Dissolution and liquidation

Dissolution

Law 31/1990 provisions present some general cases of dissolution and special procedures for certain types of companies.
General cases

a) expiration of the period established for the life of the company (the associates must be consulted 3 months before the final moment);
b) impossibility to carry out the object of activity of the company or its fulfillment;

c) the declared nullity of the company;

d) the decision of the general assembly (voluntary dissolution); e) the court decision, initiated by any one of the associates, for justified reasons, such as serious dispute between the associates that hinder the company's activity; f) bankruptcy; g) other reasons as prescribed by the law or by the constitutive act of the company;

Special cases

1) The joint-stock company (company by shares) enters dissolution:

a) in the case of a loss of half of the registered capital ;

b) when the registered capital reduces under its minimum legal level;

c) when the number of shareholders diminish under its legal minimum.

These cases are particular to companies by shares due the compulsory elements needed for setting up and functioning of the company. The limited partnership by shares (sleeping company by shares) and the limited liability company enter dissolution in case of losing half of their registered capital or of it being reduced under its minimum legal level, as the case may be.

2) The general partnership and limited liability companies are dissolved through:

a) bankruptcy; b) legal incapacity; c) exclusion; d) withdrawal or death of one of the associates

when, owing to these causes, the number of the associates was reduced to only one.

An exception makes the case where the constitutive act contains a clause according to which the company may continue its existence with the heirs or when the only remaining associate decides the company to continue in the form of a limited liability company with one sole associate. The provisions of the preceding paragraphs are to be applicable also to the limited partnership or limited partnerships by shares providing those clauses are applicable to the only active or the only sleeping partner.

3) At the request of the Register of Trade Office or of any interested person, the court can decide the dissolution of the company, in the cases when: a) the company lacks the bodies required by the constitutive act or these bodies cannot meet any more; b) the company did not submit for its balance sheet or other documents which, according to the law, should be submitted with the trade register office; c) the company ceased its activity or it has no known registered office or the associates have disappeared or they have no domicile or known residence. d) The company hasnt paid up the social capital

Dissolutions effects

Dissolution of the company has, as an effect, the beginning of the liquidation procedure. Dissolution may take place without liquidation in case of merging or of total division of the company and in other cases stipulated by law. As from the moment of dissolution, the managers cannot start new operations; otherwise they are personally and jointly liable for the operations they started. Even under these conditions, the company maintains its legal personality during the liquidation operations until the liquidation is finished. The dissolution of the company, before expiration of the period established for its duration, becomes effective against third parties only after a thirty days' interval has passed from the publication in the Official Gazette of Romania. Dissolution of a limited liability company with an only associate brings about the universal transfer of the company's assets towards the only associate, without liquidation.

Liquidation

In order to declare the companys liquidation, we need official receivers, natural or legal persons, authorized by law, the official receivers are obliged, along with the company's managers, to make an inventory and to draw up a balance sheet to ascertain the exact situation of the company's assets and liabilities and to sign them. Even if the constitutive act stipulates provisions in this respect, the following rules shall be observed in liquidating and distributing the social assets: a) until the official receivers take over their duties, the managers continue their mandate b) the official receivers' appointment act or the decision that replaces it and any subsequent act bringing changes regarding their replacement must be deposited by official receivers' care, with the trade register office to be immediately registered and published in the Official Gazette of Romania, Part IV. All the documents issued by the company must show that it is undergoing liquidation.

Official receivers obligations

a) to make an inventory and to draw up a balance sheet to ascertain the exact situation of the company's assets and liabilities b) to receive and keep the company's assets, the registers committed to them by the managers and the documents of the company. c) to keep a register with all the liquidation operations, by their date order. d) to request the erasing of the company from the trade register.

Official receivers rights

a) to sue and be sued to the benefit of the liquidation; b) to carry out and to conclude the trading operations related to liquidation; c) to sell, by public auction, the real estate and any movable estate of the company; the goods cannot be sold in the lump; d) to make transactions;

e) to liquidate and to cash in the company's debts even in case of the debtor's bankruptcy, issuing a receipt;
f) to contract bills of exchange, to make unmortgaged loans and generally to carry out all other necessary acts.

The company's liquidation must be completed within 3 years at the most as from the date of its dissolution. For justified reasons the court may extend the said time limit with not more than 2 years. After the liquidation is completed the official receivers must request the erasing of the company from the trade register.

Liquidation of: General Partnerships, Limited Partnerships, Limited Liability Companies

a) Replacement of the management

As a result of dissolution, the managers must be replaced by official receivers. This procedure may be a voluntary or a legal one. The official receivers' appointment will be made by all the associates, unless otherwise stipulated by the company contract. If the unanimity of votes cannot be met, the appointment of the official receivers will be made by the court, upon the request of any associate or manager, by listening to all the associates and managers. The associates or managers may appeal against the court ruling within 15 days from the judgement.

b) Drawing the final situation and the distribution

After having completed the liquidation, the official receivers must draw up the liquidation balance sheet and propose the distribution of assets between the associates.

The unsatisfied associate may contest within 15 days from the notification of the liquidation balance sheet and the distribution draft.
In order to settle the judgement, the liquidation problems will be separated from those regarding the distribution, which may not concern the official receivers. After expiration of the period or after the court decision on the caveat remained final, the liquidation balance sheet and the distribution are considered approved and the official receivers are discharged of their responsibilities.

Liquidation of: companies by shares and of sleeping companies by shares a) Replacement of management

The appointment of the official receivers in the joint-stock companies and limited partnerships by shares is made by the general assembly which decides the liquidation, unless otherwise stipulated by the constitutive act.
The general assembly makes decisions with the same majority stipulated for the modification of the constitutive act. If the majority was not met, the appointment will be made by court, upon the request of any of the managers or associates, the company and those who requested the appointment being summoned. This ruling may be appealed within fifteen days from the delivery of the court decision.

The managers will submit to the official receivers a report about administration for the time elapsed since the latest approved balance sheet and until the moment the liquidation started.
The official receivers are entitled to approve the report, to appeal or to support the disputes that may occur.

b) Drawing the final situation and the distribution

When one or several managers are designated as official receivers, the report concerning the managers' administration will be deposited with the Trade Register Office and it will be published in the Official Gazette of Romania, Part IV, along with the final liquidation balance sheet. When the duration of administration exceeds a financial year, the report must be attached to the first balance sheet, which the official receivers submit to the general assembly.

Any shareholder may enter a caveat within fifteen days from the publication
All the actions filed will be connected to be settled by a single court decision Any shareholder is entitled to intervene in court and the ruling of court will also be opposable to the non-intervening shareholders. If the liquidation lasts longer than a financial year, the official receivers are obliged to draw up the yearly balance sheet observing the provisions of the law, and of the constitutive act.