Liquidation of the company in the Czech Republic

The liquidation of a company is a difficult process that requires careful compliance with all legal norms and procedures established by the current legislation of the Czech Republic.

In this article, the specialists of the Law Firm “Prikhodko and Partners” would like to reveal the general requirements for the company’s liquidation procedure, types of liquidation, alienation of corporate rights, and also compare liquidation procedures in different jurisdictions.

Let’s take a closer look at the liquidation procedure itself according to the current legislation of the Czech Republic.

The procedure for liquidating a company in the Czech Republic is regulated by two laws, namely the Law on Commercial Corporations and the Law on Insolvency.

Such a procedure, according to the relevant legal norms, includes several main stages:

1. Adoption of a decision on liquidation by the relevant body of the enterprise:

• The decision on liquidation is made at the general meeting of shareholders or participants of the company.
• A liquidator is appointed, who will be responsible for the liquidation process.

2. Notice of liquidation of the company we need:

• The company must notify the registration court of its decision and publish an announcement in the Trade Register in accordance with the requirements of current legislation.
• All creditors must be notified of the start of liquidation. We can consider the procedure of notifying creditors separately at a consultation with the provision of samples of relevant documentation.

3. Completion of operations and settlement of debts of the respective enterprise:

• The liquidator is obliged to complete all commercial transactions, collect receivables, sell assets and settle all debts of the company.
• After paying off all debts, the remaining assets are distributed among the shareholders or participants of the company.

4. Closing liquidation:

• The liquidator prepares a financial report on the results of the liquidation.
• The registration court makes a decision to exclude the company from the Trade Register.

Now it is necessary to consider the possible types of liquidation

According to the practical experience of our specialists, we can distinguish two main types of liquidation of companies in the Czech Republic:

1. Voluntary liquidation:

• Initiated by the owners of the company when they decide to cease operations.
• The procedure for voluntary liquidation is less complicated and more controlled by the owners.

2. Forced liquidation:

• Initiated by the court in case of bankruptcy or violation of the law by the company.
• Compulsory liquidation proceedings are often more complex and lengthy, as they involve judicial supervision and possibly arbitration proceedings.

Also, we can offer to find buyers and implement the alienation of corporate rights of the desired company.

Alienation of the company’s corporate rights involves the transfer of ownership rights to a share or shares to another person or legal entity. This can be done in several ways:

1. Sale of shares or shares:

• Owners can sell their shares or interests in the company to other individuals or companies.
• Such a sale must be registered in the Trade Register.

2. Inheritance of corporate rights:

• In the event of the owner’s death, his shares or shares may be transferred to his heirs in accordance with Czech inheritance law.

3. Exchange of shares or shares:

• Corporate rights can be exchanged for shares or shares of another company as part of a merger or acquisition.

All procedures for the alienation of corporate rights must be carried out in accordance with the legislation of the Czech Republic and reflected in the relevant registers, which will be controlled by our specialists.

We would also like to provide a comparison of different jurisdictions in the matter of company liquidation

Procedures for the liquidation of companies can vary significantly from country to country according to local laws, but the basic concept of such a procedure remains the same.

Let’s compare the main aspects of the liquidation of companies in the Czech Republic, Germany, and Great Britain.

1. Czech Republic:

• Procedure: Includes adoption of a decision on liquidation, notification of creditors, settlement of debts, and exclusion from the Trade Register.
• Duration: Usually 6 to 12 months.
• Control: The liquidation process is overseen by a liquidator appointed by the owners or by the court.

2. Germany:

• Procedure: Similar to Czech, includes notification of creditors through the Federal Official Gazette, debt settlement, and submission of the final liquidation report to the trade register.
• Duration: From 1 to 2 years, depending on the complexity of assets and liabilities.
• Control: The liquidator is appointed by the shareholders or the court, subject to court supervision.

3. Great Britain:

• Procedure: Includes voluntary liquidation (initiated by owners) or compulsory liquidation (initiated by the court), with mandatory notification of creditors through official channels.
• Duration: From 6 months to several years, depending on the complexity of the case.
• Control: A licensed liquidation specialist may be appointed liquidator, the process is controlled by the court and liquidation inspectors.

Thus, the comparison shows that the main stages of liquidation are similar in different countries, but each jurisdiction has its own characteristics regarding the length of the process, control authorities and creditor notification procedures.

It is important to take these differences into account when planning the liquidation of a company in an international context, and the specialists of the Prikhodko and Partners Law Firm will certainly help you with this.