Dissolution, Liquidation and Deletion: How to Wind Up Your GmbH
A GmbH is not “closed down” by a single resolution – its termination proceeds in three phases: dissolution, liquidation and deletion. On this page you will find the procedure at a glance, the typical time limits – in particular the blocking year – and a guide to the costs. The same applies mutatis mutandis to the UG (haftungsbeschränkt).
Good to know: The shareholders' dissolution resolution is not subject to any formal requirements – it does not need to be notarised. However, if the notary reviews a resolution that has already been drafted, the same fees are incurred as for drafting it, so it is usually more efficient to instruct the notary to draft the resolution in the first place. What is mandatorily notarial is the filing with the commercial register: the liquidators' signatures are certified. On request, we prepare both for you – the resolution and the filing – so that all that remains to be done at the appointment is to sign. Allow sufficient time overall: because of the statutory blocking year, the path to deletion usually takes well over a year.
The Procedure at a Glance
From dissolution to deletion in seven steps
- Enquiry and Data You send us the details of the company and the intended liquidators – most conveniently via our data sheet on GmbH dissolutions.
- Drafts We prepare the commercial register filing concerning the dissolution and the liquidators and, on request, the dissolution resolution. You receive the drafts in advance by e-mail for review.
- Certification Appointment A short appointment at our office: the liquidators sign the filing and the notary certifies their signatures. The liquidators also make the statutory declaration required by law. Alternatively, the certification can take place in the online procedure via video communication.
- Registration of the Dissolution We file the application together with the dissolution resolution electronically with the register court. Upon registration, the company carries the suffix “i. L.” (in Liquidation).
- Publication in the Federal Gazette The liquidators publish the dissolution in the Federal Gazette (Bundesanzeiger) and request the creditors to come forward (call to creditors). The blocking year begins with the publication.
- Liquidation and Blocking Year The liquidators wind up the current business: receivables are collected and liabilities – including taxes – are settled. The remaining assets may be distributed to the shareholders no earlier than one year after the call to creditors.
- Deletion from the Commercial Register Once the liquidation has been completed, the liquidators file the termination of the company – again with notarially certified signatures. The register court deletes the company, usually after consulting the tax office.
The Dissolution Resolution – and What It Does Not (Yet) Achieve
The most frequent ground for dissolution is a resolution of the shareholders. Unless the articles of association provide otherwise, it requires a majority of three quarters of the votes cast (section 60 of the German Limited Liability Companies Act (GmbHG) – an English translation is available here) and is not subject to formal requirements – notarisation is not necessary. The dissolution can be resolved with immediate effect or as of a specific date (such as the end of the financial year).
A common misconception: the dissolution does not terminate the company. It continues to exist as a “GmbH i. L.”, remains a legal entity and is represented by the liquidators – only its purpose changes: the winding-up takes the place of the ongoing business. The company is only fully terminated upon its deletion from the commercial register.
Important: Liquidation is only the right route if the company is able to satisfy all of its liabilities. If the company is insolvent or over-indebted, the managing directors or liquidators may be under a duty to file for insolvency – in that case, the mandatory route is not liquidation but an insolvency petition. In case of doubt, clarify the situation in advance with your tax adviser or lawyer.
The Liquidators
Upon the dissolution, the liquidators take over the tasks of the management. Unless the shareholders resolve otherwise, the existing managing directors become the liquidators (“born liquidators”); however, the shareholders can also appoint other persons. As with a managing director, the resolution determines the power of representation – sole or joint representation, with a release from section 181 of the German Civil Code (BGB) where appropriate.
The liquidators are filed with the commercial register together with the dissolution. In doing so, they make – like a newly appointed managing director – the personal statutory declaration that no grounds for disqualification exist; the notary gives the required instruction at the appointment. The liquidators' tasks include in particular: winding up the current business, collecting receivables, satisfying liabilities, converting the company's assets into money and representing the company during the winding-up. In business dealings, the company carries the suffix “i. L.”.
Publication in the Federal Gazette and the Blocking Year
After the dissolution has been registered, the liquidators must publish the dissolution in the Federal Gazette (Bundesanzeiger) and request the creditors to come forward to the company. The publication is made via publikations-plattform.de; if the articles of association prescribe additional publication journals, publication must also take place there. The text may read, for example:
“The company has been dissolved; the creditors are requested to come forward to the company.”
We as a notary's office do not make the publication – it may be handled by your tax adviser, who is often already registered on the platform. You can view the completed publication at www.unternehmensregister.de; for the later deletion filing we will need evidence (a pdf file) of the publication.
The blocking year (Sperrjahr) begins with the call to creditors (section 73 GmbHG – an English translation is available here): the company's assets may be distributed to the shareholders no earlier than one year after the publication – and even then only if all known liabilities have been settled or secured. The blocking year serves to protect creditors and cannot be shortened; it therefore determines the minimum duration of the entire procedure. Practical tip: the earlier the publication is made, the earlier the blocking year expires – it should therefore be arranged promptly after the dissolution has been registered.
