How long company liquidation takes, and what holds it up

The law and the calendar say different things. Article 2.110(3) of the Civil Code (CK) provides that the liquidator must complete the procedures and have the company deregistered no later than one year from the registration of the status of a legal person in liquidation, and before this time limit expires an extension for one further year may be requested. That is a ceiling, not a duration.

When the clock starts

Article 73(6) of the Law on Companies (ABĮ) provides that from the day the general meeting of shareholders adopts the decision to liquidate the company, the company acquires the status of a company in liquidation, and the liquidator, from the time of election, acquires the rights and duties of the company’s manager and board. Article 2.110(1) CK says the same thing from the other side: the management bodies lose their powers, and competence to conclude transactions passes to the liquidator.

The conclusion is simple. The clock starts ticking from the decision, not from the moment you make up your mind to close the company. Time can pass between “we decided to close” and “we adopted the decision”, and it does not count towards any time limit.

Notices to creditors

This is the only stage whose length you choose yourself. Article 2.112(1) CK sets out two routes: publish a public notice three times at intervals of not less than thirty days, or publish a public notice once and notify all creditors in writing.

Three notices at thirty-day intervals mean at least 60 days for this step alone (Article 2.112(1) CK). The second route requires the list of creditors to be accurate and complete, so it suits a company whose accounts are in order, and does not suit one whose books nobody has looked at for two years.

The VMI notice

The State Tax Inspectorate (VMI) notice that the company has settled its accounts with the budgets and funds is a separate stage.

An important feature of this stage: the liquidator does not submit this notice. The VMI submits it to the register itself. Point 201 of the Regulations of the Register of Legal Entities (JAR nuostatai) provides that the registrar deregisters the legal person within five days of receiving the prescribed documents and that notice. The liquidator can make sure that returns and other documents are filed without errors.

Archiving

The documents can be put in order by a specialist providing archiving services. Documents relating to employment relationships are kept the longest.

Article 17 of the Law on Documents and Archives (DAĮ) provides that the records of a non-state organisation or private legal person being liquidated whose retention period has not expired must be transferred to the municipality. A certificate that the documents have been transferred for safekeeping, or that there are none to transfer, is filed together with the deregistration documents. It is not needed if the register has already received such a notice directly from the body that accepts the documents (points 198.3 and 38.7.9 of the JAR nuostatai). This work is worth starting in parallel with the VMI stage, not after it.

Public institutions and foundations

For a public institution (VšĮ) the law sets the same time limit as for a company: the liquidator must complete the procedures and have the institution deregistered no later than one year from the registration of the status of a legal person in liquidation, and an extension for one further year may be requested before it expires (Article 2.110(3) CK). When the process ends within that limit depends on the route chosen for notifying creditors (Article 27(6) of the Law on Public Institutions, Article 2.112(1) CK), on the VMI notice that the institution has settled its accounts with the budgets and funds (point 201 of the JAR nuostatai), and on the transfer of the documents for safekeeping (Article 28(2)(8) of the Law on Public Institutions, Article 17 DAĮ). The same applies to foundations.

Statutory time limits

The law sets these time limits:

• public notice of the liquidation: three times at intervals of not less than thirty days, or once with written notice to all creditors (Article 2.112(1) CK);
• assets are distributed to the shareholders no earlier than 2 months after these steps (Article 73(14) ABĮ);
• the register deregisters the company within five days of receiving the prescribed documents and the VMI notice (point 201 of the JAR nuostatai);
• the whole liquidation must be completed within one year of the registration of the status of a legal person in liquidation, and an extension for one further year may be requested before it expires (Article 2.110(3) CK).

What can hold things up

What can hold things up is old returns that were never filed, a change of accountant midway through the process, a document from an earlier period that cannot be found, and forgotten assets that someone remembers only after deregistration. So the first conversation about liquidation is not about the procedure but about what has been left in disorder in the company.

More on liquidation

• Liquidation of companies: service page
• Liquidation initiated by the Centre of Registers
• Who can be a company liquidator in Lithuania, and what are they liable for?
• Assets to shareholders on liquidation in Lithuania: when, how much, tax
• Debtor company in liquidation: how a creditor claims the debt in Lithuania
• Liquidation or bankruptcy: what to do when a company runs short of assets
• Does bankruptcy need shareholder consent? How insolvency is established
• Liquidating a UAB with a shareholder abroad: what can be done remotely
• Liquidation in Lithuania: archive certificate and state land lease tax
• Liquidation in Lithuania: annual financial statements and the AGM
• Shares in other companies during liquidation: act before deregistration
• After bankruptcy opens: CEO duties and what shareholders can still do

How to start

Send us the legal form and answer three questions: are there debts, are there employees, are there assets? We assess the case and tell you what the timing will depend on in your case.

Tel. +370 5 212 1506, email info@linden.lt

More about this service: liquidation of companies.