A holding company can be wound up or dissolved due to certain reasons. Do you think about the reasons and steps for dissolving a holding company? Here are the essential steps of the process.
What Are the Reasons to Dissolve a Holding Company?
The law provides grounds for the dissolution of companies and hence a holding company. They are listed in Article 1844-7 of the Civil Code. They can be of legal origin, voluntary, provided for by statutes and sometimes judicial. So there are classic and anticipatory cases of dissolution.
classical causes of dissolution
The classic reasons for dissolving a holding company are:
- the reasons provided for in the articles of association;
- achievement or extinction of corporate purpose;
- Expiry of the time for which the company was incorporated.
You can also dissolve the holding company if it no longer complies with the legal conditions attached to its position (share capital or number of partners).
Expected reasons for dissolution
It is also possible to proceed with the dissolution of the holding company in advance by the partners or by decision of the Court for the following reasons:
- by joint decision of the partners on early dissolution;
- By order of the court (at the request of one of the partners) paralyzes the normal operation or non-performance of the obligations of one of the partners in the event of a serious disagreement;
- court decision (judicial liquidation decision for insufficient assets, criminal judgment for a serious crime, etc.);
- Cancellation of partnership contract (agreement for allocation of contribution by the partners to the holding company).
Early dissolution may also occur in the event of impossibility of prosecution (example of retirement without heir). But the holding company, thanks to the many tools, makes the successors an excellent means of transmission. If these are present, dissolution can be avoided.
The terms of dissolution of the company are specified in Article 1844-7 of the Civil Code.
What Are the Steps to Dissolve a Holding Company?
The stages of dissolution of a holding company are the same for all companies.
1. Decision Making
The decision to dissolve must be taken by the partners under the conditions provided by statute. An extraordinary general meeting is convened during which a decision to stop the activity is taken. A breach report has been prepared. This should include the company’s legal information, the decision and effective date of the dissolution, and the appointment of a liquidator. As of 2021, note that registration of a notice of dissolution is optional.
2. Legal Declaration of Dissolution
Legal notice of dissolution The legal notice should be published in the newspaper. From 2022, the price is fixed and is 149€ HT. The declaration of dissolution is only the first step, let us not forget the announcement of the closure of the liquidation.
3. Formation and transmission of dissolution file of the holding company
It will be necessary to proceed with the formation of the dissolution file and send it to the Registry of the Competent Commercial Court.
The file should contain:
- Minutes of dissolution signed by the partners;
- Company Amendment Form signed by the liquidator (M2);
- Identity document signed by the liquidator and a declaration of non-convict;
- Certificate of publication in a legal declaration newspaper;
- A check commensurate with the court fee.
After the Dissolution of the Holding Company: Liquidation and Cancellation
Once the first phase of dissolution is completed, it comes to the liquidation and delisting of the holding company.
liquidation of holding company
An amicable liquidation following the decision of the partners to dissolve the holding company. It is established under the conditions set out in the Articles of Association. The designated liquidator will carry out its mission, consolidating the funds and reimbursing the company’s creditors so that it is no longer liable for any debt and its accounts are cleared. If there are any funds remaining at the end of the operation, they will be called “liquidation bonuses” and will be returned to the partners.
In the event of termination of payment, another procedure will be applied, judicial liquidation. In this case, the commercial court will appoint the liquidator. Along with this deregistration will also take place.
been liquidated, it will be necessary to publish a legal declaration of the closure of the liquidation in the newsletter of the Legal Announcements. The price is fixed at a uniform rate of €108 excluding taxes.
delisting of holding company
Once the dissolution is complete (or has been announced at the same time) comes the final step, the dissolution of your holding company. For this you need to file a deregistration file with the competent business formality center or registry. The appointed liquidator will take care of this formality.
The file should contain:
- a copy of the recording of the completion of the liquidation actions and the truth certified by the liquidator;
- A copy of the closing accounts, also certified true;
- Completed and signed M4 form;
- an original power of attorney from the liquidator if he has not signed the M4 form himself;
- Certificate of publication in the Journal of Legal Declarations.
You can then get the Kbis deregistration extract online or from the registry or liquidator.
questions to ask
What is “Liquidation Loss”?
At the end of the holding company’s liquidation operations, if the result is negative, there will be what is called a “liquidation loss.” It is a capital loss which will be borne by the partners till their participation in the share capital or securities held.
Does the legal status of the holding affect the dissolution?
The stages of dissolution of a holding company are the same for all companies. On the other hand, depending on the legal status of the holding company, there may be differences of opinion regarding the terms of the general meeting to decide on changes in the company.