II. Dissolution and Liquidation Process

The most common dissolution is via a special resolution. This resolution has to be passed by a majority of not less than three-fourth of votes present. In summary process can be as follows: 

1.Conduct a shareholders’ meeting

Notice of the summoning of the general meeting for dissolution shall be published at least once in a local newspaper and sent by post with acknowledgement of the receipt to every shareholder whose name appears in the register of the shareholders not later than 14 days before the date fixed for the meeting (Sec. 1175 CCC) the invitation must include the dissolution agenda.

At the general meeting at least one-fourth or 25% of the total shares must be present to achieve a quorum (unless stated otherwise in the company’s Articles of Association). Shareholders have to vote in favour for the dissolution and pass the resolution by a majority of not less than three-fourth (at least 75%) of votes present (Sec. 1194 CCC).

2. Appointing a Liquidator

Upon dissolution, a company’s directors automatically become liquidators unless stated otherwise in its Articles of Association. The dissolution and liquidator’s name must be registered with the Department of Business Development (DBD) within 14 days. The liquidator shall be responsible for settling company’s affairs involving all liquidations.

The liquidator's duties include:

• Settling the company’s affairs, repaying debts, and selling assets.

• Notifying creditors via newspaper and registered letters within 14 days.

• Depositing unpaid creditor amounts as per legal provisions.

• Applying for bankruptcy if assets are insufficient.

• Preparing and certifying a balance sheet and summoning general meetings for approval.

• Submitting liquidation progress reports every three months.

• Holding annual shareholder meetings if liquidation exceeds a year.

• Prioritizing liquidation expenses over other debts.

• Distributing remaining assets among shareholders after fulfilling obligations.

• Presenting final liquidation accounts to a general meeting.

• Registering the final proceedings with the DBD within 14 days, officially ending the company’s legal existence

3. Accounting and tax clearance

When applying for dissolution, the Revenue Department can object the dissolution if the company has outstanding tax liabilities. The company must return its taxpayer card within 60 days and, if registered for VAT, notify the cessation of business and return its VAT certificate within 15 days.

The corporate income tax return for the final period must be filed within 150 days, along with audited financial statements. The Revenue Department can investigate tax returns for two years, or up to five years in cases of suspected tax evasion. Companies with past tax disputes may consider remaining dormant for at least two years before dissolution to let the tax prescription period expire. However, dormant companies must still file tax returns and audit financial statements annually.

4. Termination of Employment and Notification to the Social Security Office

The dissolution has to be considered as a termination of employment for which the employees must be compensated according to Sec. 118 of the Labour Protection Act. The amount of severance payment is dependent upon the time the employee has been working for the company.

The company must notify the Social Security Office of its closure by the 15th day of the month following its dissolution registration with the DBD.

5. Government Licenses Clearance

Any government licenses, such as a BOI Certificate, Foreign Business License, or Factory License, must be canceled and returned to the relevant authorities according to applicable regulations before dissolution.

We hope that the information provided above helps outline the process. If you have any further question, please do not hesitate to contact us through channels below.