Causes of dissolution of a business

Verified 01 January 2024 - Legal and Administrative Information Directorate (Prime Minister)

There are different events that end a business' life. Dissolution may be automatic when a cause provided for in the articles of association occurs (e.g. arrival of the intended term). It can also be decided by the judge: this is called forced dissolution. Finally, the partners may voluntarily decide to cease the activity. Several formalities must be carried out in all cases.

A business terminates automatically when certain events in the statuses occur. This is called "dissolution by right".

This automatic (or "automatic") dissolution of the business occurs in the following cases:

Arrival of the business

The lifetime of a business is fixed in the statutes. It's from 99 years maximum. However, it may be shorter.

At the end of the life mentioned in the articles of association, the business must be dissolved by the manager and the partners. They must then cease activity by carrying out the formalities for winding up and winding up the business.


Partners have the ability to intervene to prevent dissolution. They must then meet in a general meeting and decide to to extend the life of the business.

Realization or extinction of the objects of the company

The object of the company corresponds to the activity which the business may engage in. It is defined in the statutes at the time of constitution. The business resolves in 2 cases:

The implementation of thesocial object means that the operation for which the business was set up has been definitively completed.

Example :

A business is set up to carry out certain work. When the work is complete, the business is dissolved.

L'extinction of the objects of the company means that the activity for which the business was formed has become impossible.

Example :

A business is set up to operate a goodwill and that goodwill has disappeared or is being sold.

When this social object is realized or extinguished, the business can no longer continue its activity and disappears. The business is dissolved for the realization or extinction of the object of the company, the shareholders or shareholders do not have to decide on the merits of the dissolution.

They just have to draw the consequences by implementing the liquidation of the business and by completing the formalities of cessation of activity.

Realization of a cause provided for in the articles of association

The statutes may provide that the business will be dissolved on the occurrence of a specified event (for example, the death of a partner or the elimination of a tax regime).

In this case, the business disappears when this event occurs. The director and members shall carry out the formalities laid down for the cessation of activity.

The dissolution of a business is not always voluntary. It is sometimes the result of a judge's decision. This is known as "forced" dissolution or judicial dissolution.

The dissolution may be ordered by a judge in the following cases:

Dissolution on "just grounds"

The dissolution of a business may take place for “just reasons” at the request of a partner when the operation of the business is paralyzed. For example, a failure by a partner to fulfill his obligations or a disagreement between partners paralyzes the functioning of the business.

It is the judge who assesses on a case-by-case basis whether the situation constitutes a "just ground" for dissolution.

When a partner does not fulfill his obligations, the judge may consider that the just reason justifying the judicial dissolution of the business:

  • The partner works for a competitor.
  • The partner shall draw down unjustified funds from the accounts of the business.
  • The partner does not notify the management of its decision to withdraw, contrary to the articles of association, and resumes its contributions in kind.

The disagreement between partners should lead to paralysis of the functioning of the business. It must be a real deadlock, that is, the impossibility of collective decisions.

The reasons for a disagreement between partners are varied. Examples include:

  • The breakdown of the common life between two concubines who created a SARL prevents any collective decision making and the holding of assemblies
  • The partners are unable to obtain the majority needed to replace the board of directors, which has resigned for several years.
  • The members have brought civil proceedings against the associate manager for breach of trust.
  • The conflict between two partners prevents the adoption of deliberations for which the statutes require unanimity.

It's the judge who assesses the case by case whether the situation constitutes a "just cause" for dissolution.

Any member, regardless of the number of shares or shares he holds in the business, may then apply to the commercial court of the place where the business has its registered office for dissolution on just grounds.

Who shall I contact

The partner of a civil business must apply to the court.

Who shall I contact

Please note

The partner who is the source of the disagreement may apply for judicial dissolution, but his or her motive may not be upheld by the court as a "just motive".

Dissolution in the event of a meeting of all the shares in one hand

In the USA, CNS and civil businesses, the business must always have at least 2 partners. When a partner owns all the shares, he becomes the sole partner of the business. This is the case, for example, when one of the two partners buys all the shares of his partner.

In order to prevent the business from dissolving, the member may regularize the situation in a 1-year period. For example, he may sell shares to bring in a new partner.

