A GmbH's liquidation demands a lot of formalities which are observed by the registration court. It ends with deregistration of the German Trade Register.
To initiate the liquidation, there are several possibilities mentioned in § 60 GmbHG (German Limited Liability Companies Act). In most cases, a shareholder's decision to liquidate the company will be taken.
For the shareholder's decision, a majority of ¾ of votes is required, as long as there is no other ruling in the articles of association. The decision is directly coming into force as long as no other date has been declared.
The shareholder's decision should be taken by the end of the financial year because an opening balance has to be prepared. It should contain the nomination of the liquidators (which also can be the former general managers, whose responsibilities are equivalent to the general manager's in time of liquidation) and a rule who will store the company's books after the liquidation.
From the effectiveness of the shareholder's decision on, the company has to use the labelling "GmbH in Liquidation" or "GmbH i. L.". The same date is decisive for the determination of taxable income. From the same time on, the General Manager of the GmbH have no longer the power to represent the company.
Liquidation means the changing of the corporate purpose to wind-down the business. Therefore, the obligations shall be paid and the assets be realised. Only after the total wind-down of the company, it will be deregistered of the German Trade Register.
The decision to liquidate the company has to be notified to the German Trade Register. In this notification, the liquidators have to affirm that there are no conflicting reasons with the nomination.
With the entry in the German Trade Register, the liquidators become legal representatives of the company. Main task of the liquidators is to wind-up the company's business and to pay the obligations. They can run all dealings appropriate to these purposes.
The liquidators have to announce the company's liquidation in the German Electronic Federal Gazette and to appeal to the company's creditors.
There must have passed at least one year from the appeal to the creditors before the company can be deregistered in the German Trade Register.
Before the company's remaining property will be distributed, the GmbH can be run on at every point under the condition of changing of the corporate purpose per shareholder's decision.
After the restrictive year has passed and the company's affairs have been concluded, the remaining property can be paid out to the shareholders. This is the liquidation ending.
The liquidation ending has to be notified to the German Trade Register. The record for the announcement of the company's liquidation and the appeal to the creditors has to be attached to this notification. With this act, the liquidator's responsibilities are fulfilled.
The registry court reviews the correct proceeding of the liquidation. If there are any objections, the company will be deregistered from the German Trade Register.