On 15 November 2023, the Temporary Transparency Turboliquidation Act entered into force, and it brings significant changes to the way in which companies can be dissolved and liquidated.
This blog explains how the Temporary Transparency Turboliquidation Act works and what the consequences are of the entry into force of this Act.
What is turboliquidation?
Turboliquidation is a quick and self-initiated dissolution procedure for companies. The unique aspect of this is that it is possible without liquidation, provided that there are no assets left at the time of dissolution. As a result, a company can be deregistered directly from the Chamber of Commerce, without the intervention of a judge.
Why the new legislation?
In practice, turboliquidation has proven to be vulnerable to abuse, especially when companies cease to exist with outstanding liabilities. The criticism mainly focused on the lack of control mechanisms regarding the position of creditors and accounting obligations. With the introduction of the Temporary Transparency Turboliquidation Act, an attempt is being made to address this criticism by increasing transparency.
Practical implications for entrepreneurs
Entrepreneurs who want to make use of the turboliquidation must be aware of the new requirements. Within fourteen days of dissolution, the board must file a balance sheet, a statement of income and expenses, and other relevant documentation with the Trade Register of the Chamber of Commerce. In addition, the board must notify any creditors in writing. Failure to comply with the accountability obligation is considered an economic offence.
Disqualification as a protection mechanism
An important aspect of the new law is the extension of the civil law prohibition on directors. This is intended to prevent fraudulent dissolutions without benefits and offers the possibility of imposing measures on directors who repeatedly abuse the turboliquidation.
A temporary arrangement
The Temporary Transparency Turboliquidation Act is introduced as a temporary two-year scheme with the possibility of extension. On July 5, 2023, the law was published in the Official Gazette, and from November 15, 2023, it was in force.
We understand that these changes may raise questions for entrepreneurs. Our specialists are ready to advise and assist with the liquidation of your company. Feel free to contact us for more information.