Home > Blossary: Dissolve
Dissolve, means solve from the base of creation, We thus have word ''dissolve company'', or dissolution (noun) of company. A company is usually or can be dissolved, if passive, (deriving from debts, expenses, payment of shares and dividends, any other cost, that can be caused for ex. from inflation, such as raise of selling price of products, for which in turn, purchase of products for ex. of company, who buys from wholesale to resell, have also risen, so that total debt of company, thus here passive is below the initial capital invested, thus, debts may exceed or may exceed by far, net revenus. In this case we say that passive> active income (that includes initial funds invested to set up company+ any debts, expenses, damage from fewer products sold, while purchase price of products from another company to resell, has risen, and thus much fewer items are sold in higher price, but while cost of purchase of product + revenus from this amount of products sold for a time period, at new rates, cause rather a damage to company as above, and passive income, incl. all cost, debts and expenses involved, is higher than net revenus. In regard to above calculated as : gross revenus+ amount of capital-net revenus, if this last amount of net revenus is < thus less than any debts, expenses, cost of company then we have passive higher than active, thus loss of company is higher than earnings. This can constitute a reason for solution of companies: Usually for saving company X from bankrupcy, the board of directors deliberate in meetings, for some financial issues that regard company, while changes are made in its Statute, and set forth, thus applied. We talk then on possible dissolution, (or solution of company) Also another case for dissolution of company, is for ex. when 5 stakeholders had invested initially, for ex. in an LTD Company funds X , say 100 USD, typically, thus all together this makes 500 total capital invested. In LTD companies, shares and dividends are paid in amounts relative, thus corresponding, to initial capital invested accordingly, while, in SA Companies, whatever, funds of investment are per stakeholder, the earnings would be split. Thus, if earnings of a Company falls for ex in periods of recession, below half of initial capital invested per stakeholder, thus total capital invested, for ex. 500 ( 5 stakeholders x 100 each one), thus earnings fall below 250 per month, for ex. for three subsequent months, then we can talk on dissolution of company.Same applies with shares sold in Stock Exchange, for SA companies where earnigns are split per stakeholder, regardless of initial capital invested, each one of them. etc. All above applies also for selling of shares of a (SA) company, in Stock Exchange, when for ex. initial capital invested is 500 (5 stakeholders), and earnings from shares are between 149 and 249, upon calculation also of other expenses and debts, and functional cost of company, payment of wages, and/or salaries, any other cost+ any other net earnings etc So, we also have dissolution of marriage, when a married couple gets divorce, on basis of applicable laws of C.C and relative process is followed though Lawyer and Court. Also we have dissolution of Parliament, 30 days approx. before national elections and proclamation of Elections, upon Decree of Law, signed by President of Republic where Parliament does not work, being closed, and will start working again after elections, with new members of composition elected, for the new period of new Governmment

Category: Law

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