Company liquidation

A. Dissolution of companies

Liquidation is preceded by dissolution, being practically an effect of it. The causes of dissolution are multiple, the law providing for both situations in which dissolution is a voluntary act of the associates or shareholders, and situations of de jure dissolution, generally with a sanctioning title. A case of de jure dissolution that has generated many procedures is Art. 30 of Law no. 359/2004 on the simplification of formalities for the registration in the trade register of natural persons, family associations and legal persons, their tax registration, as well as for the authorization of the operation of legal persons, which establishes a special case of de jure dissolution with a sanctioning title. The same law also establishes several special rules for the procedures thus opened, the principle being, however, that after the dissolution of the company and the appointment of the liquidator, the effective liquidation is carried out according to the rules of Law 31/1990.

Art. 10, 14, 15324, 227, 228, 229 and 237 of Law 31/1990 list the main causes of dissolution that lead to liquidation, the most important being:

• failure to fulfill the obligations relating to the minimum share capital for the respective type of company;
• the passage of the time established for the duration of the company;
• the impossibility of achieving the company's object of activity or its achievement;
• the declaration of the company's nullity;
• the decision of the general meeting;
• the decision of the court, at the request of any associate, for valid reasons, such as serious disagreements between associates, which prevent the functioning of the company;
• the company no longer has statutory bodies, etc.

The following causes of dissolution are listed specifically for joint-stock companies:

• in the case and under the conditions provided for in art. 158;
• when the share capital is reduced below the legal minimum;
• when the number of shareholders falls below the legal minimum.

General partnerships or limited liability companies are also dissolved by bankruptcy, incapacity, exclusion, withdrawal or death of one of the partners, when, due to these causes, the number of partners has been reduced to one.

According to Art. 233. – (1) The dissolution of the company has the effect of opening the liquidation procedure. The dissolution takes place without liquidation in the case of a merger or total division of the company or in other cases provided for by law.

Law 31 also provided for situations in which the dissolution is not followed by liquidation, for example art. 236, according to which the dissolution of a limited liability company with a sole partner entails the universal transmission of the company's assets to the sole partner, without liquidation.

B. Liquidation of companies

TITLE VII – Liquidation of commercial companies in Law 31/1990 regulates the actual liquidation procedure.

The law regulates the entire liquidation procedure in only 18 articles, from 252 to 270, divided into 3 chapters: CHAPTER I – General provisions; CHAPTER II – Liquidation of general partnerships, simple partnerships or limited liability companies and CHAPTER III – Liquidation of joint-stock companies and limited partnerships.

The main duties of the liquidator are listed in Art. 255, which are:

• to sue and be sued in the interest of the liquidation;
• to execute and complete the commercial operations related to the liquidation;
• to sell, by public auction, the real estate and any movable assets of the company; the sale of the assets will not be possible in bulk;
• to make transactions;
• to liquidate and collect the company's receivables, even in the event of bankruptcy of the debtors, by issuing a receipt;
• to contract promissory notes, make non-mortgage loans and carry out any other necessary acts.

The liquidators may not, in the absence of special provisions in the articles of association or in their appointment act, establish mortgages on the company's assets, unless they are authorized by the court, with the approval of the censors. The liquidators who undertake new commercial operations that are not necessary for the purpose of liquidation are personally and jointly liable for their execution.

The procedure is carried out in relation to the Trade Register Office (ORC), in principle without the control of any court.

I. Procedure in relation to the Trade Register Office

To summarize, whether the liquidator was appointed by the General Meeting or by the court, the liquidation procedure involves the following stages in relation to the ORC and the submission of the following documents:

Stage of submitting the liquidator's signature.

• The liquidator's specimen signature, legalized by a notary, in order to mention it in the Trade Register;
• The liquidator's declaration indicating that he can be the liquidator of the company in question, legalized by a notary or certified by a lawyer;
• Copy of the Official Gazette of Romania in which the AGM Decision appointing the company's liquidator was published or of the court decision appointing him;
• Copy of the liquidator's identity card and professional certificate;
• Original AGM Decision appointing the liquidator by the associates/shareholders, accompanied by the registration certificate with the Trade Register;
• Request for submission/mention of documents – form on the ONRC website.

Stage of publication of the liquidation financial statements

• Financial statements (final liquidation balance sheet), in duplicate;
• Proposal for distribution of assets;
• Request for submission/mention of documents – form on the ONRC website.

Stage of deregistration of the company

• AGM decision approving the financial statements;
• The company's tax attestation certificate, stating that the company has no debts to the state budget;
• The certificate of registration in the Trade Register and the certificates issued, in original;
• Request for submission/mention of documents – form on the ONRC website.

II. The actual liquidation procedure

In close interdependence with the procedure in relation to the ORC, the stages being conditioned by each other, the liquidation involves the following procedure, depending on the complexity of the file:

• Inventory of assets and liabilities, preparation of the balance sheet at the beginning of the liquidation;
• Actual liquidation procedure: Taking over the right of signature in the bank, management of the company's activity, collection of receivables, payment of creditors, taxes and duties. Completion of all ongoing operations, settlement of disputes, sale of assets by public auction;
• Within 60 days of appointment, the liquidator must submit to the Trade Register Office a report on the company's economic situation, indicating whether it is necessary to open bankruptcy proceedings. The liquidator is obliged to request the opening of the procedure if the company is insolvent;
• If the liquidation is extended beyond the financial year, the liquidators are obliged to prepare the annual financial statement, complying with the provisions of the law and the articles of association;
• Upon completion of the liquidation operations, the final liquidation balance sheet and the asset distribution proposal will be prepared, which are submitted to the ORC;
• Approval of the final balance sheet and the distribution proposal in the AGA;
• Ensuring the takeover of the company's archive by an associate or handing it over to a specialized company that will ensure its preservation under legal conditions;
• Distribution of the net assets remaining after the distribution of the amounts due to creditors (respectively the payment of all taxes and liquidation expenses) among shareholders/associates;
• Deregistration of the company, completion of the procedure.

The liquidation procedure according to Law 31/1990 must be carried out with maximum responsibility, considering that according to Art. 253 paragraph (2) the liquidators have the same liability as the administrators. In addition, liquidators who undertake new commercial operations that are not necessary for the purpose of liquidation are personally and jointly liable for their execution, and the provisions 271-277 regarding crimes also apply to the liquidator, to the extent that they refer to obligations that fall within his or her duties.