Voluntary end of the company

Entrepreneurs may decide at any time to close their company down. This does not necessarily mean that they are ceasing their business activity.

Entrepreneurs may decide at any time to close their company down, at least in legal terms. In fact, the life of the company does not always end with compulsory bankruptcy. There are various reasons behind the choice to close a company:

Lack of profitability
Delicate economic situation
Poor commercial prospects in the sector of business concerned
Retirement
Lack of a suitable successor
Change of career
Contractual end
Death of a partner
Creation of a new company
Change of legal structure
Takeover agreed by a corporation under public law

For an overview of both voluntary and involuntary causes of company dissolution, see:

There may be several reasons for the closure of a company

Planning cessation of business activity

For entrepreneurs, the decision to close down their business activity is extremely difficult and painful. They should however be aware that this solution almost always proves preferable to a continual destruction of the company’s values, which would end up with a compulsory arrangement with creditors, even bankruptcy. It is usually through a planned and carefully conducted closure that the interests of all stakeholders – the entrepreneur’s family, employees, customers, suppliers, backers - are best protected.

It is sometimes possible to sell a sector of the company, for example to employees or a competitor. In other cases, it is better to close the company immediately or in stages and to part with its assets under the best possible circumstances. It is also necessary to find acceptable solutions for the employees.

Since choosing the method for closing the company is of particular emotional and financial importance for an entrepreneur, it is sometimes wise to contact a professional liquidator.

Source: UBS Outlook

Procedure for closing a company

The closure procedure depends on the legal structure. As a general rule, the dissolution of a company entails its liquidation; that is, the conversion into cash of all its assets and the paying off of its debts using the proceeds. Once liquidation is complete, the company must be deleted from the trade register.

For a detailed description of the legal and administrative procedures for dissolving a company and removing it from the trade register, see: