This content is from: Slovak Republic

Slovak Republic: New company liquidation rules

An amendment to the Commercial Code, introducing several important changes concerning the liquidation of companies, will come into force on October 1 2020. The amendment seeks to improve transparency in the business environment by taking aim at tax fraud as well as the deceptive practices associated with company liquidations.

Under the prevailing law, the winding up of a company – with or without going into liquidation – is preceded by the legal termination of the company's activities and removal of the company from the commercial register. The amendment introduces a new rule whereby a company is considered to be in 'crisis' from the time of the winding-up resolution until the time its entry into liquidation is registered in the commercial register. This will substantially limit the company in making any financial payments to members and related parties. Under the existing rules, a company goes into liquidation on the same day the winding-up resolution is adopted by the member(s) and the effect of the subsequent publication of the liquidation in the commercial register is strictly declaratory. Under the amendment, the lawful liquidation process will not begin until a liquidator is registered in the commercial register. Members will be allowed 60 days from adopting the winding-up resolution to appoint a liquidator; if they fail to do so, the court will appoint a liquidator randomly selected from the register of official receivers.

The amendment also changes how certain legal acts made by the company before liquidation are preserved. Under the amended law, when a company goes into liquidation all unilateral legal acts made by the company – in particular instructions, authorisations, powers of attorney, and procurations – will cease to exist, with the exception of powers of attorney granted for representation of the company in judicial proceedings. A new step has also been introduced in the liquidation process, requiring the liquidator to draw up a list of the amounts owed to all of the company's creditors within 45 days after liquidation of the company is published in the commercial register. The purpose of this list is to allow the creditors to register their claims for payment out of the liquidation proceeds. However, the company is not released from its obligations to creditors who are not on the list, or even to those creditors who turn up after the 45-day period during which the list of creditors must be drawn up.

The amendment prescribes continuing settlement of the claims registered in the liquidation in the order in which they are received. Claims that in a bankruptcy would be settled as low-ranking claims, such as contractual penalties and the claims of shareholders of other related parties, will only be paid in a liquidation after all other claims of the creditors in the liquidation have been fully settled.

Some of the bureaucracy involved in lodging the application to strike a company from the commercial register upon completion of the liquidation has also been eliminated. The amendment no longer requires the mandatory consent of the tax authority and the Social Insurance Agency to the striking of a company, which will speed up the liquidation process. In addition, the amendment provides clarification of some issues that in practice have been subject to lengthy and complicated solutions offered by case-law. There may be situations where some assets remain after the liquidation of a company, in which case a supplementary liquidation will take place. However, after four years from the time the company is struck from the commercial register, there can be no further liquidation order, as after that time all newly discovered assets of the company automatically belong to the state.

Daniel FutejDaniel Grigel

© 2021 Euromoney Institutional Investor PLC. For help please see our FAQs.

Instant access to all of our content. Membership Options | 30 Day Trial