Czech company liquidation implies the process of termination of a firm, with its assets being sold and any remaining assets of the company being distributed to the shareholders. Our lawyers in the Czech Republic can help you during the company liquidation procedures.
| Quick Facts | |
|---|---|
| Applicable law(s) |
– Czech Commercial Code, – Civil Code, – Insolvency Act |
|
Conditions to liquidate a company |
– limited duration of life, – conclusion of activities in the Czech Republic, – indebtness, – withdrawal of the business license |
|
Types of procedures |
Voluntary and judicial proceedings are in place for company liquidation in the Czech Republic. |
| Voluntary company liquidation | Voluntary liquidation implies the shareholders agreeing to close the Czech company. |
| Compulsory company liquidation |
Compulsory liquidation is available if creditors file a request in this sense with a Czech court or if the Trade Register withdraws a company’s business license. |
| Appointment of a liquidator in a voluntary procedure |
The liquidator is appointed by the shraholders. |
| Appointment of a liquidator in a mandatory procedure |
In this situation, the court will nominate a liquidator. |
| Authorities to notify in case of liquidation |
Companies Register, tax authorities, and other bodies in accordance with the industry the company operates. |
| Requirement to notify other parties (YES/NO) |
Yes, the creditors |
| Notice requirements | The liquidator must announce the Trade Register about the start of the liquidation procedure immediately. |
| Additional accounting requirements to comply with (if any) |
Yes, a final financial statement must be drafted and filed with the tax authorities within 30 days from the initiation of the procedure. |
| Company liquidation time frame (approx.) |
3 – 4 months in the case of the voluntary procedure. In the case of enforced liquidation, the process can take longer. |
| De-registration with the Czech Revenue Department required (YES/NO) |
Yes |
| Trade Register deletion requirement (YES/NO) |
Yes, this is the last stage in the company liquidation procedure in the Czech Republic. |
| Company liquidation support (YES/NO) | Yes, our Czech law firm can assist during company winding up proceedings. |
Table of Contents
What are the main ways to close/ liquidate a company in the Czech Republic?
There are two scenarios under which liquidation can occur:
- when the company is solvent, in which case voluntary liquidation applies;
- when the company is insolvent/ bankrupt, in which case the mandatory/ court procedure applies.
What are the company liquidation steps in the Czech Republic?
- analyzing the state of the company (financial-related matters);
- filing the tax return from the date of entering the liquidation process onwards;
- appointment of a company liquidator in agreement with the applicable legislation in this sense;
- auction sale of the property in liquidation, whether on a local plan or abroad;
- drawing up of the company’s balance sheet (a team of accountants can help in this matter);
- obtaining confirmation from the district social security administration company with no outstanding payments;
- acquiring the approval for the liquidation of the Czech company from the tax authority.
What is voluntary company liquidation in the Czech Republic?
According to the Commercial Code of the Czech Republic, voluntary company liquidation may be instituted if the legal structure chooses to take another legal form, if the term of the company has expired, if the goals of the company have been reached, etc.
When can voluntary liquidation of a Czech company be declared?
Voluntary liquidation can begin for one of the following reasons:
- the company was created for a limited period, which has come to an end;
- the company will discontinue its operations in the Czech Republic and relocate to another country;
- the shareholders vote to close the company.
IMPORTANT! In the latter scenario, at least two-thirds of the shareholders must agree to the closing of the business to start the liquidation procedure.
Voluntary liquidation can be established during a general meeting of the shareholders.
We also have an infographic on this subject:
What is an enforced company liquidation?
An enforced company liquidation is usually ordered by the court when the legal entity is in bankruptcy and when the company lacks a reserve fund. In case the reason for which the court decides to liquidate the company can be solved, the decision may be cancelled. Liquidation is thus one of the forms of company dissolution, and it is not necessarily instituted due to bankruptcy. Ultimately, the Czech company is deleted from the Commercial Register so as to complete the liquidation process.
What are the reasons for court company liquidation in the Czech Republic?
Court liquidation is usually requested by one or more creditors when a company can no longer pay its debts. In this case, a judge will rule whether the company can be declared insolvent or not.
What are the grounds under which a Czech company can be declared insolvent for liquidation purposes?
According to the law, the following two conditions must be met simultaneously:
- the company has multiple unpaid creditors;
- the company has not met its payment obligations for more than 30 days.
Our Czech lawyers can offer more information on the two conditions.
Who appoints the liquidator in a Czech company closing down?
In the case of the voluntary procedure, the liquidator is appointed by the shareholders. Usually, one of the directors is in charge of carrying out the procedure.
In the case of the compulsory procedure, the judge appoints an officer of the court to execute the process.
When is the liquidation of a company in the Czech Republic completed?
After the company’s assets have been disposed of and the creditors have been paid.
Are there any other steps to take after liquidating a Czech company?
Yes, it must also be deleted from the Commercial Register’s records.
How long does it take to liquidate a company in the Czech Republic?
The voluntary procedure can be completed in about 4 months, while the mandatory one can take about a year.
What is the legislation applicable to company liquidation in the Czech Republic?
Act No. 89/2012 of the Civil Code and Act No. 90/2012 of the Commercial Companies and Cooperatives comprise the legal framework for company liquidation in the Czech Republic.
Should you need assistance or advice on company liquidation in the Czech Republic, you can contact our Czech lawyers, as they have the required expertise in these matters.