Last updated: 6 December 2018
Just like the incorporation of a company, the closure of a limited liability company implies the completion of rather complex formalities.
Regardless of the reasons why you want to close the company, we consider it useful to present the essential elements of the simplified procedure for the winding-up and liquidation of a company pursuant to Romanian law and to draw your attention to some aspects that we consider important.
OPTIONS DEPENDING ON THE COMPANY’S SPECIFIC SITUATION
It should be noted that, in addition to winding-up by operation of the law and judicial winding-up (in the cases specifically stipulated by Law no. 31/1990 on companies), the winding-up of a limited liability company may be voluntary (with the consent of its shareholders and following a simple compliance check performed by an appointed clerk).
In the latter case, the Romanian law stipulates two possibilities, namely a more complex procedure or a simplified procedure, depending on the actual status of the company.
The more complex procedure involves two main stages: dissolution and liquidation, as well as the appointment of a liquidator responsible for recovering the company's claims and paying its debts. At the end of his/her mission, the liquidator draws up a winding-up report, which he/she submits to the Trade Registry.
If, on the contrary, the company to be closed has no debts and the shareholders agree on the distribution of the assets remaining after liquidation, the simplified procedure may be chosen and the simultaneous winding-up and liquidation of the company may be decided. This procedure is, of course, desirable if the legal conditions (absence of debts and the shareholders' agreement on the distribution of assets) are fulfilled.
THE SIMPLIFIED PROCEDURE: PRELIMINARY OPERATIONS
Before the actual winding-up and liquidation, the company must cease its activity, which normally implies, as the case may be:
• The termination of its employees’ employment contracts;
• The termination/assignment to another entity of the pending contracts (with clients, suppliers etc.);
• The payment of debts;
• The recovery of any potential claims or their assignment to another entity.
Depending on the company's specific situation, there may be other issues that need to be addressed before or after the company is closed (e.g. the obligation to fulfil certain notification obligations, if the company holds certain permits/to return such permits etc.).
Please note that all these issues have to be resolved before the winding-up and liquidation procedure is launched.
PROCEDURE TO BE FOLLOWED
Once the aforementioned preliminary operations have been completed, the company’s shareholders unanimously decide to simultaneously wind-up and liquidate the company and file their decision with the Trade Registry, to be mentioned in the Registry and to be published in the Official Journal.
After publication of the decision in the Official Journal, potential creditors of the company who consider themselves prejudiced by the winding-up decision may raise objections within 30 days.
This objection will be judged by the court. Even if debts are paid, such a case file lasts, based on our experience, between eight months and a year; therefore, during this period, the winding-up procedure is blocked.
In practice, the risk of objections is very high, especially as regards the tax authority, which objects to the winding-up of companies, sometimes invoking debts of a ridiculous value ...
Finally, if there is no objection or if the objection is rejected by the court, the company may be deregistered. This stage involves, in particular:
• Closing of the bank accounts;
• Drafting of the liquidation accounts by the company’s accountants;
• Obtaining a certificate from the Romanian tax authority, certifying that the company has no debts towards the State budget.
Once this stage is completed, the company's representatives may apply for the deregistration of the company from the Trade Registry and from the tax authority.
It should be noted that the simplified winding-up and liquidation procedure has the advantage of a shorter term and entails lower costs.
However, before choosing this procedure, you must make sure that all legal conditions are met and, in particular, that the company has no debts (especially tax debts). Otherwise, creditors may oppose the winding-up, which will delay the term and lead to additional costs for the company.
It should also be noted that the assistance of an accountant during the entire procedure is essential, especially since the company will have to fulfill all its tax and declarative obligations until the time of its deregistration.
Finally, contrary to the general opinion, the winding-up of a company does not automatically imply a tax inspection (but does not exclude it).