Financial Statements: The Legal and Financial Key to an Orderly Closure of a Company in Nicaragua
The process of dissolving and liquidating a commercial company in Nicaragua is not merely an administrative or business decision. It is a complex legal procedure that must follow a series of steps established by national legislation. In this process, the final Financial Statements become a central element from a legal, financial, and accounting standpoint.
Under current Nicaraguan law, once the decision to dissolve a company has been made, it must enter a liquidation phase that allows for the evaluation of its assets, liabilities, and equity. This stage requires the preparation of final Financial Statements that accurately reflect the company’s financial situation.
These documents are essential to:
• Determine if there are outstanding debts with creditors.
• Establish the amount of assets available for distribution among partners.
• Facilitate accountability by the liquidator.
• Ensure transparency and legality of the process for third parties and authorities.
A fundamental aspect of the legal closure is that all shareholders are required to review and approve the Financial Statements prepared for the Dissolution and Liquidation process. This approval must be documented in the Dissolution Minutes, which must be signed by all partners or shareholders as a unanimous agreement.
The Shareholders' General Meeting Minutes, which include the Certified Financial Statements, must be published in La Gaceta, the Official Gazette, as part of the public notice process and to protect the interests of third parties. This publication ensures transparency for creditors, suppliers, employees, and any natural or legal person that currently has or previously had a relationship with the company.
The Financial Statements prepared for this process must be certified by a Certified Public Accountant (CPA), who attests to their accuracy, completeness, and compliance with applicable accounting standards. This certification ensures that the shareholders are making decisions based on technically and legally sound information and that the State and interested third parties can rely on the presented data.
The involvement of a CPA is not optional but serves as a guarantee of objectivity and impartiality in the presentation of the Financial Statements, especially in companies where there may be conflicts among shareholders, complex assets, or prior audit processes.
Required Financial Statements for Liquidation
During the closure process, the Financial Statements must include:
- Liquidation Balance Sheet: Shows the final financial position of the company, including assets, liabilities, and net worth.
- Income Statement (Profit and Loss): Details the economic performance during the last operating period.
- Cash Flow Statement: Presents cash inflows and outflows to assess liquidity at the time of closure.
- Explanatory Notes: Provide necessary legal and accounting details to correctly interpret the financial information.
Once approved by the shareholders in the Shareholders’ General Meeting Minutes, certified by the CPA, and published in La Gaceta, the Financial Statements must be formalized through a public deed and registered in the corresponding Public Commercial Registry in order to proceed with the cancellation of the company’s legal status.
Other required steps include:
• Tax closure with the General Directorate of Revenue (DGI).
• Closure of operations with the corresponding Municipal Authority.
• Closure of bank accounts.
• Termination of operations in any institutions where the company was registered, according to its business activity.
CALA LAWYERS’ Added Value:
Integrated Legal and Accounting Solutions
At CALA LAWYERS, we understand that a successful legal closure requires not only legal advice but also technical-accounting support. That’s why we work directly with CALA ACCOUNTING, our sister firm specializing in accounting services, with a team of Certified Public Accountants (CPAs) qualified to prepare and certify the financial statements required by law.
This synergy between our legal and accounting departments allows our clients to:
• Accelerate the dissolution process timeline.
• Ensure full legal and tax compliance.
• Reduce errors or rejections at the Public Registry and other institutions.
• Avoid unnecessary costs due to outsourcing or repeated procedures.
Having a single firm that integrates the necessary legal and accounting services is a practical and strategic advantage that significantly reduces the risk of complications during a company’s closure.
Failing to have properly Certified, approved, and published Financial Statements may result in serious consequences, including administrative and tax sanctions, legal challenges by dissenting partners or creditors, blockage of the legal cancellation process at the Public Commercial Registry, and even joint liability of the company’s directors or legal representatives.
In conclusion, the dissolution of a commercial company is a technical and legal process that requires order, transparency, and regulatory compliance. Certified Financial Statements, approved by the shareholders, are the cornerstone of this legality, as they clearly represent the final point in the company’s economic life.
At CALA LAWYERS, we guide our clients throughout the entire process, and with the support of CALA ACCOUNTING, we offer an integrated solution that guarantees a safe, efficient closure in full compliance with current regulations.
Contact us today if your company is considering closing operations in Nicaragua.
We can help you do it correctly, with no legal or financial risks