The procedure for winding up a limited liability company is set out in Articles 270–290 of the Commercial Companies Code. Placing a limited liability company into liquidation is the consequence of one of the grounds for the company’s dissolution arising. According to the Code, these grounds are:
- reasons provided for in the articles of association;
- a resolution of the shareholders to dissolve the company or to transfer the company’s registered office abroad, recorded in minutes drawn up by a notary;
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in the case of a company whose articles of association were drawn up using a standard template, also a resolution of the shareholders to dissolve the company, bearing a qualified electronic signature, a trusted signature or a personal signature from all shareholders;
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the declaration of the company’s bankruptcy;
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other grounds provided for by law.
The most common reason for the dissolution of a company is the adoption by the Shareholders’ Meeting of a resolution to dissolve the company and commence liquidation, and a resolution to appoint the company’s liquidators. These resolutions must be recorded by a notary in minutes drawn up in the form of a notarial deed.
Placing the company into liquidation entails a change in the manner and purpose of the company’s operations, which are primarily limited to liquidation activities. Pursuant to Article 282 of the Commercial Companies Code, the liquidators must wind up the company’s current affairs, collect receivables, fulfil obligations and realise the company’s assets. Liquidators may only initiate new business if this is necessary to complete pending matters. Importantly, real estate may be sold by public auction, and by private treaty only pursuant to a resolution of the shareholders and at a price not lower than that specified in the resolution adopted by the shareholders.
One of the most significant final stages of the liquidation of a limited liability company, from the perspective of the interests of the company’s creditors and shareholders, is the distribution of assets amongst the shareholders following the satisfaction or securing of the company’s creditors. As indicated above, this distribution may not take place before the expiry of 6 months from the date of the announcement of the commencement of liquidation and the summons of creditors. Furthermore, during the liquidation period, no profits may be paid to the shareholders, even partially, nor may the company’s assets be distributed before all liabilities have been settled.
Pursuant to Article 288(1) and (2) of the Commercial Companies Code, on the day preceding the distribution among the shareholders of the assets remaining after the creditors have been satisfied or secured, a liquidation report must be drawn up, which is subject to approval by the shareholders’ meeting. The liquidation report forms the basis for the distribution of the assets of the company being wound up amongst the shareholders.
The general rule is that the assets remaining after the creditors have been satisfied or secured are divided amongst the shareholders in proportion to their shares. The articles of association may contain different provisions in this regard, as provided for in Article 286(3) of the Commercial Companies Code. Therefore, if, according to the liquidation report, there are assets remaining after the creditors have been repaid (or secured) which are subject to distribution amongst the shareholders, then, as a general rule, they are entitled to claim payment of the liquidation amount due to each shareholder.
From the perspective of commercial practice, a key issue is the possibility of distributing the assets of a company in liquidation in kind (in natura). The general rule is that the assets of a company in liquidation should be realised, and the proceeds therefrom are primarily used to secure and satisfy the claims of creditors. Among legal scholars, the prevailing view is that the distribution of partners’ assets in kind is permissible. The relevant literature also emphasises that consent to the distribution of the company’s assets in kind may result in the inability to make repayments in proportion to the partners’ shares. If such a situation were to arise, it might be necessary to amend the articles of association and obtain the consent of all shareholders whose share in the assets would be reduced in relation to their proportional share.
The assets of a company undergoing liquidation may include various items, including real estate. Article 282(1) of the Commercial Companies Code stipulates that, during liquidation, real estate may be disposed of by public auction, and by private sale only pursuant to a resolution of the shareholders and at a price not lower than that resolved by the shareholders. What happens if the shareholders do not decide to sell the real estate during the liquidation proceedings, but after all creditors have been satisfied, they express a wish to transfer the real estate to the shareholders free of charge in proportion to their shares? The Regional Court in Poznań addressed this issue in its Order of 24 January 2017, ref. no. II Ca 1522/16, LEX No. 2251434, which emphasised, inter alia, that “the Commercial Companies Code does not explicitly specify the form in which the transfer in kind of real estate constituting an asset of the company being wound up should take place to a partner after the creditors have been satisfied. In this situation, it must be held that, by virtue of the reference contained in Article 2 of the Commercial Companies Code, the provisions of the Civil Code apply mutatis mutandis to the transfer of a company’s asset, namely real estate. Agreements obliging the transfer of ownership of real estate (Article 155 § 1 of the Civil Code) and agreements transferring ownership of real estate in performance of a pre-existing obligation require the notarial form to produce the effect of a transfer of ownership, in accordance with Article 158 of the Civil Code. It cannot be assumed that the transfer of ownership of real estate from a legal entity, such as a commercial company, to a partner (another legal entity) can take place through acts that do not take the form of a notarial deed. This would contravene the fundamental rule governing real estate transactions, which applies in the Polish legal system.
The issue of the effective transfer of the assets of a company in liquidation is of great importance from the perspective of the shareholders of a limited liability company placed in liquidation, since, pursuant to Article 25e(1) of the Act on the National Court Register “The State Treasury shall acquire, free of charge and by operation of law, the assets remaining after an entity has been struck off the Register, regardless of the reason for such striking off, which were not disposed of by the competent authority prior to the striking off, upon the entity’s striking off from the Register.”
He gained his professional experience in one of Lublin's renowned law firms, dealing with civil and business law in its broadest sense. At the law firm Hewelt Wojnowski i Wspólnicy spółka komandytowa, he deals on a daily basis with current counseling in the field of business and the development of corporate documentation of companies, such as. Company agreements, bylaws of company bodies, agreements regulating relations between shareholders, resolutions of company bodies, M&A transactions. In addition to…
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