Dissolution of a public limited company
A public limited company is dissolved by resolution of the shareholders or by judicial decision. In general, the dissolution of a public limited company consists of three key stages:
- Adopting a dissolution resolution and submission of the dissolution resolution;
- Deletion of the public limited company from the Commercial Register.
Submission of the dissolution resolution
The basis for voluntary dissolution of a public limited company is a resolution adopted by shareholders, which must have been adopted by 2/3 of the shareholders who participated at the meeting. If a company has different types of shares, the adoption of a dissolution resolution requires additionally that at least 2/3 of the votes represented by each type of share be in favour of the resolution.
To dissolve a company, the management board must submit to the Commercial Register an application and the dissolution resolution of the shareholders along with the minutes of the general meeting.
If the dissolution of the public limited company is decided by an extraordinary meeting, the management board shall submit the approved annual report for the last financial year and an overview of the economic activities of the public limited company in the current year, which must indicate the term during which the demands of creditors may be satisfied by the public limited company.
The dissolution resolution and submission of application is followed by liquidation, in the course of which it is important that you follow a specific series of steps.
Liquidation consists of the following stages:
Appointment of liquidators and entry of their names into the Commercial Register. The liquidators of the public limited company are the members of the management board, unless provided otherwise in the articles of association, the resolution of the general meeting or judicial decision. A court shall appoint the liquidator if so requested by shareholders whose shares represent at least 1/10 of the share capital. You can submit the application for entering the dissolution in the Commercial Register electronically or through the Company Registration Portal.
Publication of a notice regarding liquidation of public limited company in the Ametlikud Teadaanded and notification of all known creditors. The liquidation notice must specify that the creditors must present their demands within four months of publication of the notice.
Approval of the opening balance sheet prepared upon liquidation and annual report by resolution of the shareholders. After approval, the opening balance sheet prepared upon liquidation and the annual report shall be submitted promptly to the Commercial Register. A court may release the public limited company of the obligation of auditing the opening balance sheet prepared upon liquidation and the annual report if the financial situation of the public limited company is so unequivocal that an audit appears not to be necessary in the interests of the shareholders or the creditors.
Dissolving a public limited company, collection of debts, sale of assets and satisfying creditors’ demands, regardless of notification of demands. If the assets of the public limited company being liquidated are not sufficient to satisfy all of the requirements of the creditors, the liquidators must file a bankruptcy petition. If a creditor known to the public limited company has not presented a demand and the demand cannot be satisfied due to reasons independent of the public limited company, the funds belonging to the creditor shall be deposited in escrow if possible. If it is not possible to discharge the obligation during the liquidation or if the demand is challenged, the public limited company’s assets may not be distributed among shareholders if the disputed sum of money has not been deposited or if the creditor has not been given sufficient security.
Preparation of the final balance sheet of the public limited company and distribution of residual assets. The residual assets shall be distributed among shareholders in accordance with the asset distribution plan prepared by the liquidators pursuant to the nominal value of the shares, unless provided otherwise in the articles of association. In general, the assets may be distributed after six months have passed since the dissolution of the public limited company was entered into the Commercial Register and the liquidation notice published and after two months have passed since the shareholders were notified of the presentation of the final balance sheet and asset distribution plan.
Liquidation of a public limited company is a fairly time-consuming process that lasts at least six months. The activities of a dissolved public limited company can be continued, or a merger, division or transformation of the company may also be conducted. To do so, the liquidators must submit to the Commercial Register an application for continuing the company’s activities.
Deletion from the Commercial Register
After the public limited company has been liquidated as required, the company management board will have to submit an application to the Commercial Register for the deletion of the company from the Commercial Register. This can be done after a minimum of six months of the entry of the dissolution of the public limited company into the Commercial Register and providing notification thereof. You will have to attach a final balance sheet and asset distribution plan to the application for deletion from the Commercial Register.