Cancellation of enterprises
Business, like any process that is influenced by different factors over time, changes. And these changes can mean both a product of something new and complete cessation of already obsolete old. There are only two types of reasons for closing down of an enterprise: voluntary or involuntary (liquidation due to the requirements of government agencies).
In the first case there are plenty reasons for such a decision, and therefore is quite difficult to choose the right tactics to deal with the paperwork issues. Among the main reasons for the voluntary liquidation of the business are:
- Pre preinstalled duration of the company recorded in the Charter;
- The achievement of the purposes for which the company was established;
- Liquidation according to the decision of the general meeting of shareholders for the reasons:
- the low level of net profit;
- inability to achieve company’s goals;
- negative indicators of economic efficiency and much more.
- The merger of several companies by the decision of the Shareholders Council or separation of a company in several companies;
- Distribution of property among the shareholders of the company;
Transition of the enterprise in the different legal form.
Almost in any country the process of termination of the firm’s activity is accompanied by a drawing of the liquidation balance. No exception and Czech the companies. At the same time, the proprietor should evaluate the balance of the enterprise as from a factual and from the legal point of view, because some financial transactions may be simply not recorded or unaccounted for various reasons.
This is what the proprietor should worry about, as the closing down of one enterprise does not always mean the termination of whole business. Nevertheless, due to such negligence as incorrect evaluation of the liquidation balance may cause serious problems as a litigation with the tax authorities or the creditors.
Therefore, to ensure the successful liquidation of is best to contact a professional lawyers who are able to carry out a full independent review of all obligations and liabilities of the enterprise, to prepare a full package of necessary documents, to objectively assess the state of the balance sheet and the company’s debts.
Also worth mentioning the importance of proper preparation of documents in a forced process of liquidation. For the cancellation of the enterprise’s by the forced circumstances could be the following grounds:
- the absence of any external or internal activities of the enterprise for two years;
- the absence of activities for the general collections of shareholders for two years;
- prohibition of certain types of the company’s activities sufficient for a complete termination of its operation;
- unresolved disputes between the shareholders of the enterprise;
- reduction of the authorized capital of the company below the permissible limit (less than 200 000 CZK);
- circumstances in which the basic conditions for the company existence are not feasible;
- violation by company the main liabilities to establish and maintain a reserve fund;
- company is engaged in illegal or not permitted under the Charter activity;
- exceeding an indebtedness over the total cost of the enterprise and its property and so on.
This list can be extended if the legal framework will be complemented by appropriate changes regarding the reasons for liquidation of companies.
If the reasons forcing the closure of firm are avoidable, the court may give a certain period of time, during which the company must eliminate them. But often the situation develops so that such reasons are unsolvable. In this case, the state could not give the certain term for elimination of the forced company’s closure, but it imposes certain requirements on the process of liquidation.
Under Czech legislation, the proprietor has a right to terminate the existence of the company, both ways: through full legal liquidation (which assumes, that all debts, loans, tax and other disputes must be fully repaid), and without liquidation. The second option is available only if the enterprise itself in one way or another will continue its actual, but not a legal existence. Another words, if the successor company will be able to take over all the debts of the company that being liquidated by the state. Therefore, the second option is not easier than the first, as the proprietor will have a long way in preparing the documents for the transfer of debts from the old to the new enterprise.
FChain is ready to assist you at all stages of such a complex process. Having representatives in the Czech Republic, we offer you services of the most experienced lawyers that are able to provide you guaranteed solutions in all issues of liquidation of the company. Our specialists will prepare the documents for the closure of debt obligations and provide help in the drafting of the liquidation balance sheet. Also we will monitor the presence of unreported balances and accompany the whole process of elimination, communicating with the public service for you. Relying on us you are making the right choice, because professional assistance in the closing down of an enterprise – the best solution for your business reputation.