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Company Re-registration Deadline Granted One Year Extension

 

 

THE NEW DRAFT ACT ON THE AMENDMENT OF THE ACT ON THE COMMERCIAL REGSITRY

The draft Act has already been approved on the first hearing in the Parliament in November 2010. Its second hearing and final adoption is expected any moment now.

Prolongation of the term for re-registration:
The most important change for the Quest readers that the draft Act provides is for the prolongation of the term for re-registration until 31st December 2011. The idea of this new deadline is to stimulate company owners to re-register their companies voluntarily and avoid the consequences of the amended liquidation procedure.

Liquidation procedure and new opportunities for creditors:

The second most important change relates to the status and future of the companies that fail to re-register until 31st December 2011. The newly proposed legal provisions are quite different and provide for many more options than the existing ones:
- On the first place after 31st December 2011 the commercial activity of the companies which have not re-registered, will be deemed officially terminated. The Registry Agency will not initiate a liquidation procedure right away, as it is provided in the current Act, but will announce on its web-page lists of all companies that have not re-registered and these companies will not be allowed to conduct commercial activity, initiate court proceedings, dispose of their assets or conclude any deals whatsoever. They can only pay salaries to their employees and public liabilities to the state authorities (two categories of creditors which usually benefit higher protection). Any other actions of these companies will be deemed null and void.
- As of the date of the announcement of the lists of creditors on the web-page of the Commercial Registry, all creditors, courts and authorities will be considered notified of this fact.
- A significant opportunity is provided to the creditors of such companies. They are entitled to demand the re-registration and liquidation of a company-debtor (it is necessary to mention that such opportunity is given to the owners or managers of the company as well, only they will not be allowed to keep the company, it has to be liquidated). The term for exercising of this right is 30 June 2014. The main purpose of this right is for the creditors to exhaust the possibilities for recovery of their takings against the respective company, by conducting a liquidation within which all assets of the company-debtor will be explored, gatherer, evaluated and distributed amongst creditors. This amendment releases the Registry Agency from this duty and transfers the active role and somewhat the responsibility, including financial to the creditors of the company. This is because the creditors who have requested for the liquidation, are even allowed to point out a liquidator or become liquidators of the company, in case there is no registered legal representative of the company in liquidation (Note: I see certain deficiency of the draft here, because there is always a registered representative of the company - the opposite is impossible, except in cases of decease. But the more frequent cases, which is not secured in the draft, will be those of unavailable legal representatives or legal representatives who are inappropriate to take the responsible position of a liquidator. This deficiency is compensated to some extend by the possibility for the creditor to demand replacement of a liquidator who does not fulfil his duties or threatens the rights of the creditors with his actions). It is important to point out that the creditor, initiating the liquidation procedure, will be financially liable for the costs of the liquidation procedure. And because the main purpose of this opportunity is to cover the creditor's takings against the company, it is advisable to make a preliminary investigation and initiate such procedure only if you are sure that the company has enough assets to justify the whole adventure and no less importantly - to cover the liquidation costs which will otherwise turn into another loss for you. I am paying more attention in this article to the opportunity of creditors to initiate a liquidation procedure against a non re-registered company, because in this financial crisis some of you may have to make use of it and should be therefore aware of it. Of course it is impossible to explain all other specifics of the procedure in details, so before deciding to exercise this right and during the procedure itself, you should obtain professional advice.