In general, the law requires that the representative body is aware of the financial situation of the company at all times, and if the company is threatened with insolvency, instead of acting in the interests of the shareholders, it acts in the interests of the creditors as a whole (similar to wrongful trading). It may be held liable for compensation of any damage or loss a creditor suffers due to the representative body’s failure to act in the interests of the creditors.
If the registered capital of the company reduces to half or two thirds (depending on the form of the company; “negative equity scenario”), the representative body will have to convene a shareholders’ meeting so that the shareholders can decide on the next step.
In bankruptcy, the representative body has to put together a reorganisation plan and negotiate it with the creditors. It retains the management role.
In liquidation, the representative body has to hand over certain company information and documents to the liquidator and prepare a closing balance sheet.