Dissolution and liquidation of a company in Luxembourg
Company Dissolution and Liquidation in Luxembourg
Updated on Saturday 11th February 2017
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Although Luxembourg is an attractive country for foreign investments, company dissolution and liquidation in Luxembourg can sometimes be necessary when company prove to be inefficient. The cessation of activity happens in two stages: first the decision to dissolute the company and then the liquidation phase.
Our lawyers in Luxembourg can assist and guide you through the company dissolution and liquidation procedures in Luxembourg.
Types of company dissolution and liquidation in Luxembourg
The voluntary dissolution of a legal entity in Luxembourg is decided through an extraordinary general meeting. It is a common decision to end any business activities. This can occur if the business purpose is considered terminates, if the business has a fixed term of operation, because of unsatisfactory business results or as a consequence of the company not observing its mandatory legal provisions.
After the dissolution has been agreed upon, the liquidation phase begins. After its dissolution has been pronounced, the company will exist solely for the purpose of liquidation: to satisfy any existing claims from creditors and pay all outstanding debts. A liquidator is appointed during the general meeting. If no one from outside is appointed, the director of the company or a member of the management board can act as liquidator.
Compulsory liquidation occurs when the dissolution of the company is imposed by a court decision. This court decision can be made on behalf of one or more partners/shareholders or upon request from a public prosecutor if the company has breached the law.
You can also watch the video below for information on how to liquidate a company in Luxembourg:
The liquidation process and the liquidator’s duties
The appointed liquidator must draw up an inventory of the company’s asses and draw up a balance sheet in order to determine the assets and liabilities of that legal entity. Afterwards the liquidator will proceed to recover the dissolved company’s assets. Once recovered, the assets will be sold in order to pay the company’s debts. Only after all the debts are settled can the remaining assets or amounts (if any) be distributed among the company’s shareholders.
The distribution of the assets is performed according to the amounts owed to each creditor. The assets must be distributed to all creditors in a fair manner. The liquidator must prepare an annual financial statement. Once the process is complete, a final general meeting is convened in order to approve the final accounts and the liquidator’s report. After the liquidation process is complete, the company is removed from the Trade and Companies Register.
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