If the situation of the business is regularized within 1 year, then dissolution is avoided and the business continues its activity.


This cause of dissolution does not apply to the Limited Liability Company (LLC) which becomes a Single Person Limited Liability company (EURL) and the Simplified Share business (SAS) which becomes a Single Person Simplified Share business (SASU).

Where the situation of the business is not regularized within the period of one year, any interested party (i.e. creditor) may apply for dissolution of the business.

This application must be made to the commercial court of the place where the business has its seat for a commercial business.

Who shall I contact

If it's a civil business, you have to go to the court.

Who shall I contact


If the single partner is a business, there is universal inheritance which takes place without liquidation business.

Dissolution in the event of a judgment ordering the winding-up of the court

A business in financial difficulties may request the opening of collective proceedings. Where judicial redress is not possible, a judicial liquidation may be opened by the court.

At the time of final judgment from the court’s judicial winding up, the business disappears. It is therefore automatically dissolved.

Dissolution following a criminal sanction

Where a business is convicted of certain offenses, the court may impose a penalty of dissolving the business.

The infringements concerned include:

The business is then referred to the commercial court if it is a commercial business to organize its liquidation.

Who shall I contact

In the case of a civil business, the latter shall be referred to the court of justice to organize its liquidation.

Who shall I contact

Without waiting for the term laid down in the articles of association, shareholders or members may at any time decide to cease the business of the company. This is a early voluntary dissolution.

The partners must decide on voluntary dissolution at a general meeting and appoint an amicable liquidator. The latter will carry out the procedures for the liquidation and then the cancelation of the business.

1. Hold a meeting deciding on the dissolution and appointment of the liquidator

From the moment of its dissolution, the business is in liquidation.

It must hold a general meeting to to declare the company dissolved and name an amicable liquidator.

For people outside the business (such as creditors), the winding-up shall not take effect until the date on which the SCR: titleContent and the RNE: titleContent.

The amicable liquidator shall be appointed in accordance with the provisions laid down in the statutes. It may be a partner (a natural person or a business) or several partners.

During his term of office, the amicable liquidator represents the business in respect of third party. It has the following tasks:

  • Sell movable and immovable property belonging to the company
  • Pay for creditors
  • Allocate the available balance, if any, among partners based on their respective contributions

Within three months of the end of the financial year, the liquidator shall draw up the annual accounts and a written report in which he shall report on the winding-up operations.

2. Publish a legal notice of dissolution

The decision of the meeting to dissolve the business with the appointment of the liquidator shall be published in the 1-month period in a legal listing support in the business' head office department.

Search for media eligible to publish legal listings by department

3. Lodge an amending formality file

In a period of 1 month from the decision to dissolve, the liquidator must prepare a file containing the following documents:

  • Minutes of the meeting which decides on the dissolution with appointment of the liquidator
  • Certificate of publication of the decision to dissolve in a legal listing support
  • Declaration on the honor of non-conviction and parentage (surname and forenames of father and mother) of the liquidator
  • Duplex copy of valid national identity card of liquidator

The file of the formality of dissolution of the business is made at the companies' formalities office.

Company Formalities Window

4. Hold a meeting deciding on the closure of the amicable liquidation

At the end of the liquidation, the liquidator shall summon ordinary general meeting the members for their opinion on the following matters:

  • Final accounts for the closure of the liquidation
  • Discharge from the liquidator's management and discharge of his mandate
  • Closure of the liquidation.

5. Publish a winding-up announcement

The liquidator shall publish a notice of closure of the liquidation in a legal listing support in the department of the head office of the business within the period of 1 month.

Search for media eligible to publish legal listings by department

6. File a de-listing file

In the 1-month period as from the publication of the closure of the liquidation, the liquidator requests the cancelation of the business from the companies' formalities window.

Company Formalities Window

The following documents the following shall be provided for the removal from the business:

  • Decision of the general meeting deciding on the final settlement accounts
  • Document confirming the closure of operations certified by the liquidator to be in conformity
  • Certificate of publication in a legal advertisement publisher

The business is then removed from the SCR: titleContent and the RNE: titleContent.