The consequences of a liquidation of a company leads to the disappearance of the company and its legal personality.
The court can order the compulsory liquidation of a company:
- either on behalf of one or more partners/shareholders for "legitimate reasons";
- or on request from the public prosecutor for serious violations of the law.
The judgment ordering the liquidation marks the beginning of the liquidation procedure and the appointment of the official liquidator.
The liquidator is responsible for all the liquidation operations until the final judgment which closes the liquidation process.
Once this process is finalised, the company is removed from the trade and companies register (registre de commerce et des sociétés - RCS).
Who is concerned
Compulsory liquidation on request from a shareholder / partner
One or more shareholders or partners can request the court to order the dissolution / liquidation of their company for "legitimate reasons".
The concept of "legitimate reasons" is not defined by the law. The judge will determine the reasons by taking into account the interests of the company instead of the interest of the shareholders / partners.
Example: a serious disagreement between partners may constitute a legitimate reason for dissolution of the company if the normal operation of the company is blocked because of said disagreement.
Compulsory liquidation on request from the public prosecutor
The public prosecutor can request the court to order the dissolution/liquidation of any Luxembourg company that:
- engages in activities which contravene criminal law;
- or contravenes:
- the provisions of the commercial code;
- the laws on commercial companies;
- or the provisions governing the authorisation of establishment.
The court will assess whether the offences are deemed sufficiently serious to justify the dissolution / liquidation, regardless of the financial situation of the company.
the following offences may constitute grounds for dissolution:
In the event of liquidation on request from a shareholder or partner, the applicant must pay a deposit for the winding up fees and expenses.
How to proceed
Liquidation on request from a shareholder / partner (for "legitimate reasons")
The shareholder or partner in a commercial company (SA, SARL, SCA, etc.) can submit a request for liquidation to the district court in the jurisdiction where the company is established (Luxembourg or Diekirch).
If the motives invoked will inhibit normal business operation so as to compromise its future and survival, the courts can order the liquidation of the company. The court will appoint a liquidator and set the liquidation procedure.
In principle, the court will apply the rules governing the liquidation of the bankruptcy in order to keep control of the liquidation procedure.
Liquidation on request from the public prosecutor
Where the offences are deemed sufficiently serious, the court may order the liquidation of the company. The court will appoint a liquidator and set the liquidation procedure.
In principle, the court will apply the rules governing the liquidation of the bankruptcy but it may change these rules at a later stage.
Following the judgment ordering the liquidation, the liquidator will:
- publish an extract of the judgment in the newspapers and in the electronic compendium of companies and associations (Recueil électronique des sociétés et associations), after the lodging with the trade and companies register, to inform third parties so that they can declare their claims, if any;
- set up an inventory and the opening balance sheet for the liquidation procedure;
- organise the recovery (collection of money owed to the company) and realisation (sale of the assets belonging to the company) of the dissolved company's assets;
- check the company's receivables;
- depending on the case:
- distribute the assets between the existing creditors;
- pay the liquidation proceeds to the partners / shareholders;
- file for bankruptcy;
- initiate legal proceedings;
- report offences to the public prosecutor's office;
- submit the winding up report to the judge having ordered the liquidation.
The judge can then pronounce the judgment closing the liquidation procedure.
The liquidator must file the extract from the judgment ordering the liquidation and from the judgment closing the liquidation procedure with the trade and companies register for publication purposes in the electronic compendium of companies and associations (Recueil électronique des sociétés et associations - RESA).
Consultation of the RCS
At the time the company is put up for liquidation and when the liquidation procedure is closed, the clerk of the court shall provide an extract from the judgment to the Luxembourg Business Registers (LBR) for the purpose of registration of the judicial decision in the trade and companies register.
The indication "en liquidation judiciaire" (compulsory liquidation) or "radiée" (removed) will show next to the company name in the search results on the website of the trade and companies register in Luxembourg (see section "Consulter une personne").