Resumption after compulsory dissolution

Even though the Danish Business Authority has announced a compulsory dissolution of your company, you still have the opportunity to resume operations of the company. However, some conditions must be met before a resumption can take place.

What is resumption after compulsory dissolution?

A compulsory dissolution is a forced liquidation of the company. The decision on compulsory dissolution is made by the Danish Business Authority, which then asks the Bankruptcy Court to dissolve the company.

There can be many reasons why the Danish Business Authority decides on compulsory dissolution. However, a frequent cause is the company’s failure to submit the annual report or if the management is deregistered without registering a replacement management.

If the company is resumed before the compulsory dissolution is finalized, this means that the company will not be dissolved anyway. In the event of a resumption, the Danish Business Authority’s request to the Bankruptcy Court for compulsory dissolution is withdrawn. You can therefore resume the operation of your company as before.

What is the process of a compulsory dissolution?

In the event of a compulsory dissolution, the company’s management resigns. Neither the Board of Directors nor the Executive Board can act on behalf of the company during a compulsory dissolution.

The Bankruptcy Court in the district of the company’s primary address handles the actual compulsory dissolution.

The bankruptcy court summons a member of the management to explain the company’s conditions, including what assets and liabilities the company contains. The bankruptcy court then decides how the compulsory dissolution is to take place. This can be done through a formless dissolution, bankruptcy proceeding or a liquidation, depending on the company’s financial circumstances.

A formless dissolution means that the company is dissolved without any estate administration. This approach is typically chosen if the company does not have the funds to cover the cost of the compulsory dissolution.

If the company is insolvent but still possesses assets of a particular value, the compulsory dissolution will occur as a bankruptcy proceeding in accordance to the rules in the Bankruptcy Act.

If the company is solvent, the compulsory dissolution can occur through a liquidation of the company. The Bankruptcy Court appoints a liquidator who is then responsible for the company’s liquidation.

In the event of bankruptcy proceedings or a liquidation, the costs of the compulsory dissolution of the company are paid using the company’s funds.

What are the conditions for resumption?

Certain conditions must be met before resumption can take place. There are five primary conditions, all of which must be met.

  1. The company owners must decide on resumption at a general meeting by a majority that constitutes at least 2/3 of the votes and the represented capital.
  2. An auditor’s statement must be prepared by an approved auditor, stating that the share capital is present and that no illegal loans have been granted.
  3. The reason why the company was sent for compulsory dissolution must be corrected. If the compulsory dissolution is due to the company not having submitted its annual report in time this must therefore be submitted, etc.
  4. The Danish Business Authority must receive the request for resumption within three months after the compulsory dissolution process was initiated by notice to the Bankruptcy Court.
  5. The company must not have undergone compulsory dissolution proceedings within the last five years, prior to the current compulsory dissolution proceedings.

Remember the deadline to request resumption

If the 3-month deadline is not met, resumption is not possible. If you still want to run a business as a limited liability company, you are forced to start a company again. In particular, this means that a new share capital must be paid in.

If the Bankruptcy Court manages to dissolve the company before the expiration of the 3-month deadline, a resumption is also not possible. Therefore, it is vital to notify the Danish Business Authority of the resumption as soon as possible.

Get professional help with resumption

At Advokatgruppen, our skilled lawyers in company law are always ready to help you and your company. Suppose you have received notice of a compulsory dissolution. In that case, we can help you ensure that the conditions for resumption are met so that you can resume the operation of your business.