Dissolution, liquidation and deletion of a GmbH in Germany

Before an existing GmbH (company with limited liability) can be deleted from the commercial register, numerous legally prescribed formalities must be observed. The withdrawal of the GmbH from legal transactions takes place regularly in three stages:

1. Dissolution

2. Liquidation

3. Deletion

The dissolution of the company therefore does not lead to its deletion in the commercial register. The company may only be deleted once the legally prescribed liquidation process has been completed.

2. Dissolution of the GmbH

The reasons for the dissolution of a GmbH are regulated in § 60 GmbH Law (GmbHG). In the following, the leaflet focuses on the practically important case of dissolution by shareholders’ resolution.

The process by which the company enters the phase of processing its business in order to terminate its existence is referred to as dissolution.

The dissolution neither destroys the legal personality nor the capacity to act of the GmbH. Despite the dissolution, the company remains party to, for example, in a process. The company remains in the event of dissolution, but an addition such as “i. L.” or “i. dev.” to be attached, which indicates the settlement.

3. Resolution to dissolve

The shareholders can dissolve the company by resolution. Unless otherwise agreed in the articles of association, the resolution requires a majority of three quarters of the votes cast.

• As a rule, the resolution does not constitute an amendment to the articles of association. In order to be effective, the resolution does not generally require notarial certification or entry in the commercial register. The dissolution resolution therefore results in the dissolution of the company at the scheduled time.

• An amendment to the articles of association would be given if the duration of the company was regulated in the articles of association. Because the dissolution resolution then changes the corresponding regulation of the articles. In this case, a notarial authentication of the resolution to dissolve is required and the effect of the dissolution does not begin until it is entered in the commercial register.

4. Registration of the dissolution

The dissolution of the company must be registered for entry in the commercial register in a notarized form, Section 65 GmbHG. The registry court at the company’s headquarters is responsible for the local area. The reason for the termination (e.g. resolution to terminate) should be stated when registering.

The respective legal representatives of the company are required to register. Whether this is a liquidator or a managing director must be considered differently:

• The liquidator (s) are required to register if a dissolution has already occurred, ie in the event that the dissolution resolution does not constitute an amendment to the articles of association and has immediate effect. In this case, the entry in the commercial register is purely declaratory.

• The managing director (s) are required to register if a resolution to dissolve the articles of association is to be entered, since in this case the legal effect of the dissolution begins with the entry. The entry in the commercial register has a constitutive effect in this case.

Read more: Common questions about trade registration in Germany.

5. Registration of the liquidators

In addition to the dissolution, the liquidators must be registered for entry in the commercial register, Section 67 GmbHG. In principle, any natural person with full legal capacity can become a liquidator, who could also become a managing director:

• Acting managing directors are automatically appointed as liquidators by law, without a special appointment act, Section 66 (1) GmbHG, unless a different regulation is made in the articles of association, shareholders’ resolution or court order. Whether the managing director is obliged to continue his activity in the role of liquidator depends on the employment contract and is to be answered in the affirmative in case of doubt. Because the case of dissolution in itself is not an important reason for a termination. With the assumption of the office, the management contract also continues. The managing director can effectively resign, but may be liable for damages.

• If liquidators are specified in the articles of association, a further act of appointment is not required here either. They are deemed to have been appointed upon termination of the contract.

• The appointment of a liquidator by a shareholders’ resolution is permissible in any case, even if a liquidator is named in the articles of association. A change in the statutes is not necessary. Unless otherwise stipulated in the articles of association, the resolution only requires a simple majority, even if it also dismisses a liquidator in accordance with the articles of association.

In exceptional cases, liquidators can be appointed by the registry court at the request of shareholders whose joint shares correspond to at least ten percent of the share capital. An important reason is, for example, objectively justified doubts about the neutrality or qualification of a liquidator.

If acting managing directors do not become liquidators, their power of representation expires. The liquidators can also be recalled in the same way as they were appointed.

Read more: The steps of business set-up in Germany

6. Rights and duties of the liquidators

The liquidators are the management and representative body of the GmbH i. L. Like the managing directors of the advertising GmbH, the liquidators are the legal representatives of the company.

The task of the liquidators is to end the company’s current business, to meet the company’s obligations, to collect claims and to convert the company’s assets into money, Section 70 GmbHG. If new legal transactions are entered into, these must be in the service of processing.

The liquidators are obliged to ensure that the company is properly wound up. The responsibility for culpable behavior, that is, for the violation of the due diligence of a prudent businessman, can justify the obligation to pay damages.

