LLC Dissolution PDF

5.Dissolution and liquidation for all limited liability companies Grounds for dissolution: 1)expiration of the time limit set in the instrument of incorporation 2) the achievement of the corporate's objects or the impossibility to achieve it 3) the inability of the shareholders' meeting to function...

5.Dissolution and liquidation for all limited liability companies Grounds for dissolution: 1)expiration of the time limit set in the instrument of incorporation 2) the achievement of the corporate's objects or the impossibility to achieve it 3) the inability of the shareholders' meeting to function or is inactive for a long time 4) the reduction of share capital due to losses below the legal minimum 5) resolution of the extraordinary shareholders' meeting to dissolve as a result of the withdrawal of one or more shareholders 6) the extraordinary shareholders' meeting passes a resolution to dissolve the company before the time limit set in the instrument of incorporation 7) any other reasons provided for by the instrument of incorporation or by the bylaws For S.A.P.A. (Partnership limited by shares) the Civil Code states another cause of dissolution: if all the managing partners cease to hold office, the partnership shall be dissolved unless they are replaced and the replacement managing partners accept their appointment within 180 days Art. 2485 c.c: directors must ascertain whether grounds for dissolution have arisen, so carry out verification and publicity of the cause of dissolution. The dissolution must be in the company register and the liquidation must be added to the company's name (art. 2487-bis, par. 2, c.c.). Directors are liable for any delay or fail for the dissolution Liquidation -liquidation procedure: first pay the company's creditors and allocate any residual assets to the shareholders/quotaholders -directors retain their powers until the handover (art. 2486 c.c.). -other bodies as well retain their power during the liquidation procedure: shareholders' meeting and board of statutory auditors (art. 2488 c.c.) -if the reason for dissolution has been eliminated, the company may revoke liquidation status Liquidators are appointed, for the duration of the liquidation process, to carry out the liquidation, their powers must be registered in the company register. They may be removed for just cause Liquidators powers, duties and liabilities (art. 2489 c.c.) are based on the powers, duties and liabilities held by the directors, with some adaptations. -they have to carry out their duties with the diligence and professionalism required by their role -they must receive the company's assets and the other documents handed over by the directors and they have to drawn up an inventory of all the company's assets Their main task is to liquidate the company's assets and pay the company's creditors. They are not allowed to distribute the company's assets among the shareholders, until all creditors have been paid (exception by providing suitable guarantees). If funds are insufficient it may be asked of shareholders to make contributions to pay creditors. They have to draw up the financial statements and submit it to the shareholders' meeting for approval every year, as long as the liquidation lasts. When the liquidation is complete liquidators must draw up the final liquidation financial statements and the so-called distribution plan. Filing in the Business register (also with the report of the statutory auditors and of the external auditors). For the approval mechanism each shareholder/quotaholder needs to give their approval, with tacit approval. Complaints can be made by shareholders/quotaholders within 90 days from the filing, if there are no complaints within these 90 days, the final liquidation financial statements shall be deemed approved Cancellation of the company from the Business register (art. 2495 c.c.) After the approval of the final liquidation financial statements, the liquidators ask for the cancellation of the company from the Business register. If there are company's creditors who have not been paid, they may ask for the payments to the shareholders/quotaholders but only up to the limit of what they have received from the liquidation. Companies’ dissolution and liquidation Italian and European Company Law – A.A. 2024/2025 Dott.ssa Giulia Serafin → Articles 2484-2496 c.c. → The regulations are set for all limited liability companies Grounds for dissolution: 1) expiration of the time limit set in the instrument of incorporation 2) the achievement of the corporate’s object or the impossibility to achieve it 3) the inability of the shareholders’ meeting to function or its continued inactivity 4) the reduction of share capital due to losses below the legal minimum 5) Resolution of the extraordinary shareholders' meeting to dissolve as a result of the withdrawal of one or more shareholders, or inability to reimburse shares without reducing the share capital, or the upholding of the opposition of corporate creditors to the material reduction 6) the extraordinary shareholders’ meeting pass a resolution to dissolve the company before the time limit set in the instrument of incorporation 7) any other reasons provided for by the instrument of incorporation or by the bylaws → For S.A.P.A. (Partnership limited by shares) the Civil Code states another cause of dissolution: if all the managing partners cease to hold office, the partnership shall be dissolved unless they are replaced and the replaicement managing partners accept their appointment within 180 days (art. 2458, par. 1, c.c.) Art. 2485 c.c. → verification and publicity of the cause of dissolution → running of effects → company’s name (art. 2487-bis, par. 2, c.c.) → liability of the directors Liquidation → purpose of the liquidation procedure → directors: powers (art. 2486 c.c.) → other bodies: shareholders’ meeting and board of statutory auditors (art. 2488 c.c.) → revocation of liquidation status (art. 2487-ter c.c.) Liquidators → appointment and content of the resolution (art. 2487, par. 1, c.c.) → duration of their office → removal (art. 2487, par. 4, c.c.) → publicity (art. 2487-bis, par. 1, c.c.) Liquidators’ powers, duties and liabilities (art. 2489 c.c.) are based on the powers, duties and liabilities held by the directors, with some adaptations → they have to carry out their duties with the diligence and professionalism required by their role → they must receive the company’s assets and the other documents handed over by the directors and they have to drawn up an inventory of all the company’s assets → they must take all action necessary to liquidate the company, unless otherwise provided in the bylaws or in their appointment → Their main task is to liquidate the company's assets and pay the company’s creditors: - prohibition to distribute the company’s assets among the shareholders (exception by providing suitable guarantees) - insufficiency of funds → They have to drawn up the financial statements and submit it to the shareholders’ meeting for the approval every year, as long as the liquidation lasts (art. 2490, c.c.) → When the liquidation is complete liquidators must drawn up the final liquidation financial statements and the so-called distribution plan (art. 2492 c.c.) - filing in the Business register (also with the report of the statutory auditors and of the external legal auditors) → approval mechanism: each shareholder/quotaholder (not the meeting) – tacit approval (art. 2493 c.c.) - complaints from shareholders/quotaholders within 90 days from the filing - if there are no complaints within this 90 days, the final liquidation financial statements shall be deemed approved Cancellation of the company from the Business register (art. 2495 c.c.) → after the approval of the final liquidation financial statements, the liquidators ask for the cancellation of the company from the Business register → If there are company’s creditors who have not been paid, they may ask for the payments to the shareholders/quotaholders but only up to the limit of what they have received from the liquidation. Also, they can ask the payments still duo to the liquidators if the non-payment is due to their fault