We got into an argument with our business partner, but we are both shareholders in equal shares (50% -50%), as well as both members of the management board. Will the court be able to to recall a board member?
The Commercial Code stipulates that a member of the management board may be recalled and appointed by a court for a good reason. The law gives a minority shareholder and also a stagnant 50% shareholder the opportunity to demand the removal of a member of the management board through a court in a situation where there would be grounds to recall a member of the management board by decision of shareholders. An action for removal of a member of the management board filed on the basis of the Commercial Code is a legal remedy applicable to the protection of a private limited company in a situation where the member of the management board behaves harmfully or is unable to manage the company but cannot be recalled. The courts have not considered it sufficient simply to have a business dispute, the recall is justified if a member of the management board has acted to a significant extent against the interests of the private limited company.
We are a shop selling building materials. The private limited company bought the goods from us. When selling the goods, we also demanded a personal guarantee from the members of the management board of the private limited company. Unfortunately, the company owed us, do we have the right to make a claim against the members of the management board of the private limited company arising from the surety?
Credit is often given to the buyer at the wholesaler, but the board member must provide a personal guarantee as security. If the buyer receives the goods but is unable to pay for them, the wholesaler (creditor) can already apply to the member of the management board for the performance of the obligation and demand performance from him. A member of the management board either pays the debt voluntarily or can file a claim in court. It must also be borne in mind that the consumer protection provisions of the Law of Obligations Act do not apply to a contract entered into to ensure the performance of a private limited company's partner and a member of the management board.
Due to the difficult economic times, the net assets of our company have decreased. What are the legal obligations that I have to make in order to comply with the Commercial Code?
The Commercial Code stipulates that if a private limited company has less than half of the share capital or less than 2,500 euros or other minimum share capital provided by law, shareholders must decide: 1) to reduce or increase the share capital provided that the net assets the amount of the specified share capital or other minimum amount of the share capital provided by law, or 2) the adoption of other measures; 3) the dissolution, merger, division or transformation of a private limited company or the submission of a bankruptcy petition. Therefore, a solution must be found between these options and a decision made according to the current circumstances.
How is a private limited company deleted from the register?
It is also possible to dissolve a private limited company by a resolution of the shareholders. The dissolution of a private limited company takes place in liquidation proceedings and the procedural requirements and deadlines provided for in the Commercial Code must be followed.
- The liquidation process begins with the resolution of the shareholders and the appointment of the liquidators. Unless the shareholders decide otherwise, the liquidators are the members of the management board. Following the termination decision, it is not prohibited to continue the business, but this should be aimed at closing the case and fulfilling the outstanding obligations.
- The dissolution decision and the liquidators must be entered in the commercial register, a board must submit a statement to that effect.
- The winding-up proceedings must be published immediately notice in the Ametlikud Teadaanded and to known creditors must be sent liquidation notice.
- An initial liquidation balance sheet and an explanatory report must then be drawn up. Must be compiled fiscal year report at the end of the financial year ending at the time of the dissolution of the private limited company and at the end of each financial year after the dissolution.
- The opening balance sheet and the annual report must be approved by resolution of the shareholders.
- The liquidators wind up the private limited company, collect debts, sell assets and satisfy creditors' claims. Claims of known creditors must be satisfied regardless of the notification of claims. In the event of a dispute over claims, the disputed amount must be deposited.
- After all creditors have been satisfied and the money has been deposited, the liquidators draw up final balance sheet and assets remaining in liquidation distribution plan. The final balance sheet and distribution plan must be submitted to the shareholders for inspection. The final balance sheet and the plan for the distribution of assets must be audited by an auditor if an audit is prescribed for the annual report of the private limited company.
- After all creditors' claims have been satisfied or secured and the money has been deposited, the remaining assets are distributed among the shareholders in accordance with the asset distribution plan prepared by the liquidators according to the nominal values of their shares, unless otherwise provided by the articles of association. Payments are generally made in cash, unless otherwise provided in the articles of association. The liquidators do not have to sell the assets unless it is necessary to satisfy the creditors' claims and the shareholders give their consent.
- Upon completion of the liquidation shall be submitted an application to the commercial register for the deletion of a private limited company.
- Private limited company documents shall be deposited to the liquidator, archivist or other trusted person. The data of the holder of the documents shall be entered in the commercial register on the basis of the liquidator's application.
A private limited company is deemed to be dissolved as of the entry of the dissolution in the commercial register.
If you need help deleting a company from the register, please contact us.