LUXEMBOURG COMPANY LIQUIDATION

INTRODUCTION

As in many jurisdictions, there is more than one way of voluntarily closing down a Luxembourg company. In Luxembourg there is the full liquidation process and the more straightforward dissolution without liquidation. There is also the procedure of compulsory liquidation for violation of the laws regarding commercial companies.

DISSOLUTION

The company may be dissolved either by a decision of general meeting or a judicial decision. Of these, the first way is by far the most common. An extraordinary general meeting can decide to dissolve the company in the following circumstances:

- at any time by a resolution passed in accordance with the conditions laid down to amend its articles and in the presence of a notary public.

- the directors of the company are bound to call a meeting within two months following a substantial loss .

Involuntary dissolution can result from a court order issued pursuant to a petition filed either by the Luxembourg public prosecutor, due to a violation of criminal law, important provisions of the commercial law, the ccl or other laws governing commercial companies, or by a shareholder to force the company to liquidate.

A commercial company is, after dissolution, deemed to exist only for the purpose of liquidation.

LIQUIDATION

A full liquidation is more expensive than dissolution and takes longer. 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 realizing its assets and paying its creditors, although it is the liquidator who is charged with these tasks. When the liquidator believes that the realization 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.