Dissolving a limited liability company

You can dissolve a limited liability company voluntarily through liquidation proceedings. As a result, both the company and its operations will end completely. Liquidation proceedings may be the right option when you are unwilling or unable to continue the operation of your company even though it is profitable. For example, you may have become seriously ill or have reached your retirement age.

A limited liability company may also be dissolved through corporate restructuring.

If a limited liability company is insolvent, heavily in debt and unprofitable, the only option is to dissolve it through bankruptcy proceedings. You can file for the bankruptcy of a limited liability company yourself. One of the company’s creditors may also file a petition for bankruptcy.

The liquidation of a limited liability company proceeds as follows:

1. The General Meeting decides on the liquidation of the limited liability company.
2. The General Meeting elects a liquidator who will act in place of the company’s board of directors and any managing director during the liquidation and is responsible for managing the company’s affairs and carrying out the dissolution process. The liquidator may for example be a board member or another person from the company. The liquidator’s work is primarily overseen by the General Meeting. If irregularities or negligence are discovered in the liquidator’s actions, the shareholders or creditors can refer the matter to a court if necessary.
3. The liquidator or a person authorised by the liquidator notifies the Finnish Patent and Registration Office of the beginning of the liquidation proceedings and the appointment of a liquidator.
4. The liquidator also applies for a public summons to the creditors, even if the company is not aware of any creditors. The summons states the date by which creditors must register their claims from the company.
5. The liquidator converts the company’s assets into cash and pays its debts. The liquidator also divides the remaining property and draws up the final settlement of accounts. In the final transfer, the liquidator accounts for the small costs incurred after the dissolution, such as submitting a notification to the Patent and Registration Office and finalising the accounting and financial statements, and any other administrative fees.
6. The company is considered to have been dissolved when the liquidator has presented the final settlement of accounts to the general meeting.
7. The liquidator notifies the Trade Register and the Finnish Tax Administration of the final settlement of accounts and the dissolution of the company.
8. The company is then removed from the Trade Register and the registers of the Finnish Tax Administration.

Make sure that the limited liability company submits the required notifications to the authorities and makes its payments on time even if it is no longer active.

These include value added taxes and employer’s contributions. The company must also submit a tax return to the Finnish Tax Administration for its last financial year. In addition, it should apply to the Finnish Tax Administration for an amendment to its prepaid tax amount.

Take into account that the dissolution of a limited liability company may also have tax consequences to the company, to you personally and to other shareholders. Plan any solutions related to taxation carefully in advance.

Even if the company has been closed down, keep its accounts and financial statements for the time period determined in law.

The accounts should be kept for six years from the end of the year during which the last fiscal year has ended. The financial statements in turn should be kept for at least ten years from the end of the last fiscal year.

After the limited liability company has been closed down, cancel all insurance policies and other agreements connected to it.

Mandates from Suomi.fi e-Authorizations are required for taking different measures electronically. The liquidator should 

• find out who has mandates to act electronically on behalf of the company and whether these mandates are sufficient for carrying out transactions 
• find out what the instructions for the e-services of different parties say about acting on behalf of a terminated company (for example, see the Finnish Tax Administration’s instructions in MyTax)Opens in a new window. 
• familiarise themselves with the following instructions for Suomi.fi e-Authorizations: How does the cessation of activities affect the ability to act or authorise on behalf of an organisation?  

The Finnish Patent and Registration Office may remove a limited liability company from the Trade Register or set it into liquidation if

• the company has not notified a competent board of directors to the Trade Register
• the company has not disclosed its financial statements to the Trade Register appropriately
• the company has been declared bankrupt, but the bankruptcy has lapsed for lack of funds or
• the company does not have a representative entered in the Trade Register even if the law so requires.

However, the Finnish Patent and Registration Office will first encourage the company to rectify the deficiencies, issuing a deadline for doing so.

A court of law may set a limited liability company into liquidation if a shareholder has brought an action against the company. However, there must be a very weighty reason to set a company into liquidation.

The court may order a company to be removed from the Trade Register if

• the company’s assets are insufficient to cover the costs of the liquidation procedure or information on the amount of assets is not available
• a shareholder, creditor or other party does not declare that they will bear the costs of the liquidation procedure.

Corporate restructuring is a means of changing ownership.

Restructuring could include

• merging. In this case, your company is merged without liquidation so that all its assets and liabilities are transferred to another company. In return, the owners of your company receive money or shares in the receiving company. 
• divestment. In this case, your company will be dissolved without a liquidation procedure so that its assets and liabilities are transferred to two or more recipient companies. In return, the owners of your company receive money or the shares of each receiving company.
• business transfer. In this case, your company will transfer all assets, liabilities and provisions related to one or more of its business entities to the company that will continue its operations. In return, the owners of your company receive shares in the receiving company.

Please note that corporate restructuring is a lengthy process and it costs money. The arrangements must also take into account company legislation, tax legislation and accounting. It is therefore advisable to plan and implement the arrangements with experts.

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