Deletion from the Commercial Register
Once the liquidation has been completed – that is, the blocking year has expired, all liabilities have been dealt with and the remaining assets have been distributed –, the liquidators file the termination of the company with the commercial register. This filing, too, requires notarially certified signatures; a second short appointment at our office or in the online procedure is sufficient.
Before the deletion, the register court regularly asks the tax office whether all tax matters have been completed – open tax issues often delay the deletion. After the deletion, the company's books and records must be retained for ten years; the custodian is named in the filing. Further obligations also exist, e.g. under section 137 of the German Fiscal Code (AO) – your tax adviser can advise on these.
Parties Abroad and the Online Procedure
Neither the shareholders nor the liquidators need to travel to Germany for the dissolution: the certification of signatures for both commercial register filings is also possible in the online procedure via video communication – a technically suitable identity document is required (country-by-country overview). Alternatively, the signatures can be certified abroad by a local notary or a German diplomatic mission, depending on the country with an apostille or legalisation.
If foreign companies hold shares in the GmbH, their existence and the authority of the persons signing the dissolution resolution must be evidenced – the same applies as for a change of managing directors, see the notes on foreign companies as shareholders.
Alternatives to Liquidation
Liquidation is not always the best way to “get rid of” a company. Depending on the situation, the following may be considered in particular:
- Sale of the shares: Instead of winding up the company, the shareholders can sell their shares – but steer clear of so-called “company burials” (Firmenbestattungen); these are as a rule unserious at best and frequently criminal. The share transfer is notarised; see our page on Companies and Corporate Law.
- Restructuring, in particular a merger: The company can, for example, be merged into another company or – under certain conditions – into the sole shareholder as a natural person. This avoids the liquidation including the blocking year, but has its own requirements and consequences (including tax ones).
- Continuation instead of termination: A company that has already been dissolved can be continued by shareholders' resolution as long as the distribution of assets to the shareholders has not yet begun – for instance where plans change after the dissolution resolution.
We will gladly advise you on which route makes sense in your case – please contact us before passing the dissolution resolution.
Frequently Asked Questions about Dissolution and Liquidation
How long does it take until the GmbH is finally deleted?
As a rule, expect well over a year: the dissolution resolution is followed by the registration of the dissolution, the publication in the Federal Gazette, the one-year blocking year and finally the deletion filing, where the register court usually also waits for feedback from the tax office. In practice, one and a half to two years often pass between the resolution and the deletion – open tax issues can make it take longer.
Our GmbH has been inactive for a long time and has no assets – is it faster then?
As a rule, no – the blocking year applies in that case as well; it is linked to the publication, not to the amount of the assets. The winding-up is simple in substance in such cases, but the time frame remains the same. A deletion without liquidation on grounds of lack of assets occurs only in exceptional cases and ex officio, and is not a procedure that the shareholders can regularly “apply for”. In exceptional cases a so-called “express deletion” (Blitzlöschung) is possible, but strict requirements must be met for this.
Can we not simply let the GmbH lie dormant?
A GmbH cannot truly lie dormant: even without business operations, its obligations continue – annual financial statements must be prepared and disclosed, tax returns filed and running costs (such as chamber of commerce contributions) paid. If you no longer need the company permanently, an orderly liquidation or a sale is usually the better choice.
Can the dissolution be reversed?
Yes – as long as the distribution of assets to the shareholders has not yet begun, the shareholders can resolve the continuation of the dissolved company. The continuation is filed with the commercial register; the company then carries on its business without the suffix “i. L.”. After the deletion, however, a continuation is no longer possible.
What happens to the company's remaining assets?
The assets remaining after all liabilities have been settled are distributed to the shareholders – no earlier than after the expiry of the blocking year – in proportion to their shares, unless the articles of association provide otherwise. The distribution has tax consequences (final taxation, withholding tax on capital gains where applicable); coordinate it with your tax adviser.
Do all shareholders have to come to the notary?
No. The shareholders merely pass the dissolution resolution, which is attached to the filing. Only the liquidators, who sign the filings, come to the certification appointment; this is also possible in the online procedure.
Do we need our tax adviser for the liquidation?
Strongly recommended. The winding-up involves a liquidation opening balance sheet, ongoing financial statements during the winding-up period and the final tax settlement with the tax office – and since the register court regularly consults the tax office before the deletion, completing the tax side is in practice a prerequisite for the deletion. The publication in the Federal Gazette is also frequently handled by the tax adviser.
What if assets turn up after the deletion?
If it turns out after the deletion that assets still exist (such as a forgotten bank balance or a plot of land that was never re-registered), a supplementary liquidation (Nachtragsliquidation) takes place: on application, the court appoints a supplementary liquidator who winds up the remaining item. This is cumbersome – careful winding-up before the deletion filing saves this detour.
Planning a dissolution? Send us the details via our data sheet – we will prepare the resolution and the filing for you.