Business Law: Grounds for Dissolution

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Questions and Answers

In the case of a limited liability company, which of the following events can trigger the dissolution of the company? (Select all that apply)

A decision by the board of statutory auditors to dissolve the company.

The company's objects are achieved or become impossible to achieve. (correct)

The shareholders' meeting is unable to function or remains inactive for an extended period. (correct)

A resolution by the board of directors to dissolve the company, even if no other grounds for dissolution are present.

An extraordinary shareholders' meeting votes to dissolve the company before the expiration of the time limit set in the incorporation document. (correct)

The managing partners of a Partnership limited by shares (S.A.P.A.) are all replaced within 180 days.

The company's share capital falls below the legally mandated minimum due to losses. (correct)

Which of the following statements accurately describes the role of directors during the liquidation process of a limited liability company? (Select all that apply)

Directors are responsible for appointing liquidators and have the authority to remove them for just cause.

Directors are accountable for any delays or failures in carrying out the dissolution process, potentially facing legal consequences. (correct)

Directors remain in office until the company's assets are fully distributed to shareholders/quotaholders. (correct)

Directors are required to submit a written report to the shareholders' meeting outlining the reasons for the company's dissolution.

Directors cease to hold any power or responsibility once the liquidation process officially begins.

If a company undergoing liquidation manages to eliminate the cause of its dissolution, what can occur?

The company can revoke its liquidation status and resume normal business operations. (correct)

The liquidators are automatically discharged from their duties, and the company is automatically reincorporated.

The shareholders' meeting must vote to approve the revocation of the company's liquidation status.

The company can apply for a new incorporation document, effectively starting a new company with the same name.

The company must continue its liquidation process, regardless of the elimination of the dissolving cause.

Based on the provided context, which of the following entities maintain their power and authority during the liquidation process? (Select all that apply)

<p>Shareholders' Meeting. (A), Board of Statutory Auditors. (C), Directors. (D)</p> Signup and view all the answers

The powers, duties, and liabilities of liquidators are primarily based on which of the following entities or positions?

<p>The powers, duties, and liabilities held by the company's directors. (D)</p> Signup and view all the answers

Flashcards

Grounds for dissolution

Reasons for terminating a limited liability company, such as reaching a time limit or corporate objectives.

Liquidation procedure

The process of paying creditors first, followed by allocating remaining assets to shareholders.

Role of liquidators

Individuals appointed to manage the liquidation process and ensure proper distribution of assets.

Directors' duties in dissolution

Directors must verify and publicize the reasons for dissolution according to legal requirements.

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Revoking liquidation status

The ability of a company to cancel its liquidation if the reasons for dissolution have been resolved.

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Study Notes

Grounds for Dissolution

Expiration of the time limit in the incorporation document
Achievement of the company's objectives or impossibility of achieving them
Inability of the shareholder's meeting to function for a prolonged period
Reduction of share capital below the legal minimum due to losses
Resolution by an extraordinary shareholder meeting to dissolve the company (e.g., due to withdrawal of a shareholder)
Dissolution before the time limit by extraordinary shareholder meeting
Any other reason specified in the incorporation document or by-laws
For S.A.P.A. (Share-limited Partnership), if all managing partners leave office without replacement for 180 days, dissolution occurs.

Dissolution Procedures

Directors must ascertain if grounds exist for dissolution.
Verification and publication of dissolution cause is required (art. 2485 c.c.)
Company's name continues during dissolution (art. 2487-bis, par. 2, c.c.)
Directors are liable for delayed or failed dissolution.

Liquidation

Creditors are paid first, then residual assets to shareholders.
Directors retain powers until handover (art. 2486 c.c.).
Shareholder's meeting and statutory audit board retain their powers during liquidation (art. 2488 c.c.).
Liquidation status can be revoked if the reason for dissolution is removed.

Liquidators

Appointed for the liquidation process, with powers registered.
Removable for just cause
Powers, duties, and liabilities of liquidators are similar to directors, with some adjustments.
Must perform duties with diligence and professionalism
Must inventory company assets from directors
Must liquidate company assets and pay creditors.
Prohibited from distributing assets to shareholders until all creditors are satisfied (exception for guarantees)
Financial statements are drawn up annually, submitted for approval until liquidation completed
Completion of liquidation requires final statements and distribution plan, filed with register (includes statutory and external auditors' reports)
Shareholders/quotaholders have 90 days to complain about the final statement; if no complaints, the statements are approved
Company removed from Business register after approval of final statements
Creditors who haven't received payments are allowed to seek payments from shareholders/quotaholders up to the limit of what they have received in the liquidation, or from liquidators if non-payment is their fault.

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Description

Explore the various grounds for dissolution in business law, including expiration of incorporation documents, achievement or impossibility of objectives, and procedures involved in the dissolution process. This quiz will enhance your understanding of the legal framework governing business entities.