In the lifecycle of every commercial company, there are times when continuing operations is not only economically inefficient but also legally unnecessary. Company dissolution is one of the most complex and sensitive legal processes, requiring careful attention from partners, shareholders, and managers. This procedure, which marks the official end of a company’s legal personality, requires strict compliance with regulations and has wide-ranging effects on creditors, shareholders, employees, and tax authorities.

🎯 Dissolution: End of Activity or Start of Liquidation?

Dissolution does not mean immediate termination. Rather, it initiates the liquidation phase. According to Article 208 of the Iranian Commercial Code, the company maintains its legal personality until the completion of liquidation and can engage in transactions or file lawsuits.

• Dissolution: The decision or event that places the company in the phase of ending operations.

• Liquidation: Collecting receivables, settling debts, and distributing remaining assets.

⚖️ Reasons for Company Dissolution

The Iranian Commercial Code categorizes dissolution into three main types:

1️⃣ Voluntary Dissolution (By Shareholders’ Decision)

• Decision of the extraordinary general meeting of shareholders

• Consent of all partners in Limited Liability or Partnership companies

• Expiration of the company’s term

• Completion or impossibility of the company’s objectives

2️⃣ Compulsory Dissolution (By Law)

• Bankruptcy

• Significant reduction of capital

• Death or legal incapacity of a partner in personal companies

• Reduction of partners below the legal minimum

3️⃣ Court-Ordered Dissolution

• Inactivity for more than one year

• Failure to hold the annual general meeting

• Vacancy of CEO or board positions for more than six months

📝 Legal Steps for Company Dissolution

1. Holding an Extraordinary General Meeting

   • Drafting the meeting minutes, appointing a liquidator, and stating the reason for dissolution.

2. Tax Declaration (Article 114)

   • Before the meeting, submit assets and liabilities to the tax authorities.

3. Uploading Documents to the Companies Registration System

   • Meeting minutes, liquidator documents, latest official gazette, etc.

4. Publication of Dissolution Notice

   • In the official gazette and widely circulated newspapers for creditors’ information.

5. Start of Liquidation
   Responsibilities of the liquidator:

   • Completing ongoing operations

   • Collecting receivables

   • Liquidating assets

   • Settling debts

   • Submitting the Article 116 tax declaration

6. Declaration of Completion of Liquidation

   • Publishing notices three times, sealing company books, and final deletion from the registration system

💰 Key Tax Obligations During Dissolution

Two mandatory tax declarations:

1. Article 114 Declaration

   • Submitted before the meeting, includes assets and liabilities.

2. Article 116 Declaration

   • Submitted within six months after dissolution registration, includes final income and expenses.

• Tax rate: 25% according to Article 105

👨‍⚖️ The Liquidator: The Most Critical Role

The liquidator has full legal authority to:

• File and defend lawsuits

• Collect receivables and sell assets

• Settle debts

• Distribute remaining assets

⚠️ The liquidator is legally responsible for company debts and taxes for up to 10 years.

🧩 Common Challenges in Company Dissolution

• Late submission of tax declarations

• Failure of some partners to sign meeting minutes

• Appointing an inexperienced liquidator

• Not publishing mandatory legal notices

• Misunderstanding about the possibility of reviving the company after dissolution

🤝 Professional Support from Sabt Novin Holding

Sabt Novin Holding offers expert legal support throughout the entire dissolution process:

• Comprehensive legal consultation

• Accurate drafting of meeting minutes

• Preparation of tax declarations

• Uploading documents to the registration system

• Publishing required notices

• Complete follow-up until liquidation is finalized

✔️ Outcome: Reduced costs, faster process, and assurance of legal compliance.

📞 Contact Sabt Novin Holding for specialized consultation on company dissolution