Dissolution and termination – The liquidation of a GmbH

In order to terminate or dissolve a GmbH, it is not sufficient to cease business operations or to withdraw a necessary licence for business operations. In order for the company to be deleted from the commercial register, it must basically go through two phases: Dissolution and winding up or liquidation.

Dissolution of the company

As a rule, dissolution is initiated by a shareholders‘ resolution. The other grounds for dissolution – such as dissolution by way of a court judgment or dissolution upon the opening of insolvency proceedings – are standardised by law in § 60 GmbHG. Unless the articles of association provide otherwise, a majority of three quarters of the votes cast is required. The dissolution resolution is valid under § 48 GmbHG – and without any special form. It should be unambiguous and becomes effective immediately, unless a future effective date has been determined. Upon dissolution, the managing directors‘ power of representation expires.

Pursuant to § 65 (1) GmbHG, the dissolution of the company must then be filed for entry in the commercial register. The application must be made in writing. Otherwise, the declarant’s signature requires notarial certification. The law itself does not require any proof of the dissolution, however, this process has such a high significance and importance that it is to be expected that the register judge will demand documents. Within the scope of his duty to investigate, the judge will usually not rely on mere oral statements by the liquidators. In this respect, the shareholders‘ resolution should be submitted for reasons of procedural economy.

Furthermore, the liquidators of the company must be filed for entry in the commercial register, § 67 GmbHG. Pursuant to § 66 (1) GmbHG, these are in principle the acting managing directors, unless otherwise determined in the articles of association or by resolution. Pursuant to § 67 (3) GmbHG, the liquidators must affirm that there are no reasons under criminal, commercial or professional law against their appointment. For reasons of practicability, it is advisable to make this registration at the same time as the registration for dissolution.

Winding up (liquidation)

The dissolved GmbH must then be wound up by way of liquidation. If the company has no assets, there is no need for liquidation, as in this case there are no assets available for liquidation. According to § 72 GmbHG, the purpose of liquidation is the distribution of the company’s assets to the shareholders. In this context, the liquidators take over the external representation of the GmbH. Relevant duties of the liquidators are standardised by law in §§ 70 – 73 GmbHG.

These duties include in particular:

the termination of ongoing business
the fulfilment of the obligations of the dissolved company and the collection of existing claims
the conversion of the assets of the GmbH into money
the representation of the company in and out of court
signing by using the company name with the liquidation suffix (X-GmbH in liquidation, or X-GmbH i.L.)
the preparation of an opening balance sheet at the beginning of the liquidation as well as the preparation of a report on the same
the preparation of annual accounts for the end of each year
the preparation of a management report
the preparation of a closing balance sheet at the end of the liquidation period.

Furthermore, the liquidators are obliged to announce the liquidation in the Federal Gazette. A specific deadline for the announcement is not provided for. However, according to § 73 (1) GmbHG, the blocking year only begins to run with the announcement. Furthermore, a call to creditors must be made. This enables the creditors to assert any claims.

The liquidation ends with the complete distribution of the assets among the respective shareholders. The liquidators must also file the termination of the liquidation for entry in the commercial register. In the course of this, the company is deleted from the commercial register, i.e. the company no longer exists after this process has been completed. The books and records of the dissolved company must be kept for a period of ten years after the liquidation has been completed.

Insolvency as a reason for dissolution of the company

As already mentioned, the opening of insolvency proceedings is also one of the grounds for dissolution mentioned in § 60 GmbHG. Pursuant to § 15a InsO, the managing director is obliged to apply for the opening of insolvency proceedings in the case of insolvency or over-indebtedness of the company without culpable hesitation, but at the latest three weeks after the occurrence of insolvency and six weeks after the occurrence of over-indebtedness. In this case, the liquidation of the company shall be governed by the rules of insolvency law.

Cancellation of the company due to insolvency

The insolvency of a company leads to the immediate termination of the company without liquidation. However, the lack of assets must be examined meticulously. Even minor assets do not lead to an abstract lack of assets. A company is deemed to be without assets if it no longer has any assets that could be used to satisfy creditors or for distribution among the shareholders. In this case, the court is authorised to carry out an ex officio cancellation, section 394 FamFG in conjunction with section 60 (1) no. 7 GmbHG.

The official cancellation procedure can be accelerated at the suggestion of the shareholders. Any creditor claims against a company without assets lead to its over-indebtedness. Accordingly, the deletion no longer takes place based on lack of assets, but by way of § 15a InsO after an application for insolvency has been filed.

Written by Linda Naomi Henschel

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