A company’s closure is a significant choice that frequently comes after an unsuccessful attempt to restructure the legal entity. The company may be liquidated if it can no longer make a profit or if the owners are unable or unwilling to restructure. In addition to bankruptcy, which happens when a business is unable to pay its creditors, dissolution and liquidation are two different processes.
How is a Danish corporation liquidated
In Denmark, a corporation may be liquidated in one of two ways:
- Solvent liquidation is used(decided by its members).
- By way of mandatory liquidation(ordered by the Court).
There are many different reasons why a firm could be liquidated in Denmark, such as:
- If the members have determined that the company’s goals have been set.
- The availability term for it has expired.
- The Commerce and Companies Agency not receiving the necessary documentation.
- The omission to appoint the managers and auditors, and severe violation of the laws.
Each of the three options: liquidation, bankruptcy, and the forced corporate wind-up, should be handled separately. The Danish Companies Agency has the authority to order the company’s forced dissolution. Another manner in which the activities of a company are ceased is if a bankruptcy petition is filed on the company’s behalf(by the liquidator himself when the company is insolvent).
Alternately, a third party, such as a creditor, may file the petition. A trustee appointed by a court now manages the bankruptcy proceedings instead of the liquidator. The assets will once more be divided among the creditors by the relevant priority.
What procedures are followed in Denmark for corporate liquidation
A corporation that is no longer profitable may choose to liquidate itself, provided that the legal entity can pay all of the debts, including the final taxes, the costs of liquidation, and most importantly, the creditors’ claims, in the order that they are due. When this is not practicable, an administrator will declare bankruptcy. In the event of a solvent liquidation, the shareholders must vote to close the Danish company, and the Commerce and Companies Agency must be notified no later than two weeks after the vote. The liquidator, who oversees the liquidation of a company incorporated in this nation, is chosen by the members of the company in the case of a solvent liquidation or by the court in the case of compulsory liquidation. When a corporation decides to close, the decision is published in the Official Gazette, and creditors are required to be informed of the procedure and how to submit their claims. and the liquidation procedure has already begun, the appointed liquidator will be notified(often lasting three months).
The final process
A liquidator must first create a profit and loss statement and a balance sheet. These papers need to be delivered from Denmark to the Commerce and Companies Agency. The claims that were deposited on time must be paid, and the leftover assets are utilized to pay the shareholders and the late-deposited claims.
A bankruptcy petition must be filed with the Commercial Court if the claims cannot be paid. A Danish company’s liquidator must call a new general meeting and create a fresh balance sheet after paying all claims and distributing the leftover assets among the shareholders. The shareholder who spoke at the annual meeting delivered a report on its activities as well as the balance sheet. As a result, the liquidator is released, and the business’s removal from the company registry is requested.
In Denmark, solvent liquidation may be canceled under certain circumstances. In this situation, the Commerce and Companies Agency must be notified within two weeks of the resolution and the share capital of the business founded in Denmark must be increased or decreased by the stipulated minimum share capital.
