New Law of 28 October 2022 on the administrative dissolution without liquidation and bankruptcies (the “Administrative Dissolution Law”).
The Administrative Dissolution Law was published on 4 November 2022.
It provides for a new procedure of administrative dissolution without liquidation in order to evacuate in a faster and more effective way the judicial liquidation procedures which often originate from repeated breaches of company law (absence of registered office, resignation of the entire board of directors which is not replaced, failure to file the annual accounts with the RCS, etc.).
Many companies undergoing judicial liquidation are completely devoid of assets, or have even ceased their activity for some time.
According to Article 1 of the Administrative Dissolution Law: Any commercial company [… ] that has no employees and no assets may be subject to administrative dissolution proceedings without liquidation at the initiative of the State Attorney.¨
Certain companies are specifically excluded from this possibility of dissolution without liquidation, companies that are in principle excluded from the “classic” bankruptcy regime, including credit institutions and investment firms, financial institutions, insurance companies, UCIs and UCITS, specialized investment funds, SICARs, central counterparties (as defined in EU Regulation 6418/2012), central securities depositories (as defined in EU Regulation 909/2014), pension funds, etc….
The purpose of the law is to clean the commercial register of companies that are “empty shells”, including companies whose bankruptcy was closed long ago, but still survive in the commercial register.
The formal decision to open and the subsequent management, including the search for assets or rather the verification of the absence of assets, is done by the manager (gestionnaire) of the Trade and Companies Register (“RCS”).
After verifying that the company does not have any assets by carrying out a number of specific checks (which correspond to the checks carried out today by the liquidator in the same case), the RCS manager informs the State Prosecutor. When the conditions are met, the State Prosecutor requests the RCS manager to continue the procedure. The decision to close the administrative dissolution proceedings without liquidation results in the dissolution of the company.
The commercial company to which the decision to open the administrative dissolution procedure without liquidation has been addressed, as well as any interested third party who considers that the conditions have not been met, may appeal against this decision to the presiding judge of the chamber of the District Court sitting in commercial matters ruling as a judge of the merits within one month of the publication of the decision in the RCS.
The Law on Administrative Dissolutions also provides for :
– Dissolution of the legal entity by the closing of the bankruptcy : The Administrative Dissolution Law introduces Article 536-2 to the Commercial Code, which provides that henceforth, the closing of the bankruptcy results in the dissolution of the legal entity and the immediate closing of its liquidation (currently the legal entity survives the bankruptcy and is not affected by the closing of the bankruptcy)
– Creation of an insolvency register : Information on insolvency proceedings registered in the Commercial Register is collected in an Insolvency Register (REGINSOL for short) which can be consulted on the website of the administrator of the Commercial Register. The requirement for such a register is imposed by the EU Regulation 2015/848 on insolvency proceedings.
The law was published on November 2, 2022, it comes into force on the first day of the third month after its publication (thus February 1, 2023).
