Our legal system provides two different procedures for the dissolution of companies, namely ordinary regular dissolution, and simplified dissolution. This article will outline both forms of company dissolution to help you decide which is the right choice for you, should the choice be necessary.
REGULAR DISSOLUTION
Grounds for dissolution
A company may be dissolved for various reasons, as provided for in Article 402 of the Companies Act. It may be dissolved upon the expiry of the time period for which it was incorporated, by a resolution of the general meeting, which must be adopted with a majority of at least three-quarters of the share capital represented, although the articles of association may specify a larger majority and other conditions.
The company may also be dissolved if the management has been inactive for more than six months, if the court establishes the voidness of a company limited by shares, in case of bankruptcy, by a court decision, by a merger with another company, if the company’s share capital is reduced below EUR 25,000 – unless each of these amounts of share capital is recovered by an increase in the share capital, for which a resolution must be adopted at the same time as the reduction in the share capital, and in which case the increase is not made possible by contributions in non-cash contributions.
The company shall also be dissolved if it has no shareholders or if the company holds only its own shares. These are only examples of grounds for dissolution of a company, and the articles of association may provide for others.
Commencement of the regular dissolution procedure
In the cases described above, the general meeting of the company shall adopt a resolution for the dissolution and winding-up of the company (resolution for winding-up). In the event that the company is wound-up by the expiry of the period of time for which it was incorporated, the general meeting must pass the winding-up resolution no later than 30 days after the expiry of the period of the time specified in the articles of association.
Content of the resolution
Article 405 of the Companies Act lays down the content that a winding-up resolution must have. Thus, it must contain information on the company’s name and registered office, the body that adopted the resolution, the grounds for dissolution, and the time limit within which the claims of creditors and shareholders holding bearer shares shall notify their claims. Such a period may not be shorter than 30 days from the date of publication of the resolution. The last compulsory element of the winding-up order shall be the name, surname, and residence or the business name and registered office of the liquidator.
The resolution may also contain other matters relating to the dissolution and winding-up of the company, but this isn’t compulsory. The body that passes the resolution shall send it to the registration authority for entering the commencement of the proceedings in the register.
Winding-up proceedings
After the decision to wind-up has been adopted, the winding-up shall take place. Who carries it out depends on the reason for it and the consequent dissolution of the company, more detailed provisions on the latter are contained in Article 404 of the Slovene Companies Act.
For example, if a company is dissolved because the period of time for which it was incorporated has expired or by a resolution of the general meeting, then the company itself carries out the winding-up procedures. If the management has been inactive for more than six months, creditors or shareholders representing at least one-tenth of the company’s share capital may bring a petition before the court for the compulsory winding-up of the company. However, the court may also, in such a case, carry out winding-up proceedings of its own ex officio.
SIMPLIFIED DISSOLUTION OF THE COMPANY
The simplified procedure is much more attractive in terms of time than the regular dissolution procedure, as it is possible to dissolve a company without winding-up. However, a company opting for such a dissolution must fulfill certain conditions, as described below.
Conditions for a simplified dissolution procedure
A company may be dissolved under simplified procedure without winding-up if all shareholders propose to the registration body that the company be removed from the register without winding-up and attach to the proposal a resolution for dissolution under simplified procedure and a notarised declaration by all shareholders that all the company’s obligations have been paid, that all relations with employees have been settled and that they assume the obligation to pay any remaining liabilities of the company. The registry body may require the shareholders to provide evidence of the truthfulness of their statements.
This type of dissolution is therefore not suitable for companies that, for example, have outstanding claims towards employees or other stakeholders. If a company were to be dissolved and still had outstanding claims, creditors may assert their claims against shareholders who have made a declaration that all the company’s liabilities have been paid and that all relations with employees have been settled within two years of the publication of the company’s removal from the register. Shareholders are jointly and severally liable for such claims with all their assets.
Resolution to dissolve
Similar to the resolution in the case of a regular dissolution, the resolution in the case of a simplified dissolution must contain the name and registered office of the company, the authority that passed the resolution for dissolution, and the fact that the dissolution is simplified, the number of shareholders, their names and surnames with their places of residence and a proposal for the division of the assets.
Publication of the resolution
The resolution on dissolution shall be published by the registry body, stating the names, surnames, and places of residence or the company names and registered offices of all the shareholders who have assumed the obligation to pay any remaining liabilities to creditors. The publication shall also state that the dissolution resolution may be challenged within 15 days and that the registration body will otherwise adopt a procedural decision striking the company off the register.
Objection to the dissolution resolution
In its decision IV Cpg 624/2020 on 28 October 2020, the High Court in Ljubljana ruled that if it is established in the objection proceedings before the Court of Registration that a company that is being dissolved with a simplified dissolution has not yet paid all its claim and settled all its relations with its employees, which could result in damages to its creditors, the decision on simplified dissolution shall be annulled by the Court of Registration.
If no objection is lodged or if the registry body rejects the objection, the authority shall issue a procedural decision striking the company from the register and publish it.
Company dissolution cases are complex situations where it is certainly advisable to seek advice from an experienced legal professional.