How do you close your Ltd. or LLC?

Thu, 07.12.2023, 10:00

Are you thinking of closing your Ltd. or LLC? Don't worry, we can help you with this process. Our guide explains the steps necessary to dissolve and liquidate your company in full compliance with legal and tax regulations. Our experts will work with you to protect everyone's interests. There is no stress, company closure is simple.

Why decide to close and liquidate your Ltd. or LLC?
Don't worry, it happens all the time! Dissolution can be voluntary (for various reasons) or involuntary (financial problems). But be aware of the rules to follow, such as the majority required and the deadlines for dissolving the company. The administrative formalities can be confusing, but our guide explains everything you need to know about the liquidation of such a company.
 
Lack of profitability
When revenues no longer cover expenses, that is when the problems begin. The loss of profitability can be due to low margins, high production costs or excessive fixed costs. And sometimes there are unforeseen circumstances, such as a surprise guest who does not pay his share....
 
A complicated economic situation
Even the best entrepreneurs can find themselves in a difficult economic situation. Reasons such as high inflation, falling demand or rising raw material costs can put a company outside the high-tech sector at risk. Planning for closure may be the best option to limit the damage. Every company has its own challenges in the face of the economy, but dissolution or closure requires compliance with specific legal and accounting rules.
 
Non-economic reasons
Although it is often thought that the closure of a company is motivated by purely economic reasons, it should not be forgotten that other factors can also come into play. For example, the retirement of the founders may be the reason for the liquidation of the company. Similarly, it may be difficult to find a suitable successor to take over, which may lead to the company's bankruptcy. In short, there are many non-economic reasons why owners may make the difficult decision to close their company.
 
Change of legal status
As the company grows, it may be necessary to change from one legal status to another to better meet its needs. For example, if you own a limited liability company (LLC) and want to change it into a limited company (Ltd.), you will need to follow a few steps. But don't panic: in our dedicated article we have everything you need to help you understand the subtleties of this process.
 
Stages in the closure of a Ltd. or LLC :
 
Step 1: The decision to liquidate the company
In order to liquidate a company, the partners or shareholders must decide to do so at an extraordinary general meeting, with a notarised deed (unfortunately there is no wizard involved). For a limited company (Ltd.), at least two-thirds of the votes and an absolute majority of the nominal values represented are required. For an LLC, at least two-thirds of the votes and an absolute majority of the voting share capital are required (many figures, sounds like a mathematical equation).
 
Step 2: Appointment of the liquidator
Once the extraordinary general meeting has been notified by the notary, a liquidator is appointed to close the company in a professional manner. Fortunately, the liquidator manages the liquidation without having to drink alcohol. In the event of judicial dissolution, the court appoints liquidators, thus avoiding personal decisions. In the event of bankruptcy, the liquidation process follows the bankruptcy rules. The organs of the company retain their powers until they are no longer needed and the liquidators can be dismissed by the General Assembly or the court for serious reasons (unfortunately, there is no dancing on the meeting table). Ah, the joys of closing a business!
 
Step 3: Registration of dissolution
Now, in the third stage of dissolution, once the profits have been distributed, your company adopts a new name with 'in liquidation'. However, the company will retain its identity. To make this change, an extraordinary general meeting appoints liquidators. These must be entered in the commercial register to inform everyone of the ongoing closure.
 
Step 4: Appeal to creditors
Even when the company is closed, it still has commitments to creditors. The appointed liquidators must draw up a balance sheet and inform the creditors of the liquidation. The appeal to creditors is crucial: published three times in the Swiss Official Gazette of Commerce (SOGC) or in accordance with the articles of association, it invites creditors to claim their debts. A special notice is also published for known and unknown creditors. This is the key stage in which the company takes leave and creditors are invited to collect their dues. The SOGC is a bit like Tinder for creditors, where they look for financial opportunities.
 
Step 5: Liquidation of the company
The closure of a limited company or limited liability company is a complex and lengthy process. Liquidators take care of day-to-day business, liquidate assets and ensure that outstanding liabilities are honoured. If debts are not covered by assets, the court may declare the company bankrupt. Liquidators represent the company in this operation, but their actions are strictly for the purpose of liquidation. They must render accounts and publish provisional balance sheets. Once the debts have been repaid, any surplus is distributed to the shareholders according to their shares. This process can take several years and requires patience and precision to ensure proper dissolution.
 
Step 6: Deletion from the Commercial Register
Once the debts have been paid and the assets have been distributed among the partners, the next step is the cancellation of the company from the Commercial Register. This can be done under the ordinary procedure (after one year from the last publication of the division of assets) or the accelerated procedure (after confirmation by an expert auditor three months after the last publication). Once the approval of the tax authorities is obtained, the company will be dissolved, ending its existence. Appeals to creditors, which are the responsibility of the liquidator, are crucial for a speedy closure. At this stage, you may also be able to sell parts of your company to employees or competitors.
 
IFJ, your trusted partner for the closure of your Ltd. or LLC
Closing a company means taking into account the interests of all parties involved: partners, customers, shareholders, investors, suppliers, etc. Surrounding yourself with competent professionals is essential in order to deal calmly with the liquidation of a Ltd. or LLC. At IFJ, in addition to our expertise, we provide a commercial register modification service, guaranteeing responsiveness, attention and professionalism at every stage of the process. Do not be left alone in this important decision; rely on our team of experts for an efficient and successful closure.