Liquidation
After the reason for the termination of the company arises, liquidation is carried out if the members do not agree on a different method of settlement and distribution, or if bankruptcy is not initiated against the company. Liquidation is the period of the company’s existence that lasts until the company is deleted from the commercial register. The liquidation procedure is carried out if the assets are sufficient to satisfy all creditors. However, if that is not possible, a bankruptcy procedure will be conducted.
All members of the company act as liquidators during the liquidation, unless it is determined by the decision of the members or the founding act of the company that certain members of the company or other persons should carry it out. Liquidators are individuals who manage the company’s affairs during liquidation.
Liquidators are obliged to invite creditors to report their claims, and creditors are obligated to report them no later than 6 months after the last invitation.
Liquidators must complete ongoing business, collect the company’s receivables, liquidate the remaining assets, and settle creditors. To complete ongoing tasks, they may enter into new agreements. Liquidators must prepare financial reports at the beginning and end of the liquidation.
After the company’s debts are settled, liquidators must distribute the remaining assets to the members in proportion to their shares in the company’s capital, based on the final financial reports.
Upon completion of the liquidation, liquidators must submit an application to the court to delete the company from the commercial register. The company ceases to exist upon deletion from the commercial register.
Termination of the Company by Simplified Procedure
A limited liability company, including a simple limited liability company, may terminate by a simplified procedure without undergoing liquidation under the assumptions prescribed by the Companies Act. This does not apply to companies whose business activities include the activities specified in Article 34, paragraph 4, of the Companies Act (activities that can only be carried out by trading companies as determined by law, and activities that can only be performed with the consent, permit, or other act of the competent authority).
For a company to terminate by a simplified procedure without liquidation, all members must agree to this decision. The decision must include the following information:
- The company’s name, registered office, personal identification number, and registration number of the company subject to termination in this way.
- The total number of members of the company, along with the names, surnames, residences, and personal identification numbers, or the names, registered offices, and personal identification numbers of each member.
- A plan for the distribution of the company’s assets.
In addition to the above, all members of the company are required to provide a statement:
- That the company has neither outstanding obligations to employees or former employees of the company, nor any other outstanding obligations based on the employment relationship with workers and former workers;
- That the company has no disputed or undisputed, matured or unmatured obligations towards other creditors;
- That each member undertakes to settle, jointly with all other members of the company, any remaining obligations of the company, should it be later discovered that they exist.
The termination of the company by a simplified procedure without liquidation is reported to the registry court. The application must be accompanied by:
- The decision on the termination of the company.
- A statement from all members of the company confirming that the company has no outstanding obligations and that each member undertakes to settle obligations, should it be later discovered that they exist.
- Confirmation that the company has no outstanding matured debt related to public payments.
Upon the finality of the decision to delete the company from the court register, parts of the company’s assets transfer to the members of the company, in accordance with the asset distribution plan, which is an integral part of the decision of the company members on the termination of the company.
After the deletion of the company from the court register, for the obligations of the company that ceased in a simplified procedure without liquidation, the members of the company are jointly responsible with their entire assets. Creditors can enforce claims they had against the company against the members of the company within two years from the date of the announcement of the deletion of the company from the court register.
The registry court will revoke the decision on the termination of the company by a simplified procedure without liquidation if a valid objection is filed against it within 30 days from the date of the decision’s announcement. In this case, the company must continue the regular liquidation procedure.
Termination based on a court judgment
In accordance with Article 468 of the Companies Act, a company may cease to exist based on a court judgment if it becomes impossible to achieve the purpose of the company or if there are other significant reasons for its termination in the circumstances of the company. Only members of the company whose business shares account for at least one-tenth of the company’s share capital can file a lawsuit for the termination of the company.
Bankruptcy
The company may also cease to exist due to the initiation of bankruptcy proceedings against the company. Bankruptcy is a special procedure for the termination of the company regulated by the Bankruptcy Act.