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Company dissolution The importance of the company dissolution is attributed to a process of the formal and official dissolution of the company. The terms “formal” and “official” imply that the company is no longer kept in public registers. There are several ways to close a business, and each avenue has a slightly different process, but in general, liquidation is the natural result of each of these practices. The two most common ways to dissolve a company are through liquidation or bankruptcy. Liquidation of a company Liquidation is a voluntary decision and means that shareholders will vote to close the company (or if there is only one owner, he will choose to). After all formalities have been completed and all applications have been submitted, the liquidation procedure can begin. The further procedure varies depending on the legal form of the company and the jurisdiction. For example, some less complex legal forms can usually be resolved within a few days, while with other legal forms the entire process can take up to three months or even longer. Everything is based on the size of the assets, the number of creditors and the overall complexity of the case. Register for bankruptcy Insolvency proceedings are usually enforced: it is filed by creditors, third parties or the owners of the company if a company is unable to pay its liabilities during the liquidation or bankruptcy proceedings. Bankruptcy proceedings take longer than liquidation to go through and most jurisdictions require a court decision to initiate the process. It is important to formally dissolve the company as there are many drawbacks to not doing so and leaving the company inactive. First, you cannot claim ownership of the company. As long as the company is kept in the public register, it is recognized as a legal person. Second, there can be legal ramifications if a company is not wound up. For example, in some countries, if you do not dissolve the company, you will have to pay a fixed amount of corporate income tax annually, even if the company is dormant and not doing business. Other regular obligations may have to be observed, e.g. annual reports, bookkeeping, auditing, etc. http://www.confiduss.com/en/services/corporate/legal/company-dissolution/
