The process of liquidating a limited liability company (LLC) can be complex and demanding. However, by following clear and defined steps, it is possible to effectively conclude the company’s operations in a proper and legally compliant manner. So, how to liquidate a limited liability company? We present the steps in the article below.
Table of Contents
- How to liquidate a limited liability company – grounds for dissolving an LLC in Poland
- How to liquidate a limited liability company – opening the liquidation process
- How to liquidate a limited liability company – the obligation to notify the National Court Register
- How to liquidate a limited liability company – announcement in the Court and Economic Monitor
- How to liquidate a limited liability company – undertaking liquidation activities
- Liquidation of a limited liability company – liquidation report and application for removal of the company from the KRS
- Liquidation of a limited liability company with unpaid loans
How to liquidate a limited liability company – grounds for dissolving an LLC in Poland
According to the Commercial Companies Code, the dissolution of a limited liability company occurs due to:
- Reasons specified in the company’s agreement.
- A resolution of the shareholders on the dissolution of company or the transfer of its registered office abroad. This must be confirmed by a notarial protocol.
- In the case of a company formed with the use of a template agreement – also a resolution on the dissolution of the company, signed by all shareholders. It must be signed with a qualified electronic signature, trusted profile, or personal signature.
- The declaration of bankruptcy of the company.
- Other reasons provided by law.
The dissolution of a limited liability company does not occur automatically when a specific reason occurs. It only takes place after completing the liquidation procedure. To be more precise, upon the company’s removal from the National Court Register.
How to liquidate a limited liability company – opening the liquidation process
According to the CCC, the opening of the liquidation of a limited liability company occurs when:
- The court’s decision on the dissolution of the company becomes legally binding.
- The partners adopt a resolution on the dissolution of the company.
- Another reason for its dissolution arises.
The liquidation is carried out under the company’s name with the addition of the designation “in liquidation.” This requires updating official information about the company. You should notify e.g. the tax office and the Central Register of Real Beneficiaries.
How to liquidate a limited liability company – the obligation to notify the National Court Register
According to the provisions of the CCC, one must report the following data to the registry court:
- The opening of the liquidation process
- The names and addresses of the liquidators or their electronic service addresses.
- The manner of representation of the company by the liquidators and any changes in this regard. This applies even if there have been no changes in the previous representation of an LLC.
Liquidators must notify the registry court about initiating the liquidation of a limited liability company within 7 days.
The opening of the liquidation of a limited liability company should be reported electronically. One must submit the application with the required attachments. The entry in the KRS informing about the liquidation of an LLC is subject to a court fee of 250 PLN.
How to liquidate a limited liability company – announcement in the Court and Economic Monitor
Liquidators should announce the dissolution of an LLC and the opening of the liquidation process. At the same time, they must call upon creditors to submit their claims within a period of 3 following months. Both the announcement of the liquidation and the call for creditors to submit their claims are published in the Court and Economic Monitor [Polish: Monitor Sądowy i Gospodarczy]. The application for the announcement is independent of the application for removing an LLC from the register. They must be submitted separately.
How to liquidate a limited liability company – undertaking liquidation activities
According to the CCC, the liquidators of a limited liability company should:
- Conclude current affairs of the company.
- Collect receivables.
- Fulfill obligations.
- Liquidate the assets of the company.
New business can only be initiated if necessary to complete ongoing matters. Real estate can be sold through public auction. In the case of a direct sale, it can only be done based on a resolution of the shareholders. The price cannot be lower than the one approved by the shareholders.
Liquidation of a limited liability company – liquidation report and application for removal of the company from the KRS
The shareholders’ meeting approves the financial statements as of the day preceding the distribution of the remaining assets among the shareholders after satisfying or securing the creditors and completing the liquidation of the limited liability company. Then, the liquidators should announce the report at the company’s registered office. They should also submit it to the registry court, along with an application for the company’s removal from the KRS.
The application for removal from the KRS must include the following documents:
- Liquidation balance sheet as of the completion of the liquidation.
- Statement by the liquidators that the liquidation has been completed.
- Resolution appointing a keeper of books and documents of the dissolved company,
- Declaration of no ongoing court, administrative, or enforcement proceedings,
- Declaration of the satisfaction of all claims
- Financial report as of the completion of the liquidation.
- Protocol confirming the approval of the liquidation balance sheet and financial report as of the completion of the liquidation.
- The liquidators’ statement on the announcement of both reports at the company’s registered office.
After confirming the proper completion of the liquidation process, the registry court removes the company from the National Court Register.
Liquidation of a limited liability company with unpaid loans
According to the provisions of the CIT Act, revenue includes the value of received goods or rights, as well as the value of other in-kind benefits.
Revenue does not include amounts equivalent to waived debts, including loans, if debt cancellation is related to:
- bank settlement proceedings within the meaning of the provisions on the financial restructuring of enterprises and banks, or
- restructuring proceedings, bankruptcy proceedings, or
- the implementation of a restructuring program based on separate laws, or
- forced restructuring within the meaning of the Act on the Bank Guarantee Fund, deposit guarantee system, and forced restructuring.
The above shows that for taxable income to arise, there must be an actual and real increase in the taxpayer’s assets. It must have a specific financial dimension. It must also result from receiving something from another entity. Alternatively, from the waiver of an existing obligation.
In the case of the liquidation of an LLC and its removal from the KRS, none of the above situations occur. Therefore, there can be no revenue within the meaning of the mentioned provisions of the CIT Act. Especially in relation to the waiver of the obligation to repay a loan. As stated in the Civil Code, the expiration of claims or obligations may occur through set-off, novation, or release from debt.
The value of an unpaid loan, existing on the day of the liquidation and removal from the KRS, does not constitute taxable income. Such a standpoint has been repeatedly taken by the Director of National Tax Information in individual interpretations.
The liquidation of a limited liability company consists of several stages. It is a formalized process that requires the completion of various activities specified in the CCC. Their timely implementation will enable a smooth and effective liquidation of an LLC.
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