A company may close, i.e. cease to exist, by its deletion from the company register (at the competent court). This may be preceded by liquidation or bankruptcy proceedings.
Liquidation is voluntary and is carried out when the company’s assets are sufficient to cover all of the company’s liabilities.
Bankruptcy proceedings are carried out when there are reasons for bankruptcy, or after the company has become insolvent or after it has been established that its liabilities exceed its assets.
If liquidation is instituted and it is established that the company does not have sufficient assets to cover all of its liabilities after all, the proceedings continue as in the event of a bankruptcy.
Although the term “standstill” is frequently used for a non-operating company, in such an event the company still exists as a legal entity and is subject to all the regulations and obligations arising from its existence.
A company may cease to exist by the force of law and pursuant to a special court decision if it fails to submit annual financial statements for three consecutive years.
Updated: 30 November 2020