About the Dissolution of Associations

“Our association has been inactive for several years, and it’s impossible to convene the board. Despite this, the tax office keeps insisting that we submit the financial statement. What can be done to close the nonprofit organization and end this obligation?” asks our reader.

The dissolution of associations is governed by Government Ordinance No. 26 of 2000, which specifies that nonprofit organizations cease to exist upon being removed from the court registry.

Dissolution can be legally initiated by a court decision or a resolution of the general assembly.

An association is legally dissolved if the term for which it was established has expired, its purpose has been fulfilled or has become impossible to achieve, if the general assembly or the board of directors has been unable to meet legally for more than a year, or if the number of members has fallen below the legal minimum.

Dissolution by court order may occur if the association’s purpose, activities, or means of operation conflict with the law or public order, if its objectives deviate from those outlined in the statutes, if it has become insolvent, or if it lacks the necessary administrative permits.

The request for dissolution or the relevant resolution of the general assembly must be submitted to the court with jurisdiction over the association’s registered office. The court appoints a liquidator, unless the dissolution is decided by the general assembly, in which case the appointment of a liquidator must be specified in the resolution. The liquidator’s duties include preparing an inventory and balance sheet, continuing any ongoing legal transactions, paying creditors, selling assets, etc. Any remaining assets after liquidation must be transferred to legal entities with similar purposes, as outlined in the statutes, and may not be transferred to individuals.

Following liquidation, the liquidator requests the removal of the association from the court registry of associations and foundations, and the relevant parties notify the tax office of the association’s dissolution.