Compulsory dissolution of a general partnership or limited partnership

A general partnership or limited partnership is dissolved on the basis of a court ruling. There may be various reasons for a compulsory dissolution; in general the reason is that the company or its activities do not conform to legislation. If it is possible to eliminate deficiencies, the court shall grant a term before making a compulsory dissolution decision. This term allows you to eliminate deficiencies and continue the company’s activities.

Reasons for compulsory dissolution

The most common reasons for the compulsory dissolution of a general partnership and limited partnership are the following:

  • members of the partnership did not adopt a dissolution resolution, even though they were required to do so;
  • the objective of the company’s activity or the activity itself is not in conformity with the requirements set forth in legislation, is in conflict with the public order and good morals;
  • the partnership agreement is in conflict with legislation.

In addition, compulsory dissolution may be based on other reasons arising from legislation. Among other things, compulsory dissolution may be a punitive sanction for an offence committed by the company.

Compulsory dissolution process

  • Submit a petition for compulsory dissolution to the county court on whose territory you are registered. A compulsory dissolution may be initiated by a court itself; Contact information for courts
  • Begin liquidating the general partnership or limited partnership. You will have to follow a specific series of steps.

Liquidation consists of the following stages:

  1. Appointment of liquidators and entry of their names into the Commercial Register. In a compulsory dissolution, the court will appoint the private limited company liquidators.
  2. Approval of both the opening balance sheet prepared upon liquidation and the annual report by resolution of the shareholders. The opening balance sheet prepared upon liquidation and the annual report shall after approval be submitted promptly to the Commercial Register.
  3. Dissolving the partnership, collection of debts, sale of the partnership’s assets and satisfying creditors’ demands. If the partnership’s assets are not sufficient for satisfying the claims of the creditors, the partners shall be equally liable in proportion to their contributions for the partnership’s obligations, unless set forth otherwise in the partnership agreement. If it is not possible to satisfy the demands of the creditors, liquidators must file a bankruptcy petition.
  4. Preparation of the final balance sheet of the company being liquidated and distribution of assets; in exceptional cases, preparation of an annual report. The residual assets shall be distributed by the liquidators among the partners in accordance with the contributions of the partners, unless provided otherwise in the partnership agreement.

The compulsory dissolution will be effective as of the moment the corresponding court ruling enters into force. The court will communicate the relevant information to the Commercial Register for the making of the dissolution entry into the Commercial Register.

Last amended: 20-01-2016 10:53 | Compiled by: Ministry of Justice