RELATIONSHIP BETWEEN DISSOLUTION AND LIQUIDATION
Liquidation does not arise independently; it follows the dissolution of the company. That is, it can only commence once the dissolution has been agreed upon, declared, or legally verified—except in specific cases such as certain mergers.
The grounds for dissolution—which consequently lead to liquidation—are thoroughly analyzed in our article:
During the liquidation process, the company retains its legal personality exclusively to fulfill the legal purposes of this stage: to realize assets, settle outstanding obligations, and distribute any remaining balance to the partners.
WHO IS RESPONSIBLE FOR CARRYING OUT THE LIQUIDATION?
As a general rule, the company’s administrators are responsible for initiating the liquidation process, unless otherwise agreed. Partners may appoint different liquidators by a simple majority vote. If no agreement is reached or appointed liquidators do not assume their roles, any partner may request a judicial appointment.
Liquidators are required to:
- Prepare an initial inventory and balance sheet
- Realize the assets (convert company property into cash)
- Settle the company’s obligations
- Distribute remaining liquid funds among the partners
These duties must be performed within the legally established timeframes and in a transparent manner. Failure to comply may result in removal and legal liability for damages.
USE OF THE COMPANY NAME DURING LIQUIDATION
During liquidation, all actions must be carried out under the company name with the added designation “in liquidation.” This mention is mandatory, and failure to include it may result in joint and unlimited liability for the liquidators.
Furthermore, the company retains its legal personality to protect third parties—primarily creditors and suppliers—thus avoiding confusion between company assets and personal property of the partners.
DISTRIBUTION OF ASSETS AFTER COMPANY LIQUIDATION
The distribution of the company’s assets can only take place after all debts have been extinguished or sufficiently guaranteed. Partners are entitled to receive their share in proportion to the value of their contributions. In the case of joint-stock companies, the order of preference between preferred and common shares must be respected.
If there are amounts that partners fail to claim, these must be deposited in a bank under the name of the beneficiaries, ensuring availability for future withdrawal.
TERMINATION OF LEGAL PERSONALITY IN A LIQUIDATION
Once the liquidation is concluded and the final distribution executed, the liquidators must process the cancellation of the company’s registration with SEPREC (Plurinational Service of Commercial Registry). Only upon this cancellation does the company’s legal personality cease to exist.
This act is legally equivalent to a “death certificate” for the commercial entity and ensures that it can no longer generate new obligations or maintain legal standing with third parties.
In summary, the liquidation of a commercial company is a rigorous legal process that ensures the orderly termination of a company’s legal, economic, and accounting obligations. Compliance with each step is essential not only for the security of the partners but also for the protection of involved third parties.
Need assistance with dissolving or liquidating your company? Our legal team is ready to guide you through the process safely and in full compliance with Bolivian law. Contact us today for specialized legal support.
Frequently Asked Questions (FAQs)
What is the difference between dissolution and liquidation of a company?
Dissolution is the act that ends the company’s active operations, while liquidation is the process that formally settles all obligations, realizes company assets, and distributes the remaining value to the partners.
Does the company continue to exist during liquidation?
Yes. The company maintains its legal personality exclusively for the purposes of the liquidation process, as established by the applicable legal framework.
Who can be appointed as liquidators?
By default, the company’s administrators. However, the partners may appoint other liquidators by a simple majority vote. If no agreement is reached, any partner may request judicial appointment.
When can the distribution of assets among partners begin?
Only after all company debts have been settled or properly guaranteed. Before that, no partner may receive their respective share.
How is the company legally terminated?
Once liquidation is completed and the remaining assets distributed, the liquidators must cancel the company’s registration with SEPREC. Only then is the company’s legal personality officially extinguished.
The content of this article does not reflect the technical opinion of Rigoberto Paredes & Associates and should not be considered a substitute for legal advice. The information presented herein corresponds to the date of publication and may be outdated at the time of reading. Rigoberto Paredes & Associates assumes no responsibility for keeping the information in this article up to date, as legal regulations may change over time.
