In case the business of the company does no longer meet the shareholders’ expectations, they may decide to wind up their company and undergo the process of the company’s liquidation.
The liquidation process of the Slovak company encompasses two stages:
- Firstly, the general meeting of the company or its sole shareholder (in case of a sole-shareholder company) must adopt a decision on winding up of the company, its entry into liquidation and on appointment of the company’s liquidator (liquidation is carried out by the statutory body as the liquidator, unless the memorandum of association or articles of association stipulate otherwise). Such change needs to be then registered in the Commercial Register.
Subsequently, the liquidator is obliged to produce a liquidation balance sheet (as of the day the company enters into liquidation) and send a list of the company’s assets to each shareholder who requests so.
Further, the liquidator shall notify all known creditors of the fact that the company is entering into liquidation and also publish such fact in the Commercial Gazette, thereby inviting the company’s creditors and other persons and authorities to submit their claims for receivables or other rights within a period which may not be less than three months.
Once the company enters into liquidation, the liquidator may carry out only legal acts which relate to the company’s liquidation (i.e. settling the company’s obligations, claiming receivables and receiving payments, representing the company before the courts and other authorities, concluding settlements, etc.). New contracts may only be concluded by the liquidator in case such contracts relate to the termination of pending transactions.
- After the lapse of the above three months period (unless a longer period is provided to creditors and relevant authorities by the liquidator), the liquidator shall draft financial statements as of the day of completion of the liquidation and present them for approval to the company’s general meeting or a sole shareholder together with the final report on the course of liquidation and a proposal for distribution of the liquidation balance between the shareholders (shareholders may, however, not be provided with any benefits on the grounds of their entitlement to a share in the liquidation balance before the claims of all known creditors of the company are satisfied).
After the above documents are approved as described above, the liquidator is required to ask the competent tax administrators (i. e. tax authority, customs authority, local authority of the city district and municipal authority) for their consent with the deletion of the company from the Commercial register. As soon as such consents are granted by the above authorities, the liquidator may file an application for deletion of the company from the Commercial register.
We would like to emphasize that before entering the process of company’s liquidation, the company should make sure that conditions for filing of the petition for bankruptcy are not fulfilled in case of such company.
Please note that the company itself is obliged to file petition in bankruptcy in case the following conditions are met: (i) the value of the company’s obligations exceeds the value of its property and (ii) the company has more than one creditor. In such a case, the petition for bankruptcy of the company must be filed within the period of 30 days from the day the company ascertained or, if exerting professional care, could have ascertained the fulfillment of the above conditions.
On the other hand, a creditor is entitled to file a petition for bankruptcy if they may reasonably expect their debtor (i.e. the company) to be insolvent; the insolvency of a debtor may be reasonably expected if the debtor is more than 30 days in delay with fulfillment of at least two monetary obligations to more than one creditor and was requested in writing by one such creditor to pay.