The process of liquidation proceedings of a limited liability company consists of three main stages: 

• Opening the liquidation of an LLC 

• Activities of the entity in liquidation 

• Completion of the liquidation of the company 

Opening the liquidation of an LLC 

The first stage of the liquidation proceedings is the opening of the liquidation of the LLC. However, before that, there must be a reason for the dissolution of the LLC. The reason for the dissolution of the LLC is: 

• Reasons specified in the articles of association – the shareholders may indicate in the articles of association the reasons for the dissolution of the LLC, which after their occurrence lead to liquidation (e.g. completion of a specific project for which the company was established or the expiry of the period for which the company was established). 

• A resolution of the shareholders on the dissolution of the company or the transfer of its registered office abroad, supported by a protocol by a notary – the most common reason is a resolution of the shareholders, and the resolution depends on the free decision of the shareholders. In order for the resolution to be valid, a protocol must be drawn up and adopted by a majority of 2/3 of the votes, unless the agreement provides for stricter conditions (e.g. unanimity).  

• Declaration of bankruptcy of a limited liability company – dissolution takes place after the bankruptcy process is completed, and the company is deleted from the register. 

• Other reasons provided for by law – in these situations, the registry court must issue a decision on the dissolution of the company. 

On the opening date of the liquidation, the management board of the LLC company ceases to function, and the mandates of the company’s management board members expire. Competences in the field of representation and management of the company’s affairs are taken over by liquidators. During the liquidation, there is no management board of the limited liability company, and the liquidators’ become representatives of the company. The commencement of liquidation means that the commercial proxies granted by the company expire. 

Pursuant to Article 276 of the Commercial Companies Code, the liquidators are members of the management board of a limited liability company. The only exceptions to this rule are those provided for in the articles of association or the resolution of the shareholders. A resolution of the shareholders appoints the liquidators of the company. If the dissolution of the company is made by a court decision, the court appoints the liquidators, and the court has the right to dismiss them. In other cases, unless the articles of association provide otherwise, the liquidator may be dismissed by a resolution of the shareholders. At the request of persons who have a legal interest, the court may dismiss liquidators for important reasons and appoint new ones. This is mainly related to the requests of the company’s creditors or its minority shareholders, who have reservations about the actions of the liquidators as part of the liquidation proceedings. 

If the dissolution of the company is decided by the court, it may also appoint liquidators, and only the court will have the right to dismiss them. In other cases, unless the articles of association provide otherwise, the liquidator may be dismissed by a resolution of the shareholders. At the request of persons having a legal interest, the court may dismiss liquidators for important reasons and appoint new ones. This applies mainly to applications from the company’s creditors or its minority shareholders who have reservations about the actions of the liquidators as part of the liquidation proceedings. 

The liquidators of an LLC have the right to manage the company’s affairs and represent it in liquidation activities. The company’s current business should be terminated, receivables collected, liabilities fulfilled and assets liquidated. New business can only be taken up if it is necessary to complete pending cases. Real estate can be sold through a public auction, and from a single source only by virtue of a resolution of the shareholders and for a price not lower than that adopted by them. 

Opening the liquidation of an LLC requires notification to the National Court Register. The notification of the opening of the liquidation of the LLC should include the deletion of information about proxies (if appointed), as well as a request to enter the data of the liquidators (name, surname, address) and the manner of representation of the company by the liquidators. The application is submitted via the website of the Ministry of Justice. 

In addition to filing an application with the National Court Register, the LLC must publish an announcement of the liquidation of the LLC in the Court and Economic Monitor. The announcement should include a request to the creditors of the LLC to submit their claims within three months from the date of publication of the announcement in the Court and Economic Monitor. 

When announcing the opening of liquidation, it should be reported to the National Court Register. The opening notification must include a request to delete information about the persons who are members of the management board, delete information about proxies and a request to enter the data of liquidators. 

The next step is to prepare the balance sheet on the day falling on the opening of the liquidation and submit the balance sheet for approval by the Shareholders’ Meeting. The balance sheet must be prepared within 15 days of the opening of the liquidation. 

Activities of the entity in liquidation 

The liquidation activities that must be performed during the process are:  

• Repayment of liabilities,  

• Collection of receivables,  

• Liquidation of the assets of a limited liability company (which does not necessarily mean the sale of assets, but the performance of activities enabling the satisfaction of the creditors of the limited liability company), 

• Division of assets of a limited liability company among shareholders 

The division of the company’s assets is made as part of the liquidation proceedings. It cannot take place before the lapse of 6 months from the date of announcing the liquidation and calling creditors to submit claims. The division is proportional to the shares held by the creditors or in the manner provided for in the agreement. 

Completion of liquidation of the company

The books and documents of the dissolved company should be handed over to the person designated in the articles of association or the resolution of the shareholders. The termination of the activity of a limited liability company is carried out by reporting the completion of liquidation to the register of entrepreneurs by filing an application for deletion of the company from the National Court Register. The tax office must update the company’s data on the NIP-8 form and provide a copy of the financial statements. The company that employed employees must deregister them from ZUS as a contribution payer by submitting the ZUS ZWUA form within 7 days of the termination of the employment relationship. 

There is no specific duration of liquidation of a limited liability company. The liquidation proceedings of a limited liability company continue until all the activities that make up the liquidation proceedings have been completed. 

Text based on: https://www.biznes.gov.pl/pl/portal/0078