Dissolution and liquidation of a company

The president of the enterprise court may dissolve a company on legitimate grounds, at the request of a shareholder or a partner. Article 2:73 of the Wetboek van vennootschappen en verenigingen (Code of Companies and Associations) grants that power, sitting as in summary proceedings. The court of the registered office of the company has jurisdiction. Article 2:70 lists the other grounds for dissolution.

That claim is open in every company form. It differs in this from the dispute resolution scheme of title 7, which article 2:60 limits to private limited companies and to unlisted public limited companies. For a cooperative company or a general partnership, judicial dissolution on legitimate grounds is what remains. We weigh that route against the others in a dispute between shareholders.

The right route depends on what you want to achieve. A withdrawal produces a price for your shares. A dissolution ends the company itself. We set those choices side by side in the procedure in a corporate dispute.

The directors are then treated as liquidators by operation of law towards third parties. Article 2:79 of the Code states that for the private limited company, the cooperative company and the public limited company, among others. They receive that capacity without the powers that the law and the articles of association grant to an appointed liquidator.

For a director caught in a running conflict, that is the turning point. Anyone who lets the company fall silent without having a liquidator appointed ends up in the role of liquidator. Liability as a director keeps running alongside it, on the grounds and within the caps set out under directors liability.

The general meeting decides whether a company claim is brought against the liquidators. Article 2:107 says so in as many words, and lets it appoint one or more agents to carry out that decision. The structure matches the claim against directors.

The period is five years. Article 2:143, paragraph 1, bars all claims against members of the board, day-to-day managers, statutory auditors and liquidators after five years, for acts connected with their task. For the claim against the liquidators, that period runs from the publication prescribed by article 2:102.

In a fraud file the closing words of that article carry the weight. Where the acts were deliberately concealed, the five-year period only starts to run from their discovery. A liquidation that buries a transaction therefore buys no time. We also read the vote on the discharge, and what it covers is set out under discharge of directors.

A shareholder stays liable for the debts that were left unpaid at closure and that the shareholder knew about. Article 2:104, paragraph 2, creates that liability for the private limited, the cooperative and the public limited company, without joint and several liability between the shareholders. It covers debts they knew of, or could not have been unaware of in the circumstances, and for which no sufficient amount was deposited at closure.

There is a ceiling on the amount. The liability of each shareholder is limited to the contribution repaid, increased by that shareholder’s share in the liquidation surplus.

Where the company is dissolved and liquidated in a single deed, the knowledge condition falls away. Paragraph 3 of article 2:104 disapplies it for a dissolution and liquidation carried out under articles 2:80 and 2:81. Anyone who closes in that way cannot rely on ignorance afterwards.

A creditor whose claim was not paid in full may seek the reopening where an asset turns out to have been overlooked after closure. Article 2:105, paragraph 1, first sub-paragraph, gives that right. The third sub-paragraph orders the reopening only where the value of the overlooked asset exceeds the cost of reopening.

The company regains legal personality at that point. Paragraph 2 of the same article provides for it. It can therefore be sued again for what was left behind at closure.

That claim has its own limits. Article 2:143, paragraph 3, bars the claim for reopening after five years from the publication of the closure, and excludes it one year after the day the overlooked asset was discovered. Where the company is declared bankrupt, article XX.119 of the Code of Economic Law suspends by operation of law all proceedings relating to the estate until the claim has been filed. What remains possible after that is set out under conflicts after bankruptcy and liquidation.

At the request of a shareholder or a partner, and on legitimate grounds. Article 2:73 of the Wetboek van vennootschappen en verenigingen (Code of Companies and Associations) lets the president of the enterprise court of the registered office pronounce that dissolution, sitting as in summary proceedings. Unlike the dispute resolution scheme of title 7, the claim is not limited to the private limited company and the public limited company. Article 2:70 lists the other grounds for dissolution.

The directors. Article 2:79 of the Code of Companies and Associations treats them as liquidators by operation of law towards third parties where no liquidators have been appointed or designated, among others in the private limited company, the cooperative company and the public limited company. They hold that capacity without the powers the law and the articles of association grant to an appointed liquidator.

Within five years. Article 2:143, paragraph 1, of the Code of Companies and Associations bars all claims against liquidators, among others, after five years, for acts connected with their task. For the claim against the liquidators, that period runs from the publication prescribed by article 2:102. Where the acts were deliberately concealed, the period only starts to run from their discovery.

Yes, within the limits of article 2:104, paragraph 2, of the Code of Companies and Associations. The shareholders answer, without joint and several liability between them, for debts left unpaid at closure and for which no sufficient amount was deposited, where they knew of those debts or could not have been unaware of them. That liability is limited to the contribution repaid plus the share in the liquidation surplus.

Where an asset turns out to have been overlooked after closure. Article 2:105, paragraph 1, first sub-paragraph, of the Code of Companies and Associations gives that claim to every creditor whose claim was not paid in full. The third sub-paragraph orders the reopening only where the value of the overlooked asset exceeds the cost of reopening. Article 2:143, paragraph 3, excludes the claim one year after the day that asset was discovered.