Termination of a Limited Liability Company (LLC) in Iran
Termination of a Limited Liability Company (LLC)
LLCs are terminated if:
- The subject for which the company is formed is done or turns impossible to be done.
- The company is formed for a limited duration and the duration comes to an end.
- All partners decide on the termination of the company
- Only one partner is left in the company
- The company goes bankrupt
If one of the above-mentioned conditions appears, LLC will be terminated. There are also some specific conditions which may lead to the termination of LLCs:
- If a number of partners whose shares are more than a half of company`s capital decide on the termination of company.
This maximum number of shareholders does not include numerical number. It means if only one partner who owns more than 50% of the capital of the company decides on the termination, the company will be terminated even if there are many partners and they disagree on such a termination.
- If a half of company`s capital is lost due to damages received by company and one of the partners plead for the termination of company from competent court. If the court found the presented reasons for the termination acceptable and justifiable enough and other partners do not agree to pay the dissident party his share and expel him from the company, the court will issue its verdict on the termination of the company.
- If one of the partners die and the Articles of Association has declared that the death of one partner causes the termination of the company.
Liquidation Process in LLCs
Each company including LLC shall go through liquidation process after completing termination procedures in Companies Registration Bureau. The following points shall be considered in the liquidation of LLCs:
- The process of liquidation shall be performed by the managers of the company unless the Articles of Association has specified a different arrangement. (company managers can introduce one manager as the liquidation manager if the company is terminated)
- In cases such as making peace and determining an arbitrator, liquidation manager can decide only if he is given authority by general assembly or the Articles of Association.
- To divide the property of company after its termination, the termination shall be announced in an official newspaper three times and at least one year must have passed the first announcement. If the process of announcement is not gone through, liquidation manager is responsible for the damages which may be received by those creditors who could not get their demands.
Required Documents for the Termination of LLCs
- A copy of all registration papers of company including the articles of association, declaration paper, establishment announcement, newspaper announcement and the announcement on the last changes of company, a copy of Birth certificate and identity card of all company partners.
- Termination of company shall take place between 15 to 30 days.