It is important that the liquidator notices a possible impending insolvency of the GmbH i. L. keeps an eye on and, if necessary, fulfills his obligation to file for insolvency, which also exists during the liquidation, § 64 GmbHG.

7. Notice of dissolution

A particularly important liquidator’s duty is the so-called call for creditors: The dissolution of the GmbH must be announced immediately in the “company gazettes”, Section 65 (2) GmbHG. Since September 1, 2009, it has been sufficient that the dissolution is announced only once, before this point in time there was an obligation to announce the dissolution three times.

The “company gazette”, in which the publication is mandatory, has been no longer the (paper) Federal Gazette since April 2005, but the electronic Federal Gazette. This also applies if the electronic Federal Gazette is not mentioned as a communication medium in the articles of association. If the articles of association stipulate that advertisements must (also) be made in other public papers or electronic information media, announcements must also be made in these media. If, on the other hand, the articles of association stipulate that announcements are only made in the Federal Gazette, the announcement in the electronic Federal Gazette is sufficient. This clarification is contained in § 12 sentence 3 GmbHG and includes in particular the cases in which only one publication in the then before the introduction of the electronic Federal Gazette

Mandatory announcement sheet, namely the (paper) Federal Gazette was agreed in the articles of association.

The creditors are to be informed of the dissolution through the appeal. With the announcement, the creditors are also to be requested to report to the company. The publication of the dissolution is of particular importance because the blocking year only begins with the announcement, Section 73 (1) GmbHG: “The distribution may not be carried out before the debts of the company have been repaid or secured and not before the end of one year from the date on which the request to the creditors (Section 65, Paragraph 2) was made in the company gazettes ”.

The text of the notice could for example read as follows: “The (previously precisely individualized society) has been dissolved. The company’s creditors are invited to report to the company. For the GmbH i. L. (follow names). The liquidators. “

8. The year of exclusion

The legally stipulated lock-up year serves in particular to protect creditors and requires a more stringent distribution ban: during the lock-up year, any distribution of assets to the shareholders is prohibited. This means that only claims from third-party creditors from third-party transactions may be settled. There is no ranking among the creditors.

The existence and maturity of the liabilities are not affected by the blocking year. The claims of the creditors continue to exist according to general rules. The blocking year is not a deadline. Claims can be asserted against the company even after the blocking year has expired. The fate of the claims depends crucially on whether the respective creditor became known or remained unknown during the blocking year:

• As long as company assets are still available after the end of the blocking year, creditors who have not been known to date can also report to the company and satisfy their claims. If, on the other hand, the assets have already been distributed, the creditors get nothing. This rule will generally apply to unknown claims. The protection of the blocking year ends here when it expires.

• Known creditors, on the other hand, must always be taken into account even after the blocking year has expired. If a known creditor does not contact us, the amount owed may have to be deposited or security provided, Section 73 (2) GmbHG.

read more: Starting a business as a non-EU citizen in Germany

9. Distribution of wealth

With the expiry of the blocking year, the capital commitment according to § 30 GmbHG ends. The assets required to cover the share capital may then also be paid out to the shareholders. The shareholders’ claim to distribution arises only after all known creditors have been satisfied or secured. Until then, the shareholders may have a general right to the liquidation quota.

The net assets of the company are distributed according to the business shares of the shareholders, unless the articles of association contain a different regulation, § 72 GmbHG.

10. Deletion

The liquidation ends when no further resolution measures are required. The termination of the liquidation procedure is a prerequisite for the registration of the expiry of the GmbH in the commercial register and thus in principle also the complete termination of the GmbH as a legal entity.

Upon completion of the liquidation and after the final invoice has been submitted, the liquidators must register the completion of the liquidation for entry in the commercial register, Section 74 (1) GmbHG.

The company is then fully terminated when the termination of the liquidation and the deletion of the company are entered in the commercial register. The finished society ceases to exist.

11. Retention Periods

After completion of the liquidation, the books and documents of the company are to be given to one of the shareholders or a third party for safekeeping for a period of ten years, Section 74 (2) GmbHG.

12. Supplementary Liquidation

If, after the deletion of the company, it turns out that assets are still available or that resolution measures need to be carried out, a supplementary liquidation must take place. The company then re-enters the liquidation process. In order to be able to act again, new liquidators must be appointed either on application or by the registry court.

After the end of the supplementary liquidation, it must be noted that the power of representation of these liquidators for the GmbH has expired again.

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