What do you do if your company is sent for compulsory dissolution?

If your company is sent for compulsory dissolution by the Danish Business Authority, you can still manage to save it! If you need help to get your company resumed, please contact Attorney Lærke Bruun Hansen.
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A company can be compulsory dissolved if:

  • The company has not been changed from IVS to ApS
  • The company has not submitted an annual report in time
  • The company does not have an auditor, unless the company has lawfully opted out of auditing the annual report.
  • The company does not have a legal management
  • It is not possible to get in touch with the management at the registered address of the company  
  • The company has not responded to lost outstanding capital
  • The company has not registered legal or beneficial owners

All IVS’s are being sent for compulsory dissolution if they have not been transformed into an ApS by 15 October 2021.

Before the Danish Business Authority decides to send a company to compulsory dissolution, the company will be notified by letter in E-Boks. If the situation justifying the compulsory dissolution is not rectified within the deadline given by the Danish Business Authority in the letter, the company will be sent for compulsory dissolution.  

If/when the matter has not been rectified, the company will be sent for compulsory dissolution and the Danish Business Authority will send the case to the probate court where the company belongs. The probate court then appoints a liquidator to assist in the compulsory dissolution.

When the company has been requested to be compulsory dissolved, it will appear from CVR, where the company’s name will be registered “under compulsory dissolution”.

How can you save you company so that it is not compulsory dissolved?

When the company is being compulsory dissolved, it will either be resumed, merged, liquidated solvent, or declared bankrupt.  

Resumption:

It is a prerequisite for a company to be resumed, that the company has a positive net worth and that no illegal loans have been granted to the company’s management or shareholders.

To get the company resumed, a state-authorized or registered auditor must prepare statements about the company’s capital and shareholder loans, and an extraordinary general meeting must be held at which it is decided to resume the company.

If the company has been sent for compulsory dissolution due to no submission of an annual report, this must be prepared and reported to the Danish Business Authority at the same time. If the company has been sent for compulsory dissolution for another reason, this matter must also be rectified in connection with the general meeting.

An IVS can only be resumed if it is transformed into an ApS at the same time.

The report of the general meeting and the auditor’s statements must be notified to the Danish Business Authority.

If the probate court has appointed a liquidator before the Danish Business Authority has processed the request for resumption, the liquidator must participate and consent to resumption. This entails costs, as the company itself must cover the liquidator’s costs.

Merger:

If a company has been sent for compulsory dissolution within the last five years, the company cannot be resumed.

If the company is not to be liquidated, the only way to continue with the company is a merger.

This also requires the assistance of an auditor. If the probate court has appointed a liquidator, he must also be here assisting and consent to the conditions for carrying out a merger being met.

Solvent liquidation:

If the company is not to continue, but this is solvent, it can be liquidated by a solvent liquidation.

For this purpose, the company must prepare any missing annual reports as well as a liquidation account. This must be prepared by an auditor who also makes sure to file a final tax return with the Tax Administration.

A solvent liquidation presupposes that all creditors are paid in full. The auditor will therefore apply the Tax Administration for a tax receipt, which means that the Tax Administration declares that there is no debt to the public sector. At the moment, there is a case processing time at the Tax Administration of approx. 6 months.

When this has been received, the final general meeting must be held, after which the liquidator notifies the probate court that the liquidation has been completed.  

Bankruptcy:

If the company does not have the funds to carry through the above, the appointed liquidator will file for bankruptcy with the probate court, and a trustee will be appointed.

After this, the trustee will carry out an estate administration and make an examination of which transactions have taken place in the company and examine whether there are assets that can be realized and the proceeds distributed among the company’s creditors.

The trustee will also have to assess whether there are grounds for suspending the previous management. This is the case if the trustee finds that the conduct of business in the company has been grossly indefensible.

Summary:

If you want to continue with the operation of the company, it will be necessary to respond immediately to the Danish Business Authority’s notice of compulsory dissolution. Otherwise, upon resumption, it will be necessary to cooperate with the liquidator.  

If you need help in connection with your company being sent for compulsory dissolution, please do not hesitate to contact Attorney Lærke Bruun Hansen at lbh@les.dk.