Insolvency Law at San Marino
San Marino's insolvency and liquidation framework is primarily governed by the Companies Act (Law No. 47 of 23 February 2006) and the Law on Companies and Banking, Financial and Insurance Services (Law No. 165 of 17 November 2005). These laws establish procedures for both corporate and financial institution insolvency, aiming to facilitate restructuring or orderly liquidation. (Banking and financial rules - Banca Centrale della Repubblica di San Marino)
⚖️ Legal Framework
1. Companies Act (Law No. 47 of 23 February 2006)
This law provides the legal framework for corporate governance and insolvency procedures:
Ordinary Liquidation: Voluntary process initiated by the company's shareholders to wind up operations.
Compulsory Liquidation: Initiated by the Law Commissioner upon request from administrators, auditors, creditors, or ex officio when a company is manifestly insolvent. (Machine Translation of "Law On Companies And Banking, Financial And Insurance" (San Marino))
Insolvency Declaration: The Law Commissioner, with the opinion of the supervisory authority, may declare a state of insolvency for authorized entities not subject to compulsory liquidation. (Machine Translation of "Law On Companies And Banking, Financial And Insurance" (San Marino))
2. Law on Companies and Banking, Financial and Insurance Services (Law No. 165 of 17 November 2005)
This law regulates financial institutions and includes provisions for insolvency:
Insolvency of Authorized Entities: The Law Commissioner may declare a state of insolvency for authorized entities, leading to compulsory liquidation procedures. (Machine Translation of "Law On Companies And Banking, Financial And Insurance" (San Marino))
Compulsory Administrative Liquidation: Initiated when an authorized entity is declared insolvent, with procedures outlined for asset liquidation and creditor claims.
🧾 Insolvency Procedures
1. Ordinary Liquidation
Initiated voluntarily by the company's shareholders: (Machine Translation of "On The Law Society '" (San Marino))
Decision: Shareholders pass a resolution to liquidate the company.
Appointment: Liquidators are appointed to manage the winding-up process.
Asset Distribution: Assets are sold, and proceeds are distributed to creditors in accordance with legal priorities.
Final Report: A final report is submitted, and upon approval, the company is removed from the register.
2. Compulsory Liquidation
Initiated when a company is manifestly insolvent:
Declaration: The Law Commissioner declares a state of insolvency. (Machine Translation of "Law On Companies And Banking, Financial And Insurance" (San Marino))
Appointment: A judicial liquidator is appointed.
Asset Management: The liquidator manages and sells assets, settling debts in order of legal priority.
Final Report: A final report is submitted, and upon approval, the company is removed from the register.
3. Insolvency of Authorized Entities
For financial institutions: (Banking and financial rules - Banca Centrale della Repubblica di San Marino)
Declaration: The Law Commissioner, with the supervisory authority's opinion, declares insolvency. (Machine Translation of "Law On Companies And Banking, Financial And Insurance" (San Marino))
Compulsory Liquidation: The procedure for compulsory administrative liquidation is activated. (Machine Translation of "Law On Companies And Banking, Financial And Insurance" (San Marino))
Expert Appointment: An expert on bankruptcy may be appointed to assist and advise liquidators. (Machine Translation of "Law On Companies And Banking, Financial And Insurance" (San Marino))
📋 Creditor Hierarchy in Liquidation
In liquidation proceedings, creditors are paid in the following order:
Secured Creditors: Those with collateral backing their claims.
Preferential Creditors: Including employees and tax authorities. (Restructuring and insolvency law in Italy| CMS Expert Guides)
Unsecured Creditors: Suppliers and other creditors without collateral.
Shareholders: Only after all creditors have been satisfied.
🧑⚖️ Court Jurisdiction
Insolvency proceedings are under the jurisdiction of the Judicial Office, with the Law Commissioner overseeing the process. The Tribunale di San Marino handles the administrative aspects, including the receipt of applications and issuance of certificates. (Offices and Registries)
📌 Practical Considerations
Professional Assistance: Engaging legal and financial professionals is advisable to navigate the complexities of insolvency proceedings.
Timely Action: Early intervention can provide more options for rehabilitation and may improve outcomes.
Transparency: Honest and complete disclosure of financial information is crucial for the fair resolution of insolvency cases.
For individuals or entities considering insolvency proceedings in San Marino, consulting with a legal professional specializing in insolvency law is essential to ensure compliance with all legal requirements and to determine the most appropriate course of action.
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