At the time determined by the General Meeting of Shareholders (RUPS), the dissolution of the PT begins, which requires "settlement" actions that take time to implement. The time given to complete this settlement is known as the "liquidation" grace period for the company.[6] Company assets and property are often a major consideration during dissolution. Both physical and intangible products can be considered company assets. Documenting and selling or liquidating assets to distribute them to entitled parties, such as shareholders or creditors, is part of liquidation in the company liquidation process.[7]

Liquidation (vereffening, winding-up) signifies that the company's affairs will end and be settled when the GMS decides to terminate or dissolve it. Its status and legitimacy are "Company in liquidation" or "Company in dissolution" (vereffening, liquidation, or settlement) during the dissolution or settlement process.[8] The appointment of a liquidator is an important step in the liquidation process; this individual will be authorized by law to divide the company's assets among creditors and any other parties with legal claims to those assets.[9]

A person appointed to oversee the liquidation process is known as a liquidator, liquidator, or simply a liquidator. The responsibility for managing and settling the company's assets has been assigned to him. Losses caused by the liquidator's errors or negligence in carrying out the liquidation are also the responsibility of the liquidator.[10] Because the Directors have up-to-date information about the company's situation, they are ideal candidates to be appointed as liquidators. Potential dissolution actually occurs as a result of mismanagement, so shareholders typically do not appoint Directors as liquidators. Therefore, the GMS's decision to declare the company in the liquidation stage determines whether the liquidator is the Directors or another party.[11] Company liquidation is one of the consequences of the dissolution of a PT. The purpose of the liquidation stage is to provide an opportunity for the liquidator to settle the estate. If the dissolution of a company is the result of a court decision, its legal entity status will not be lost until the liquidation process is complete and the GMS or the court accepts the liquidator's accountability, as stated in Article 143 paragraph (1) of the UUPT.[12]

Many limited liability companies have been dissolved, but the liquidation process is still ongoing; some of these firms are no longer operating, but have not been liquidated, or the liquidators have been negligent in carrying out their duties. This is because business owners are unaware of the legal consequences of a limited liability company's failure to liquidate or complete the liquidation procedure. Furthermore, the UUPT does not explicitly regulate the consequences that arise for liquidators or limited bodies if liquidation is not carried out or completed.