The dissolution of a company in Portugal may be the consequence of a situation of law or fact and may be the expression of the will of the shareholders (if voluntary dissolution), or individuals, institutions, and other external factors or circumstances, in case of compulsory liquidation.
In the case of voluntary liquidation, after satisfaction of liabilities that the company has to creditors, the company’s associates may reach an agreement on the allocation of the remained assets. If the partners do not reach an agreement, the liquidation procedure is carried out as required by law for such situations – by appointing a liquidator.
If the company is found obvious insolvency or impending insolvency, cessation of the legal entity will be the procedure which is called bankruptcy.
The dissolution of a company is represented by a change in the legal situation which is characterized by its entry into liquidation. In this sense, the legal personality of the company is kept up to the closure of the liquidation.
The first phase of dissolution of the firm is by making the deed before a notary public, required only in cases where there are real estate properties. In other situations, the deed is waived and only a record of the general assembly with the decision of dissolving the company is required. This document certifies the approval by a qualified majority of the company to close the business.
The company goes into liquidation so the deed of dissolution is performed. Within 15 days, the entrepreneurs must make the changes in the Directorate General for Taxation (DGCI) and, within ten days following, the partners must report the changes to the Social Security Office.
The entrepreneurs still have a period of two months to accomplish the Commercial Register Dissolution, with a settlement period of two years extendable for another one, by the members’ decision. In the end, a report will be prepared and must contain the completion of the liquidation and the approval of the accounts. The sharing of property requires a deed and its registration must be performed at the Land Registry.
At this point, it is necessary to go to the Commercial Register to notice the closure of the company and for this you will need a minute of approval of accounts. Then the partners will declare the closure before the DGCI and before the Social Security Office.
The first phase of the bankruptcy process is to assess the economic situation of the company. On one hand, this can be found insolvent when it becomes unable to fulfill some of its obligations due to lack of financial resources and access to credit, or when the assets are insufficient to meet the liabilities. On the other hand, the company can only have financial difficulties preventing it from fulfilling its obligations.
Bankruptcy proceedings may be required by the company 60 days after failing to comply with at least one relevant obligation, situation which leads to declare the company unable to resolve the majority of its duties.
Besides this, the creditor can also initiate the process of bankruptcy of a company that is in a situation of economic inability to solve its financial problems, in case it is unable to pay the debts. The Public Authority may also file the bankruptcy of the company.
It is necessary to make a written submission for starting the insolvency proceeding. The following phase is represented by summoning the parties who have instituted the insolvency procedure before the court. After the Court issued a decision, a liquidator is appointed to carry out the liquidation procedure.
Once declared the bankruptcy, the liquidator may carry out the liquidation of the assets within six months.
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