Recently, before the Commercial Court, the question arose as to who is liable for the obligations of company (A), which was dissolved in a forced liquidation process, in cases where the controlling member of company (A), company (B), was also dissolved in a forced liquidation process.

Namely, the expected legal solution in the above-described situation would be that the controlling member of company (B), specifically company (C), would consequently be liable for the obligations of company (A).

In other words, in this case, liability for the obligations of the initially dissolved company (A) would extend to other subsequent founders/controlling members, continuing along the chain to one of the founders.

Companies Law – Forced Liquidation

The forced liquidation process is a procedure conducted ex officio by the Business Registers Agency in cases where there is a legally prescribed reason to initiate such a procedure (e.g., the company has been subjected to a business prohibition, the company has no legal or temporary representative, the nullity of the company’s registration has been determined, etc.). These legally prescribed reasons represent obstacles that prevent the company from continuing its operations due to the failure to meet certain legal requirements.

It is also important to distinguish between removable and irremovable grounds for forced liquidation. Article 546 of the Companies Law (“Law“) explicitly prescribes which grounds cannot be removed.

After the forced liquidation procedure has been completed, the consequences of the company’s deregistration from the register take effect. In this regard, the assets of the deregistered company become the property of the company members in proportion to their shares in the company’s capital.

The Law prescribes that, after a company’s deregistration, the members of the deregistered company are liable for the company’s obligations up to the value of the assets they received.

An exception to the above is that the controlling member of a limited liability company and the controlling shareholder of a joint-stock company are jointly and severally liable without limitation for the company’s obligations, even after deregistration from the register.

Court Practice and Position

It is undisputed, based on the above, that in our case, the limited liability company (B), as the controlling member, is jointly and severally liable without limitation for the obligations of the deregistered company (A).

However, if company (B) is also deregistered from the commercial register through forced liquidation, the question arises as to whether the controlling member of company (B), namely company (C), can be held liable for the obligations of company (A).

In this regard, we cite the position of the Commercial Appellate Court (Decision no. Pž 11721/21 dated 24.02.2022):

The fact that the controlling member of the initially designated defendant has also been deregistered from the register due to forced liquidation does not allow for the extension of liability to further founders indefinitely along the chain.

The Companies Law limits liability to the controlling member.

Therefore, in the analyzed case, a potential creditor could seek to satisfy its claim against company (A) by collecting from company (B) as the controlling member but would not be able to collect from company (C) if company (B) was also deregistered through forced liquidation.

Conclusion

Finally, it should be noted that the above situation in practice can lead to numerous abuses, as the liability of the company is limited exclusively to the controlling member of the deregistered company. So, if the controlling member is also deregistered, the creditor has no other legal means to collect its claim.

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