Law on amendment and supplement of the Commerce Act1 was promulgated in issue 82 of the State Gazette, dated September 27, 2024. With part of the amendments a new legal framework for accelerated and facilitated liquidation of companies was introduced - its main element being the provision of the new Article 274a “Quick Liquidation Procedure”, systematically included in Chapter Seventeen of the law. The further exposition of this article will refer namely to the new possibility for a faster and easier closing down of a company with focus on the particular ways of achieving the facilitation of the liquidation process.

Under the current legislation the voluntary dissolution and liquidation of a company takes nearly a year and the procedure is relatively complicated and expensive. Its implementation is subject to certain imperative rules and requires the submission of several consecutive applications for registration and publication of various circumstances and acts in the Commercial Register, prior notification of the National Revenue Agency, delivery of payrolls to the National Social Security Institute, etc.

The main idea behind the currently applicable procedure is to make sure that the interests of the creditors are duly protected, as well as to provide enough time for carrying out the various activities involved in liquefying the available assets, paying off the outstanding debts and distributing the remaining property between the shareholders. The procedure may be well justified in terms of the pursued objectives but it does not take into account that many of the companies exist only “on paper”, without having had any business activities and without having hired any workers and employees, and, respectively, not having any debts, nor any property to be liquefied.

The new legal framework has been adopted exactly for such purpose, namely: to introduce a diversified approach in the process of closing down companies that is taking the scale of their operations into account and thus providing the non-active companies with an alternative option for going through the stages of the liquidation proceedings under eased conditions and in shorter time periods.

What is different with the new procedure?

The facilitation of the liquidation process in the context of the new procedure is being achieved in two main ways: shortening the time periods pertaining to the various procedures and reducing the administrative burden by providing that the entire communication for the purposes of the liquidation shall be conducted through the Registry Agency.

The time to have elapsed in order to be able to proceed with distribution of the company’s property, and thus in practice the time for completion of the closing down procedure, is cut in half - from 6 (six) to 3 (three) months from the publication of the invitation to the creditors in the Commercial Register. The time period within which the National Revenue Agency is required to provide the information it has with respect to the availability or lack of the prerequisites for allowing a quick liquidation procedure is also cut in half - from sixty days to thirty days from receiving the respective notification.

It will be no longer necessary for companies to submit a prior notification to the NRA regarding their dissolution, nor to present the certificate issued as a result. All that will happen ex officio - the Registry Agency and the National Revenue Agency will exchange electronically information in regard to the submitted application for liquidation pursuant to Art. 274a of the Commerce Act. A similar solution has also been adopted in terms of the procedure for delivery of payrolls to the National Social Security Institute.

The registration officials shall pronounce on the applications for registration of a company’s dissolution after receiving the information from the NRA as per the above. Said information shall be used to establish the existence of the circumstances determining whether or not a quick liquidation procedure is to be allowed.

The Tax and Social Insurance Procedure Code, the Social Insurance Code and the Act on the Commercial Register and the Non-Profit Legal Entities Register have also been amended in order to reflect accordingly the above procedural changes.

Am I eligible for the new opportunity?

To be able to take advantage of the new opportunity for a faster and easier liquidation, your company would need to meet the following six conditions as per the new law:

not to have carried out any activity or to have stopped carrying out the activity more than 12 months ago;

not to have hired workers and employees or to have terminated employment with them more than 12 months ago;

not to have been registered under the Value Added Tax Act or to have terminated its registration more than 12 months ago;

to have no outstanding debts to the state and municipalities;

to have no pending proceedings for establishing tax obligations and obligations for mandatory insurance contributions, to which the National Revenue Agency is a party;

not to be a defendant in court proceedings, a debtor in enforcement or order proceedings, or initiated against enforcement proceedings pursuant to the Special Pledges Act or the Financial Collateral Arrangement Act.

Upon submission of the application for termination of the activity the liquidator shall present a declaration of the aforementioned circumstances, as well as a decision to conduct a quick procedure taken by the general meeting of the limited liability company, the joint-stock company and the company with variable capital, and for the other commercial companies - unanimously by the unlimited partners.

Applications pursuant to the new legal framework will be accepted from the end of next year. That one-year period has been provided so that the Registry Agency is able to put in place the software needed to ensure the application of the new legal provisions. Meanwhile, the Ordinance for administration, keeping of and access to the Commercial Register and the Register of Non-Profit Legal Entities is expected to be updated in order to reflect the amendments to the Commerce Act, introducing a standard form for the new application and listing the necessary documents to be enclosed to such application.

Practice will show if and to what extent the new provisions will be sufficiently effective in encouraging owners of dormant companies to take action and to close them down. Although a step in the right direction, the introduced reliefs, in my opinion, are not sufficiently big and considerable to lead to a significant change in the current situation and to achievement of the set goals.

Footnotes:

1 See the Law on amendment and supplement of the Commerce Act on the website of the State Gazette