration in the commercial registry of the mention of dissolution. For valid reasons, at the request of the liquidator, the commercial registry office can extend this term up to three times, each time for a year.

Liquidation does not release shareholders and does not prevent the initiation of insolvency proceedings against the company.

Bianca Dan – Attorney at Law

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