Dissolution without liquidation

Dissolution without liquidation is a legal mechanism for ending a company’s existence without having to go through the traditional liquidation procedure.

Here is a more detailed explanation :

Concept and conditions

Merger or Absorption :

When a company is dissolved without liquidation, this often means that it is merged with or absorbed by another entity.

All its assets and liabilities are transferred to the absorbing or merged company.

Legal requirements :

This process must be approved by the shareholders or associates of the dissolved company, usually at an extraordinary general meeting.

The acquiring company must be pre-existing and ready to accept all the assets and liabilities of the dissolved company.

Advantages

Simplicity and speed :

The procedure is faster and less costly than traditional liquidation.

Avoids the complex formalities of selling assets and settling debts.

Business continuity :

Allows continuity of business activities, as the assets and contracts of the dissolved company are automatically transferred.

Employees are generally taken over by the acquiring company under the same conditions. In the case of an absorbing (holding) company established outside France, the holding company will have to set up a subsidiary in France if it wishes to take over the absorbed company’s employees.

Procedure

Merger project :

A merger plan is drawn up and submitted to the acquiring company.

The project must detail the terms and conditions of the asset transfer.

Annual General Meeting :

The sole shareholder of the acquiring holding company must approve the merger project at an extraordinary general meeting.

Administrative formalities :

The resolutions of the meeting must be filed with the Clerk of the Commercial Court.

Amendments must be published in a legal gazette and in the Bulletin Officiel des Annonces Civiles et Commerciales (BODACC).

Case study

Imagine company A absorbing company B :

B’s assets and liabilities are transferred to A.

B shareholders receive A shares in exchange for their B shares.

B legally ceases to exist, but its activities continue under the banner of A.

Conclusion

Dissolution without liquidation is an effective solution for simplifying the cessation of corporate activity while ensuring continuity of business operations.

It does, however, require careful planning and compliance with legal procedures.

Find out more about dissolution without liquidation specific to a cross-border Universal Transmission of Asset – https://www.service-societe.com/en/universal-transfer-of-assets/