Dissolution and liquidation

Dissolution is an exceptional situation in a company’s life and a stage in the process that ends its legal personality.

The grounds for dissolution are set by law or by the articles of association.

Under the Companies Law, a company is dissolved by:

1. expiry of the term set for its duration;
2. impossibility of carrying out its object of activity, or its completion;
3. a declaration that the company is void;
4. a decision of the general meeting;
5. a decision of the tribunal, at the request of any shareholder, for good reasons, such as serious disagreements between shareholders that prevent the company from functioning;
6. the company’s insolvency;
7. other causes provided by law or the articles.

There are three ways to dissolve a company in Romania:

A. Dissolution by operation of law

The law provides for automatic dissolution when the term set for the company’s duration expires.

Where the shareholders set the company’s duration in the articles and that term has expired, the company is dissolved by law on the expiry date.

Recording dissolution by operation of law of a limited liability company with several shareholders involves the following stages:

1. stage I — filing the application for dissolution, together with the shareholders’ decision acknowledging the dissolution by law on expiry of the term, appointing liquidators, ending the mandates of the directors and managers, and providing for deregistration after liquidation, plus other documents;
2. stage II — filing the application for deregistration with documents including the liquidation financial statements and the plan for distributing the assets signed by the shareholders, the liquidators’ report, and the tax certificate showing that the company has no debts to the state budget or social contributions.

B. Voluntary dissolution — by decision of the shareholders

A company may be dissolved before the end of its term by decision of the shareholders taken in the general meeting.

Recording voluntary dissolution with the Trade Register involves the following stages:

1. stage I — filing the application for dissolution and liquidation, with the shareholders’ decision on simultaneous dissolution and liquidation, taken with the quorum and majority required to amend the articles, where they agree on how the company’s assets are distributed and liquidated and ensure that the liabilities are paid or settled with the creditors, plus other documents;
2. stage II — filing the application for deregistration, with the liquidation financial statements and the asset distribution approved by the shareholders.

In a voluntary dissolution where all shareholders agree on the distribution of assets, no liquidator is needed. If the shareholders do not agree on how to divide the assets, an additional stage — the liquidation procedure — is required, with a liquidator involved in winding up the company.

C. Dissolution by court order

Under the law, any shareholder may ask the tribunal to dissolve the company for good reasons. The law presumes that serious disagreements between shareholders that prevent the company from functioning are good reasons.

The court’s decision to dissolve the company must be recorded in the Trade Register and published in the Official Gazette.

Liquidation following dissolution is carried out mainly in the interest of the shareholders. Once the net assets have been distributed among the shareholders, the liquidation is complete.

Under the Companies Law, after liquidation the liquidators must ask the Trade Register to deregister the company within 15 days of the last liquidation act, which is the distribution of the net assets among the shareholders.