Dissolution of a Limited Liability trading company

These are the steps that you must follow to complete the process
Limited Liability Companies are dissolved, following the agreement of the General Meeting, on the grounds stated in article 363 of the Spanish Companies Act of July 2, 2010, namely:
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1. Due to ceasing to exercise the activity that constitutes its corporate purpose, understanding that the cessation comes into effect if the company is inactive for more than one year.

2. Due to the conclusion of the company and its declared purpose.

3. Due to the clear impossibility of achieving its corporate objective.

4. Due to discontinuation of the corporate bodies, making further operation impossible.

5. Due to losses that reduce the net worth to an amount lower than one half of the capital stock, unless this amount increases or decreases to a sufficient extent, and provided that it doesn't result in a declaration of insolvency.

6. Due to a reduction of capital stock under the legal minimum.

7. As a result of the nominal value of the company shares or stock without voting rights exceeding one half of the disbursed capital stock, with the correct proportion not being re-established within two years.

8. For any other reason established in the statutes.

Additionally, a company will be rightfully dissolved following expiry of the time period set in the corporate charters; or if, after a year from the agreement to reduce capital stock to an amount under the legal minimum required by Law, the company has not registered its transformation or dissolution with the Commercial Registry; or the capital increases to the legal minimum.

A decision from the creditors alone will not cause the dissolution of a company. However, once the liquidation phase beings, the company will be rightfully dissolved.

The dissolution of the company determines the beginning of its liquidation process, during which time the company maintains its legal personality and will add the phrase “in liquidation” to its company name.

When a trading company decides to dissolve, first, it must make sure that it has no outstanding debts. As such, the first step is to settle any incurred debts and recover its payment rights. This process is called liquidation.

In the instances listed in numbers 1 to 8 of the above grounds for dissolution, the company's General Meeting must make the decision to dissolve. For limited liability companies, that agreement must be voted on by the majority of votes cast, which in turn must represent one third of all votes representing equity interests into which the company's capital is divided.

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Whenever there is reason to dissolve the company, the Administrators are required to call a meeting of the General Board within a period of two months to adopt the dissolution agreement; any member may request said meeting from the Administrators if he/she sees any reason to dissolve the company.

If the Board is not convened, the meeting is not held, or the dissolution agreement is not adopted, any party may request the dissolution of the company from the Commercial Court Judge. Likewise, the company's Administrators are required to request the dissolution of the company from the judge whenever a reason for dissolution is discovered yet the General Board goes against dissolution or the dissolution cannot be achieved. The Executives have a period of two months from the planned date of the General Board meeting (in the event the meeting is not held) or from the date of the General Board meeting (if the Board goes against dissolution or dissolution is not achieved).

Once dissolved, the liquidation process begins.

The liquidation of a trading company includes the set of company operations that seek to determine the company's assets or wealth with the goal of dividing and allocating these among the members that make up the company. When there is a legally-justified reason for dissolution, the company does not immediately terminate and disappear. Instead, a period begins whose objective is to determine all the company's outstanding appropriations and clear any existing obligations as they arise. As such, the corporate objective undergoes a complete change and is now limited to carrying out the liquidation process. The liquidation policies exist to protect the rights of the creditors while guaranteeing an orderly termination of the company.

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