If a company has reached its objectives or due to any reason is desired to be liquidated, it must follow the regulations of the Law on Business Organization, the Business Organization Insolvency Law, Law on Bankruptcy and Liquidation of the Insurance Companies, Law on Bankruptcy and Liquidation of the Banks. Our Montenegro lawyers can give you more details about the provisions of this legislation.
Below, you can read more about how to close a company in Montenegro.
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Reasons for winding up company in Montenegro
There are several reasons for which a company can be liquidated in Montenegro. Some of the most common are:
- the creation of a company for a limited time and reaching the end of the respective period;
- a shareholders’ agreement to terminate the business;
- shareholders’ disputes can also lead to business termination;
- the completion of the business’ activities and the company’s exit from the market can also lead to winding up a company in Montenegro;
- failure to comply with the company’s Articles of Association;
- not meeting the Company Act’s requirements anymore;
- the company’s bankruptcy, which requires the creditors to file for company liquidation with the court.
| Quick Facts | |
|---|---|
| Applicable law(s) |
– Company Law, – Business Organization Insolvency Act, – Law on Bankruptcy and Liquidation of the Banks, – Bankruptcy and Liquidation of the Insurance Companies Act. |
|
Conditions to liquidate a company |
– business termination, – shareholders’ agreement to close the company, – failure to meet legal requirements, – failure to meet Statutory Documents’ requirements, – debts. |
|
Types of procedures |
Voluntary and mandatory procedures are available. |
| Voluntary company liquidation | Voluntary company liquidation in Montenegro is possible in cases where the creditors do not file for debt recovery. |
| Judicial company liquidation |
Mandatory proceedings are commenced at the request of a judge, following one or more creditors’ request. |
| Appointment of a liquidator in a voluntary procedure |
The shareholders choose the liquidator among the executives of the company. |
| Appointment of a liquidator in a mandatory procedure |
The judge appoints the liquidator. |
| Authorities to notify in case of liquidation |
– the Company Register, – the tax authorities, – the creditors, – the employees. |
| Requirement to notify other parties (YES/NO) |
Depends on the area of activity of the Montenegrin company. |
| Notice requirements | 5 days from the adoption of the liquidation decision. |
| Additional accounting requirements to comply with (if any) |
A final financial statement must be submitted to the Revenue Service. |
| Company liquidation time frame (approx.) |
The time frame depends on the type of procedure and can span from a few months to several years. |
| De-registration with the tax authority in Montenegro required (YES/NO) |
Yes. |
| Trade Register deletion requirement (YES/NO) |
Yes, following the completion of the liquidation process. |
| Company liquidation support (YES/NO) | Yes, our lawyers can assist in company liquidation matters. |
It is worth noting that the new Company Law is more specific about the types of businesses that can undergo liquidation and the procedures to follow.
If you want to know more about the Law on Business Organization’s rules for company liquidation, you can direct your questions to our law firm in Montenegro.
Types of company liquidation procedures in Montenegro
Winding up a company in Montenegro can be voluntary or compulsory. The voluntary decision is taken by the company members, while the decision of compulsory liquidation is taken by the competent Court.
Other method of company liquidation is the shorter voluntary liquidation which can be initiated if there are no liabilities left and the liquidation decision was approved by all the members of the company.
The compulsory company liquidation in Montenegro is taken by the Court which has the role of appointing the liquidator and supervising its actions.
Our team of attorneys in Montenegro is ready to help businessmen with expert advice whether we are talking about a voluntary or a compulsory company liquidation.
We have also created an infographic showing the liquidation procedure:
Steps to close a company in Montenegro
The first step to start the company liquidation process in Montenegro is determining the main reason for the business to be terminated. Following that, the procedure can be divided into:
- voluntary procedures;
- mandatory/compulsory or judicial proceedings.
In the case of voluntary company liquidation, the following stages will ensue:
- a shareholders’ extraordinary meeting where a resolution of terminating the business will be voted;
- the appointment of the liquidator, who is usually chosen among one of the directors;
- filing the liquidation notification with the Companies Register;
- publishing the notification in the Official Gazette;
- informing the creditors about the closing of the company in Montenegro;
- liquidating the company’s assets to extinguish any remaining debt towards creditors and authorities;
- drawing up a final financial statement and filing with the tax office;
- filing for deletion of the company with the Companies Registrar.
Similar steps will be taken in case of compulsory company liquidation in Montenegro. However, the decision to terminate the business will be ruled by a court of law.
The decision of liquidation of a company in Montenegro must be registered with the Register of the Commercial Court by the company’s management no later than five days since it was taken. During the general meeting where the decision is taken, an individual or a corporate body must be appointed in order to complete the process of liquidation. His details must also be registered at Register of the Commercial Court.
Theliquidatorwill replace the place of the management board as soon as his details are officially registered. His first assignment is to deliver a notification related to the liquidation to the creditors and also to the tax authority. The claims cannot be submitted shorter than 60 days from the written notification. The notification must also be published in a daily newspaper at least two times, with an interval of minim 15 days and maximum 30.
In the notification are stipulated the maximum term of submitting the claims by the creditors. The usual term of submitting the claim is not shorter than 60 days since the publication of the announcement. For the disputed claims, the maximum term of submitting it to the Court is 30 days since it was received.
All the claims submitted after the expiration of the deadline must be satisfied after all the other claims submitted in time are fulfilled. All the remaining assets are divided between the entitled shareholders. A final report related to the way the process was performed and a balance sheet with all the company’s assets must be presented in front of a final meeting of the shareholders. After being approved, a copy of the final report and a request of de-registration must be sent to the Register but not later than 7 days from the meeting. The register is sending a notification of de-registration to the Official Gazette and the company ceases to exist.
An important aspect to consider in the case of public companies in Montenegro is that the new Company Law provides for an expedited liquidator appointment similar to that of the voluntary procedure. This step has shortened significantly the duration of the entire process.
If you want to be up to date with the latest amendments of the Company Law in terms of liquidation, our Montenegrin lawyers can advise you.
The process of company liquidation in Montenegro can take from a few weeks (in case of a shorter voluntary liquidation) to several years if the claims are contested or other issues occur.
Below, you will also find our video on this topic:
Measures to be taken by companies in financial distress
The new Company Law provides several time frames for settling certain financial difficulties before starting the liquidation procedure. According to a report drafted by the European Bank for Development and Reconstruction:
- in case of insolvency, companies can file a reorganization plan alongside the insolvency petition with the court within 60 days from starting the proceedings;
- an extension of 15 days is available in certain circumstances;
- the court will rule in the case of such petitions within 3 days.
Insolvency and bankruptcy regulations also apply in the case of natural persons. So, if you are foreign citizens interested in immigration to Montenegro, you can also enquire with us about such procedures. In addition, you can rely on our lawyers for support in applying for a residence permit, or a passport for Montenegro, depending on your case.
Our Montenegro law firm can guide you through the entire company liquidation procedure, making sure that all the financial and legal obligations are being fulfilled. Contact our law office for more information.