In entrepreneurship, there are many terms that are used and it is very likely that their meaning is mistaken. Thus, dissolution and liquidation are often taken to be the same thing. They are words that are often used when a company ceases to operate. However, they are very distinct terms that have their own definitions and meanings. So what is the difference between liquidation and dissolution?
When to talk about dissolution?
Generally, we can say that dissolution and liquidation are inseparable. It is only the moment of realization that is not the same. The dissolution is, in fact, a first step in the dissolution-liquidation of a 1901 association. The decision to dissolve is the trigger for the cessation of activity of the association. It can be taken either by the Assembly of the association, depending on its status, or by the appropriate Court following the impossibility of an economic recovery. The dissolution allows the association to keep its legal personality during the whole procedure of cessation of activity. But it is also this decision of dissolution that orders and triggers the liquidation, by appointing the liquidator. Otherwise, there can be no liquidation without dissolution.
When to talk about liquidation?
Following the various dissolution formalities, the liquidation procedure can now begin. It consists in highlighting the assets of the association and its liabilities. And depending on the body that made the decision to dissolve, the shareholders or the Court, the liquidation could be done amicably or in a judicial manner. In all cases, the goal is the same; that is to say, to liquidate the assets to satisfy the liabilities and also to divide them between the associates. And if dissolution is the first phase of the end of an association, liquidation is the last. It includes the deregistration of the association with the competent body and the official announcement of the association's disappearance.
What are the differences in paperwork?
Although dissolution and liquidation are successive procedures for winding up an association, it should be noted that they each have their own requirements in terms of documents. In the case of dissolution, certain documents must be submitted to the Clerk of the competent court, including a procès-verbal of dissolution, the liquidator's supporting documents, a certificate of publication of the announcement and a specific form. As for the liquidation, a liquidation report must accompany a liquidation balance sheet, a proof of publication of the announcement and another corresponding form.