What is the dissolution of the company?

Today nothing can be taken for granted, because suddenly we are through the roof and in the blink of an eye everything is gone. This is the context in which the today. In particular we are talking about the dissolution of the company, one of the most complex decisions that can be taken within an institution.

Concept of dissolution of the company

The concept of dissolution of the company is determined by its legal disappearance from the market. It is the moment when a final decision has been made regarding your presence and the closing stage begins. There are several causes for the dissolution of the company and of all of it, perhaps the most common are two. On the one hand, we find the set of circumstances in which the social purpose for which the entity has been built cannot be achieved. On the other hand, and not least, the loss of net worthprogressively.

Therefore, the definition of dissolution of the company does not necessarily imply the cessation of its activity, but the process of liquidation thereof.

How does the dissolution process of the company unfold?

Now that we know what the dissolution of a company is, we can take the next step. We talk about how the dissolution process of a company develops once it has already been declared as such. However, depending on each country, its current regulations and its Law, this procedure may vary.

In any case, there are 3 main phases of dissolution of the company that we must take into account.

  1. The company may enter bankruptcy: It may be the company's own creditors who request this process.
  2. The company may declare the liquidation of the company: this means that those in charge of carrying out the liquidation of the company will be in charge of distributing the capital stock that constitutes it. However, this capital will only be distributed as long as the existing debts have been paid. In this way, even if the company has gone into dissolution, its owners, main positions and administrators will only obtain a community asset when they have paid off their debts.
  3. The company may carry out the transfer of ownership: it will have the right to put the sale in put options.

It is also important to note that company administrators will only have a maximum period of two months to convene the General Meeting and determine how the process of dissolution of a company will be carried out. Of course, the people in charge of the business liquidation will have to be registered in the Mercantile Registry as a requirement.

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