Voluntary Dissolution has been saved
An overview of the requirements and procedures for voluntary dissolution in Luxembourg.
In Luxembourg, insolvency regulation is governed by the following provisions:
- the Luxembourg Commercial Code (Code de Commerce) with articles 437 to 592 introduced by the law dated 2 July 1870 on bankruptcy procedure (faillite) (liquidation);
- the Law dated 10 August 1915, as amended, on commercial companies (the Company Act) which deals with voluntary liquidation also referred to as ‘corporate procedures’ and compulsory liquidation proceedings (involuntary liquidation), to which the provisions of bankruptcy are normally applied;
- the Luxembourg Civil Code;
- the Law dated 14 April 1886, as amended, on composition in order to avoid bankruptcy (concordat préventif de la faillite); and
- the Grand-Ducal Decree dated 24 May 1935 completing the regulation with respect to the reprieve from payment (sursis de paiement), the composition in order to avoid bankruptcy and the controlled management (gestion contrôlée), the second main proceedings used in Luxembourg and hereinafter called ‘reorganisation’; however, this procedure is quite uncommon.
The literal legal meaning of “voluntary liquidation” refers to “corporate liquidation”.
Specific procedures are prescribed by the Luxembourg Company Law applicable to public limited liability companies, partnerships limited by shares, private limited liability companies or cooperative limited liability companies when a company goes into voluntary liquidation.
The board of directors must justify the proposed liquidation in a special report to the shareholders and attach a statement of assets and liabilities drawn up as at a date not more than three months previously. This statement is ordinarily prepared on a liquidation rather than a going concern basis; if not, this should be justified by the board.
Procedures for a full liquidation
Firstly, a shareholders’ meeting must be held, usually under the conditions sufficient to change the company’s articles and often in the presence of notary. During the meeting the decision to put the company into liquidation is made and a liquidator is appointed. The minutes must be published in the Luxembourg Mémorial.
The company now only exists for the purposes of realising its assets and paying its creditors, although it is the liquidator who is charged with these tasks. When the liquidator believes that the realisation process has been more or less completed, he must call a second general meeting at which he presents the accounts of the liquidation and at which a commissaire to the liquidation is appointed to verify these accounts.
When the commissaire is ready to make his report, a third and final meeting is called to be held before a notary. At the meeting the report of the commissaire is heard, the accounts of the liquidation are approved, and the liquidation is closed.