Liquidation Committee

Formation Trigger

Process of closing a business officially begins with a resolution passed by the shareholders or a judgment issued by a court. In a voluntary closure, the shareholders must form the liquidation committee within fifteen days of the decision to dissolve. If they fail to do so, creditors can apply to the court for a mandatory appointment of the committee members.

The court will intervene if the internal conflicts of the company prevent a smooth transition to the winding up stage. This trigger ensures that the assets of the company are not wasted or hidden by the management after the business has stopped operating. The formation of the committee is a public event that must be recorded with the market registration authorities.

This formal step protects the interests of anyone who has an outstanding claim against the business.

Fiduciary Responsibility

Members of this body are held to high standards of professional conduct and are personally liable for any misconduct during the process. A liquidation committee must act in good faith and avoid any conflict of interest when selling company property. They cannot buy the assets themselves or sell them to related parties at a discount.

Each member has a duty to maximize the recovery for the creditors and ensure that the priority of payments is followed exactly as required by law. If the committee finds that the assets of the company are insufficient to cover all debts, they must immediately stop the liquidation and file for bankruptcy in court. This duty ensures that the insolvency is handled under the more strict rules of the bankruptcy law.

The accountability of the members provides a layer of security for the financial system.

Final Closure

Termination of the corporate life is the ultimate goal of the work performed by this group. Once all assets have been sold and the proceeds have been distributed to the creditors and shareholders, the committee must prepare a final report. This report is submitted for approval to the shareholders meeting or the court that appointed the committee.

The committee then applies to the tax bureau for a clearance certificate, which proves that all taxes have been paid in full. Only after receiving this clearance can the committee go to the market regulation bureau to cancel the business licence. The last act is to publish a final announcement to the public that the company no longer exists.

This orderly exit prevents the company from becoming a ghost entity that could be used for illegal activities. The liquidation committee is the legal bridge between an active company and its final dissolution.