February 02, 2024
The regular procedure of closing the company is liquidation, and which procedure is quite complex and time-consuming, and often creates frustration for entrepreneurs because of the pile of documents that need to be collected. The alternative to this is the so-called termination of the company under a summary procedure, which act was introduced in the Companies Act in order to facilitate entrepreneurs to close their business and the procedure of deleting the company from the court register.
Termination of the company under summary procedure
The termination of the company under summary procedure is regulated by Article 472a of the Companies Act, which provides the following:
The company may terminate under summary procedure without liquidation if all its members agree to make a decision on such termination of the company. In the decision on termination, except for the express indication that the company terminates under summary procedure without liquidation, the following information must be provided: company, registered office, personal identification number and registration number of the entity of the company that ceases, the total number of members of the company, with the indication of the name and surname, residence.
All members of the society are also obliged to make a statement:
– that the company has no outstanding obligations towards workers and former employees of the company or other outstanding obligations based on the employment relationship between workers and former workers,
– that the company has no disputed or indisputable, due or outstanding obligations towards other creditors and
– that each member undertakes to settle, in solidarity with all other members of the society, all remaining obligations of the company, if it subsequently turns out that they exist.
The company must publish without delay on the website of the court register and in the company’s newsletter, if it has one, a decision on the termination of the company under summary procedure without liquidation and a statement that there is no debt.
Registration of the termination of the company
The termination of the company due to the decision of the members to terminate under summary procedure without liquidation must be reported without delay to the registry court for registration in the court register. If the prerequisites for registration are met, the registry court will issue a decision on the termination of the company under summary procedure without liquidation.
Right to object
Members of the company, creditors of the company or state bodies may object to the decision on the termination of the company under summary procedure within 30 days from the date of its publication. The complaint is decided by the register court that issued the decision on the termination of the company under summary procedure. If the court finds that the complaint is well founded or that there is a possibility of damaging creditors or members of the company, it will revoke the decision on the termination of the company without liquidation and inform the company, which must continue the liquidation procedure.
Deleting the company from the register
If no objection has been filed against the decision on the termination of the company without liquidation or the court rejects or rejects the filed complaint, the registry court will issue a decision on the removal of the company from the court register and publish it on the website of the court register.
Responsibility of members of the society
After the deletion of the company from the court register, the members of the company are liable for the obligations of the company that has ceased in summary proceedings without liquidation with their entire assets. Creditors may exercise claims they had against the company against members of the company within two years from the date of publication of the deletion of the company from the court register. A member of the company who settles a claim to the creditor has the right to require each member to reimburse him for the part that falls on him. Unless otherwise agreed, the part that falls on an individual member of the company is determined in proportion to the participation of his business share in the share capital of the company.
Keeping business books and business documentation
Members are obliged to keep business books and documentation of the company within the deadlines specified by special regulations or entrust for safekeeping to a person who provides services of storing business documentation in accordance with the rules governing the handling of archival material and archives. Business books and documentation can also be stored in electronic form. The court register will enter with whom and where the company’s books and documentation are stored. The fee for the storage and storage of the company’s books and documentation shall be settled at the expense of the company prior to its deletion, and may not exceed the justified costs of digitizing the company’s books and documentation, drafting their list and their safe keeping and protection in electronic form.
The court shall grant access to the business books and documentation referred to in the previous paragraph of this Article to shareholders and creditors of the company, as well as to other persons who make it probable that they have a justified interest in doing so. For inspecting the stored business books and documentation of the company and making copies of them, a fee is paid, which cannot be higher than the fee paid for inspecting and making copies of archival material stored in the Croatian State Archives.
Submission of financial reports at FINA
The director of the ceased company must submit an annual financial report to FINA by 30 April of the current year in which it ceased operations, or together with the annual financial statement for public disclosure to be submitted within 6 months of the dissolution of business. The company must not have assets at the time of termination, which means that all assets must be sold, and the same must be harmonized in the business books.
The advantages of the termination of the company under summary procedure for entrepreneurs include:
Speed and efficiency: The shortened procedure allows for a faster cessation of society without going through a lengthy and complex liquidation procedure.
Lower costs: Since the liquidation process is avoided, the costs associated with the termination of the company are much lower.
Simplicity: The process is simpler because it requires fewer procedural steps and less bureaucracy.
Direct decision of the members: The termination of the company depends solely on the consent of all members, which simplifies decision-making within the company.
This procedure is particularly suitable for companies that can reach unanimous agreement among members and that wish to end their operations in a rapid and efficient manner without additional obligations arising from the liquidation process.
For legal advice on the procedure and possibilities of termination of the company, you can contact us at:
