Terminating a sole proprietorship

In the case of a sole proprietorship, the termination of business operations is quite straightforward. The key steps to terminate sole proprietorship are as follows:

  1. decision to close the company,
  2. payment of business debts,
  3. termination of business-related insurances and contracts,
  4. divestment of business assets, and
  5. notification of termination to the Finnish Patent and Registration Office (PRH) and to the Tax Administration.

Terminating a limited partnership or general partnership

Also terminating a limited partnership or general partnership is fairly easy, if the partners agree with the termination of the company.

If partners agree with termination of the company, the main steps are:

  1. decision to close the company,
  2. payment of business debts,
  3. distribution of assets among partners,
  4. notification of termination to the Trade Register of Finnish Patent and Registration Office (Patentti- ja rekisterihallitus PRH) and to the Tax Administration. The form must be signed by all partners or accompanied by an appendix with the signatures of all partners and an agreement on the termination of the company.

If there is no agreement on termination of the company, a liquidation procedure is required. Before the liquidation procedure, all partners must be informed of the grounds on which the company intends to be dissolved. In liquidation proceedings, one or more partners may act as liquidators. A partner of a general partnership or limited partnership may demand the dissolution of the company in the following situations:

  • the partner has terminated the partnership agreement and the notice period is over,
  • the agreed period of association has ended,
  • one of the other general partners goes bankrupt or his or her shares are seized,
  • one of the other partners dies and it is not agreed that the company will continue to operate,
  • one of the other partners is in breach of their obligations,
  • the company’s prerequisites for continuing operations have deteriorated significantly,
  • no date has been agreed on the termination of the partnership agreement, or
  • the continuation of the company’s operations is unreasonable, for example, due to the state of health of a partner

In liquidation proceedings, one or more partners may act as liquidators.

The liquidator submits a notification of liquidation and liquidators to the Trade Register of the Finnish Patent and Registration Office. The liquidator will also seek a public summons from the court. The public summon calls on creditors to declare their claims by the due date.

The liquidator converts the company’s assets into cash and pays debts and other payments. If there is not enough money, the general partners pay for the rest of their own funds. If, on the other hand, money is left over, the liquidator distributes it to the partners.

Finally, the liquidator makes a final statement. The liquidator also notifies the Trade Register and the Tax Administration of the termination of the company.

Terminating a limited liability company

A limited liability company must always be terminated in a lawful manner, i.e. either by dissolution or bankruptcy. If the company has more assets than debts, the company may be terminated in liquidation proceedings.

The General Meeting decides on the liquidation of a limited liability company. It elects a liquidator to replace the company’s Board of Directors and, if applicable, the CEO. The liquidator can be, for example, a member of the Board of Directors or another person from within the company or an attorney.

The liquidator notifies the Finnish Patent and Registration Office of the commencement of liquidation and the election of the liquidator. At the same time, the liquidator applies for a public summons to the creditors, even if the company is not aware of any creditors. The summons indicates the deadline by which creditors must declare their claims against the company.

The liquidator converts the company’s assets into cash and pays off its debts. He also distributes the remaining assets and draws up a final statement. The company is considered dissolved when the liquidator has presented the final statement at the General Meeting.

The liquidator notifies the Trade Register and the Tax Administration of the final statement and the dissolution of the company. After that, the company will be removed from the Trade Register and the Tax Administration’s registers.