Liquidation

Liquidation is a procedure that includes settling and distributing the assets of a company that ceased to exist. The name of a company undergoing liquidation proceedings has to contain the additional indication “in liquidation”.

The reasons for the termination of a company may be as follows:

1. Expiry of the time for which it was established
2. Decision of company members
3. The final court decision establishing that the registration of the company in the Companies Register was unlawful
4. Bankruptcy of the company
5. Death or dissolution of a company member, unless otherwise defined by the articles of association
6. Institution of bankruptcy proceedings over one of the company members
7. Cancellation of a company member or his/her creditor
8. Final court decision.

Exemptions

• Liquidation cannot take place if 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 by the force of law because the creditor of one of the members has declared his/her dismissal or that 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 association stipulate that certain company members or other persons should do it.
• At the proposal of one of those persons, liquidators may be appointed for relevant reasons by the court in the territory of which the company is established. The court may appoint as liquidators persons who are not members 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 is taken by the bankruptcy manager.
• The application for registration of liquidators in a register of companies is submitted to the court along with the application for the registration of reasons for the termination of the company.

Liquidators

• Liquidators have to complete ongoing operations, collect the company’s receivables, encash the remaining assets and settle the creditors. To complete any pending operations, they may also enter into new business transactions. Within the limits of their business activity, liquidators represent the company.
• Actions concerning liquidation are performed jointly by liquidators unless a decision entered in the register of companies determines that these may be taken individually.
• Regardless of the above, liquidators may authorize someone among them to perform certain tasks or certain types of tasks. Regardless of who appointed them, liquidators have to act in accordance with the decision relating to the conduct of the company’s operations unanimously made by the company members or the bankruptcy manager of one of the company members, a creditor who has cancelled articles of association due to claims against one of the members, or a bankruptcy administrator of one of the members.

Liquidation progress

• Liquidators have to compile financial statements at the beginning and the end of the liquidation.
• The things they have given to the company must be returned to the members.
• After settling the debts of the company, liquidators have to allocate the remaining assets to the members in proportion to their shares in the company’s capital, 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 to ensure the amounts belong 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 have to compensate for the shortfall in the proportion in which they are obliged to cover the company’s loss.
• Upon completion of the liquidation, liquidators have to submit to the court an application for the deletion of the company from the register of companies. The company ceases to exist by its deletion from the register.

Storage and retention of company books and documentation

• Business records and documentation of the company have to be kept by the liquidator within the time limits set by special regulations or entrusted for safekeeping to the person providing the services for the storage of business documents in accordance with the rules governing the treatment of archival material and archives.
• Business records and documentation may also be stored electronically.
• The Companies Register will contain the information on where the company’s books and documentation are stored.
• The fee for the storage and retention of company books and documentation is charged to the company prior to its deletion and cannot exceed the justified costs of the digitalization of company books and documentation, preparation of their list, and their safeguarding and protection in electronic form.

Liquidation costs

• Costs of liquidation have been reduced because there is no obligation of its publication in the Official Gazette of the Republic of Croatia Narodne novine, which has been replaced with an announcement at the website of the companies register.
• There are notarial costs and commercial court costs

Termination of a company without liquidation

• A company may be terminated with a summary proceeding without liquidation.

Competent authority and regulations

Ministry of Justice, Public Administration and Digital Transformation

Ulica grada Vukovara 49, 10 000 Zagreb

gradjansko.pravo@mpudt.hr

Companies Act (NN 111/93, 34/99, 121/99 – authoritative interpretation, 52/00 – Decision of the Constitutional Court of the Republic of Croatia, 118/03, 107/07, 146/08, 137/09, 152/11 – consolidated version, 111/12, 68/13, 110/15, 40/19, 34/22, 114/22, 18/23, 130/23 and 136/24)

Companies Register Act (NN 1/95, 57/96, 1/98, 30/99, 45/99, 54/05, 40/07, 91/10, 90/11,148/13, 93/14, 110/15, 40/19, 34/22 and 123/23)

Ordinance on the manner of entry into the Companies Register (NN 121/19 and 2/23)

Last updated on 28 February 2025