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Company Liquidation in Denmark

Company Liquidation in Denmark

Updated on Thursday 17th January 2019

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Closing down a company is a decision is an important decision that usually follows an attempt to restructure the legal entity. When the business is no longer feasible, or when the owners cannot or do not wish to restructure, the company can be liquidated. The dissolution and the liquidation are two separate processes as well as bankruptcy that occurs when the company is no longer able to pay its creditors.
 
Our company liquidation lawyers in Denmark specialize in terminating a business and handling the particular phase of the liquidation. Furthermore, we can also help with legal representation for litigation or arbitration that may be needed to settle the creditor disputes that may arise after the decision to end a company’s activities.
 
Below, our team of attorneys in Denmark answers some of the most commonly asked questions about the liquidation process and, in general, about terminating the business activities. 

How can a company be liquidated in Denmark?

There are two ways a company can be liquidated in Denmark: through solvent liquidation (decided by its members) or through compulsory liquidation (ordered by Court). The reasons why a company is liquidated in Denmark may vary, for example: if the members have reached the conclusion that the company has established its purposes, the availability term for it has expired, the failure in submitting the relevant documents to the Commerce and Companies Agency, the omission to appoint the managers and auditors, severe violation of the laws.

Liquidation, bankruptcy and the imposed company wind-up are all separate courses of action and should be treated accordingly. This is why we recommend getting in contact with one of our company liquidation lawyers in Denmark so that you can request specialized counseling according to your company’s particular situation.
 
The compulsory wind-up of the company can be ordered by the Danish Companies Agency, for example when the company has ignored part of its mandatory duties, such as not filing the annual report. One of our lawyers can give you more details about these situations, however, the Agency will generally allow a company to remedy its deficiencies and will set a deadline for this remedy to take place. Should the company managers and owners be unable to resolve the issues, only then will the company cease to exist in a compulsory manner.
 
Another manner in which the activities of a company are ceased is if a bankruptcy petition is filed on behalf of the company (by the liquidator himself when the company is insolvent). Alternatively, the petition can be filed by another party, such as a creditor. The bankruptcy proceedings are not administered by the liquidator anymore, but by a trustee appointed by a court. Once again, the assets will be distributed to the creditors, according to the applicable priority.

Our Danish law firm can tell you more information about the two types of company liquidation in Denmark.

The video below shows how to liquidate a Danish company:

 

What are the steps for company liquidation in Denmark?

Liquidation is an option for a company that is no longer profitable as long as that legal entity is able to settle all of the dents, including the final taxes, the costs for liquidation itself as well as most importantly the creditor’s claims, in their particular order. In those cases when this is not possible, and the liquidation process is already on the way, the appointed liquidator will file for bankruptcy. 

In case of the solvent liquidation, the decision of closing the Danish company must be taken during a general meeting of the shareholders and the Commerce and Companies Agency must be notified no later than two weeks from the decision. Our Danish lawyers can take care of the relationship with the Commerce and Companies Agency.

The liquidator is the person in charge with the liquidation of a company established in this country and is appointed by the Court in case of a compulsory liquidation or by the members of the company is a case of a solvent liquidation.

The decision of closing a company is published in the Official Gazette and the creditors must be notified regarding the process and the way they can deposit their claims (usually a period of 3 months).

The first thing a liquidator must do is elaborating a balance sheet and a profit and loss account. These documents must be deposited at the Commerce and Companies Agency from Denmark.

The claims deposited on time must be paid and the remaining assets are used to cover the claims deposited after the period of 3 months and to the shareholders.

If the claims cannot be covered, a petition for bankruptcy must be deposited at the Commercial Court. 

After covering all the claims and dividing the remaining assets to the shareholders of a Danish company, the liquidator must convene a new general meeting and a new balance sheet must be elaborated. During the general meeting, the shareholder is presenting the balance sheet and a report regarding its activities.

As a result, the liquidator is dismissed and a request for canceling the company from the companies register is made.

The solvent liquidation in Denmark can be revoked in certain situations. In this case, the share capital of the company established in Denmark must be increased or decreased in accordance to the settled minimum share capital and the Commerce and Companies Agency must be notified within two weeks from the resolution.

How long does it take to liquidate a company in Denmark?

Usually, the company liquidation in Denmark takes around six months if all the claims are covered in time and there are enough funds to support the process.

The liquidation process will differ according to the particular situation of the company and whether or not it is solvent or insolvent. We recommend reaching out to one of our company liquidation lawyers in Denmark for complete information about the process and legal counseling in your case. The liquidation procedures for private companies in Denmark are outlined in the Companies Act and one of our lawyers can offer you complete details about the legal proceedings, as they are indicated by law.

Closing down a business, or even selling or transferring it to another owner, is a step that is registered with the Danish Tax Agency or SKAT. It should be noted that the business must prepare its accounts for the year in which it is closed no matter the date on which the actual discontinuation of the business took place. The gain/loss account should be prepared for all of the types of assets held by the company, from properties to items (computers, machinery, and equipment, office supplies, etc.).
 
Business owners in Denmark who choose to close down a company are still required to keep certain documents for a period of five to ten years after the date of the closure. These include the ledger cards, the inventory lists, production ledgers, records, delivery notes, and other ledgers. For property owned by the former business, the accounting records that prove these real property transactions must be kept for a period of ten years after the date of the purchase or the renovation, as applicable. 
 
Voluntary company liquidation is the preferred method for ending the activities of a Danish business that is no longer profitable. This way, the business owners can maintain a certain degree of presence in the finalization of the company’s activities, and choose the liquidator who is to be appointed.

Contact our team of attorneys in Denmark for complete assistance in several corporate matters, including the dissolution of a Danish company.