Liquidation

Liquidation

Liquidation is a procedure which includes the settling and distribution of the assets of a company which is being terminated. The name of a company undergoing liquidation proceedings must contain the additional indication “in liquidation”.

The reasons for the termination of a company may be:

  1. Expiry of the time for which it has been formed
  2. Decision of company members
  3. Enforceable court decision establishing that the registration of the company in the court register was unlawful
  4. Bankruptcy of the company
  5. Death or dissolution of a company member, unless otherwise defined by the articles of incorporation
  6. Institution of bankruptcy proceedings over one of the company members
  7. Cancellation of a company member or his creditor
  8. Enforceable court decision

Exemptions

Liquidation will not be carried out if the members agree on a different method of calculation and division or if bankruptcy has been instituted over the company.

A creditor or a bankruptcy manager may come to an agreement for liquidation not to be carried out in the event where it should be carried out by the force of law because a creditor of one of the members has stated his cancellation or because bankruptcy proceedings have been instituted over one of the company members.

Implementation of liquidation

Liquidation is carried out by all company members as liquidators, unless a decision of the members or articles of incorporation stipulate that certain company members or other persons should do it.

At the proposal of one of those persons, liquidators may, for relevant reasons, be appointed by the court in whose territory is the seat of the company.

In addition to members of the company, a creditor who due to its claims against one of the members has cancelled the articles of incorporation is also deemed a participant in the appointment of liquidators.

If bankruptcy proceedings are pending against any of the company members, the position of such a member shall be taken by the bankruptcy manager.

The application for registration of liquidators in a court register shall be submitted to the court together with the application for the registration of reasons for the termination of the company.

Liquidators

Liquidators must complete ongoing operations, collect the receivables of the company, encash the remaining assets and pay off creditors. To complete any pending operations, they may also enter into new business transactions. Within the boundaries of their business activity, liquidators represent the company.

Actions concerning the liquidation shall be performed by liquidators collectively, unless a decision registered in the court register determines that these may be taken individually.

Regardless of the above, liquidators may authorise someone among them to carry out certain operations or types of operations. Regardless of who appointed them, liquidators must act according to decision relating to the conduct of the company’s operations unanimously made by the company members, a creditor who has cancelled the articles of association due to its claims against one of the company members or the bankruptcy manager of one of the company members.

Course of liquidation

Liquidators must compile financial statements at the beginning and at the end of the liquidation.

Members should be returned the things they gave the company to use.

Having settled the debts of the company, liquidators should allocate the remaining assets to the members in proportion to their shares in the capital of the company, which is determined on the basis of the final financial statements.

During the liquidation, money can be temporarily divided if it is not required to settle the creditors. The amounts required to cover the outstanding or disputed liabilities should be maintained, and to ensure the amounts belonging to the members for the final distribution.

If the assets of the company are not sufficient to cover the liabilities of the company and to pay off the shares in the capital, members of the company should compensate for the shortfall in the proportion in which they are obliged to cover company’s loss.

Upon completion of the liquidation, liquidators should submit to the court an application for the deletion of the company from the register. The company ceases to exist by its deletion from the register. Business records and company documents will be deposited by liquidators to the court on the territory where the company has its seat.

Costs of liquidation

Costs of liquidation have been reduced by abandoning the obligation of its publication in the Official Gazette and replacing it with a notice on the court register website, as an equally rapid and transparent method of publication, while significantly more cost-effective at the same time.

For a simple limited liability company: 800 HRK

For a limited liability company: 1,600 HRK

Notarial costs of limited liability company liquidation

For compiling a notarial document containing the decision of members on the cessation of a company, statements and signatures of liquidators and a certification of the application for entry into the court register, the notary public is entitled to a single remuneration of 100 points. The value of a point is 10 HRK.

The total cost payable by the party to the notary public amounts to 1,250.00 HRK.

Should the party not accept the notary’s calculation of the remuneration and costs, the notary public and the party may request a court specified by law for the territory in which the notary public has his/her seat to determine the amount of remuneration and reimbursement of costs. If the notary public attempts to charge the party more than he/she is entitled to, the party always has the option to notify the Ministry and the Chamber of this.

Court costs of limited liability company (d.o.o.) liquidation

In court proceedings, court fees are paid according to the prescribed tariff.

A court fee for registration in the court register amounts to: 100 HRK

A court fee for registering a change of data in the court register amounts to: 150 HRK

For publishing an invitation to creditors: 100 HRK

The total cost of liquidation for a limited liability company (d.o.o.) amounts to 1,600 HRK (notarial costs amounting to 1,250 HRK and court costs amounting to 350 HRK).

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