The dissolution of a commercial company does not immediately extinguish the company, but determines the beginning of a liquidation period during which the legal entity continues to exist, until the liquidation operations are concluded. In other words, the dissolution of a commercial company does not make the legal entity disappear, but it does completely modify its object since it is prevented from continuing to carry out its activities in a normal way, having to limit itself only to concluding the operations that have been carried out and finally distribute the equity or corporate assets among the partners or shareholders.
At the time of incorporation, the partners or shareholders can establish in the bylaws what will be the causes for which it will be dissolved, but additionally, the General Law of Mercantile Corporations in its article 229 contemplates various reasons why it can be given, among them the following:
1) Due to the expiration of the term established in the social contract.
2) Due to the impossibility of continuing to carry out the main purpose of the company or because it is completed.
3) By agreement of the partners taken in accordance with the social contract and with the Law.
4) Because the number of shareholders becomes less than the minimum that this Law establishes, or because the parties of interest come together in a single person.
5) For the loss of two thirds of the capital stock.
6) By judicial or administrative resolution issued by the competent courts, in accordance with the causes provided in the applicable laws.
Given that the dissolution constitutes a modification to the corporate deed, it must be registered in the Public Registry of Commerce. However, it is not obligatory when the dissolution is carried out due to having concluded the social life, since it operates by right. The aforementioned registration is for the purpose of informing the creditors of the dissolution of the company.
The administrators will not be able to carry out new operations, being jointly and severally liable for the businesses comprised against such prohibition, the Assembly for its part is also limited in its powers, since it can only make resolutions regarding the liquidation. On the other hand, its functions after dissolution are transitory until the appointment of the liquidators.
Once the dissolution is made, the liquidation is carried out, which is the procedure by which the company is extinguished. The creditors are liquidated with their assets and the social assets are divided among the partners.
This will be in charge of one or more liquidators who will be the legal representatives of the company and will be responsible for the acts carried out beyond the commission that was made to them and will act jointly. The process will be carried out in accordance with the relative stipulations of the social contract or the resolution made by the partners when agreeing or recognizing the dissolution of the company. In the absence of such stipulations, the liquidation will be carried out in accordance with the law.
Once the appointment of the liquidators has been made, the administrators will deliver all the assets, books and documents of the company to them, drawing up an inventory of the corporate assets and liabilities. For which the liquidators will have the following powers:
- Conclude the social operations that were pending at the time of dissolution.
- Collect what belongs to the company, pay what it owes and sell the company’s assets if it has them.
- Practice the final balance of the liquidation, which must be submitted to the discussion and approval of the partners or shareholders. As well as liquidating each partner or shareholder their social assets.
- Obtain from the Public Registry of Commerce the cancellation of the registration of the social contract, once the liquidation is concluded
Finally, once the balance sheet has been approved, the liquidators will proceed to make the payments that are pending to the partners or shareholders, against the delivery of the share titles; and the sums that belong.
María Fernanda Ortega
Gloria Ponce de León & Hernández
