LIMITED COMPANIES THAT ARE INACTIVE FOR MORE THAN 1 YEAR SHOULD BE DISSOLVED

In a previous article we discussed the obligations of a dormant company, now we will see the possible consequences of a company left dormant for a long period of time.

Leaving a company sleeping without dissolution is a situation in which there are numerous entities. However, sometimes we overlook that in the case of limited companies, being inactive for a period exceeding one year is a legal cause of dissolution.

Since the entry into force of Legislative Royal Decree 1/2010, of July 2, the downtime required to get the legal cause in the event of dissolution was reduced from three years to one. From this we can deduce that there is a large number of private corporations that should dissolve and do not, moving the liability to the administrator for breaching that obligation.

Once incurred in the event of dissolution, the administrator must call a general meeting within two months to adopt the agreement. Failure to do so, the administrator will be responsible for the social obligations after the commencement of the case.

Social obligations are presumed to be unclaimed after the occurrence date of the legal cause of the dissolution of the company, except that administrators can be demonstrating that pre-date.

The liability of directors for failing to act in order to get a solution does not require the existence of a nexus between an act or omission and the damage caused by them. Any creditor may make a claim against the administrator or society, or both simultaneously, for the collection of an existing debt.

These circumstances, which are often not taken into account, can cause serious problems for the manager of a limited partnership. If an entity that is inactive has no debts to third parties, the situation is salvageable. But if any, must take into account the consequences of that mere failure to exercise activity.

For further details do not hesitate in contact VP Advisers.