Voluntary Dissolution/Liquidation Of A Luxembourg (Unregulated) Commercial Company

The number of companies incorporated in Luxembourg keeps on growing at a steady pace, and for each of them, successful or not, a liquidation may at some stage have to be considered. Liquidation (or winding up) is a process by which a company's existence is brought to an end, and the law classifies liquidations into two types: voluntary (by way of shareholder(s)' decision) or compulsory (by way of a court order). The purpose of this briefing is to set out the main points to consider about a voluntary dissolution and/or liquidation in relation to an unregulated commercial company.

Introduction

A voluntary liquidation may occur for several reasons, amongst which the realisation of the company's objects, the sale of its main assets or the arrival of its term.

Formally the process will involve the prior dissolution of the company, and once decided, the company will exist solely for the purpose of its liquidation. The voluntary dissolution of a company can only be decided by its shareholder(s). It is not necessary to make any application to a court for this, and there should not be any court involvement during the whole procedure. The end result will be that the company will cease to exist and be removed from the Luxembourg Trade and Companies Register.

A formal three-stages procedure will usually have to be followed from dissolution to liquidation, but alternative ways (with one stage or two stages procedures only) have been developed and may be used, subject to certain conditions.

I - Normal liquidation process - three-stage procedure

First stage: dissolution and appointment of the liquidator

It is generally recommended to have the annual accounts of closed financial years duly approved before a company is put into liquidation. It will also be helpful for the liquidator to receive up to date interim accounts of the company at the time it is appointed, to help separating the periods before and after dissolution and help him start its work from a clear situation.

The dissolution and initiation of liquidation proceedings being a shareholder(s)' decision, as a first step, the management body of the company should convene an extraordinary general meeting to resolve on the dissolution of the company and the method of liquidation. This meeting must take place in the presence of a Luxembourg notary, and should also appoint a liquidator. After this meeting, a notary should not be needed anymore.

There is no limitation as to who can act as liquidator, and any natural or legal person may be appointed as such. If no liquidator is appointed, the person(s) responsible for the management of the company prior to its entry into liquidation will be deemed to be the liquidator(s) towards third parties. Note that Ogier Luxembourg may act as liquidator through one of its subsidiaries.

As from the dissolution:

the mandates of the members of the management body (and of the members of any supervisory body and of the auditors, if any) automatically terminate the liquidator represents the company and is...