The dissolution of a company marks the final point of its legal existence and represents the definitive conclusion of the business closure process. After dissolution, which determines the cessation of activities, and liquidation, which takes care of settling debts and distributing the remaining assets, dissolution is the final step necessary for the company to disappear completely from legal and economic transactions. Only when the public deed of dissolution is registered in the Mercantile Registry does the company lose its legal personality and cease entirely.

In this article, we will analyze in-depth the process of company dissolution, the legal requirements that must be met, and the implications for shareholders and interested third parties.

 

More information

 

Legal consequences of company dissolution

The dissolution of the company follows the division of the corporate assets and the payment of the liquidation quota. It is outlined in Articles 395 to 397 of Royal Legislative Decree 1/2010, known as the Companies Act (LSC). Once dissolved, the legal effects on the company are:

  • Its management and representation bodies cease to function, as they no longer have responsibilities.
  • Its legal personality does not automatically extinguish. This is maintained until all legal relationships, including those after its liquidation and formal dissolution, are concluded.
  • As long as all responsibilities are extinguished, shareholders cease their relationship with the company.
  • Creditors can initiate or continue debt claims against the company that has been declared dissolved.

 

Requirements for the definitive closure of the company

Before proceeding to the definitive dissolution, certain legal requirements must be met to ensure the correct closure of the company and protect the interests of shareholders, creditors, and third parties. The dissolution can only take place if the company has settled its debts with creditors and distributed the corporate assets among the shareholders, always respecting the payment priority order established in Article 391.2 of the LSC. Creditors must be prioritized over shareholders.

Once debts have been settled and the remaining assets distributed, the liquidators must prepare a final liquidation balance, accompanied by a detailed report on the execution of the process. It is the general meeting of shareholders that must approve this balance, while the law also grants a right to challenge within two months for shareholders who did not vote in favor of the agreement.

 

Company dissolution procedure

Once the prior requirements have been met, the formal dissolution of the company can proceed by following these steps:

  • Public deed: Article 395 of the LSC requires liquidators to grant a public deed before a notary, formalizing the definitive dissolution and certifying that the liquidation process has been completed.
  • Registration in the Mercantile Registry: As per Article 396 of the LSC, the deed of dissolution is registered in the Mercantile Registry, which implies the definitive cancellation of the company.
  • Publication in the Official Mercantile Registry Bulletin and document deposit: The publication in the BORME notifies the fiscal and labor authorities of the dissolution, while the deposit of documents in the RM ensures their preservation.

 

The dissolution of a company is the result of a process that involves dissolution and liquidation. For the company to disappear definitively, it is essential to meet the legal and administrative requirements, ensuring that no debts remain and that the rights of shareholders and creditors are respected. Therefore, following the correct steps, consulting with qualified professionals, and ensuring that the company is fully liquidated and canceled in all registers is key to an orderly and risk-free dissolution.

✅ For more information, you can contact our corporate advisory service.

Related tags