Sometimes company management has to make the decision to close the business. In such situation, the first task to think about the process of liquidating of legal entity.
To liquidate a company means to pass a procedure for terminating the economic activity of an organization without transferring rights and obligations in form of succession to other persons (according to the Civil Code of the Russian Federation).
For the correct execution of the liquidation of a legal entity, experience and knowledge of the liquidator of companyare required. Besides, it takes a lot of time to collect and execute the necessary documents to liquidate a company. If you are not sure that you can cope with the preparation of a mandatory package of documents for liquidation by yourself, then entrust this work to professionals, e.g. to a liquidation law firm.
Valen Group offers its clients the legal services of company liquidation, it liquidates all forms of businesses. The expertise of our employees allows us to cope successfully with the task and in the shortest possible time.
Standard procedure – steps to liquidate a company
Voluntary liquidation of a company is a rather lengthy process, typically it can take from three to eight months. To close a company, you need to go through several stages:
- Adoption of a decision on the company liquidation, approval of the composition of the liquidation commission, the terms, and procedure for liquidation.
- Sending an official notice of liquidation to the tax authority at the place of registration. The message should be sent within three days from the date of the decision on liquidation.
- Placing an announcement about the company liquidation in the print media of the official body – Bulletin of State Registration. The publication is necessary so that creditors can demand a refund from a company being liquidated. The placement of official information is carried out by tax authorities that carry out state registration of legal entities.
- Notification of the liquidation of employees, employment services, and creditors of the organization. Employees of the company should be notified in writing about the upcoming liquidation at least two months before the upcoming dismissal. Creditors also need to be informed of a company liquidation, and the publication of an announcement in the media does not relieve the company of this obligation.
- Onsite tax audit by government agencies. This procedure usually takes two months, regardless of when the last check was. Until its completion and the drawing up of the final document, a company cannot approve the interim liquidation balance sheet and proceed to the next stages of liquidation.
The ways to liquidate a company
Now let’s look at ways to liquidate an organization.
- Voluntary liquidation of a company is an official way of terminating the activities of a company by making an official decision by the founder himself or by the members of the company. We note that this is a lengthy process. It provides for a special procedure established by law.
The stages are as follows: Adoption of a decision on liquidation by the participants of the company being liquidated, creation of a liquidation commission; notification of the tax office of the beginning of liquidation; placement of information in the Bulletin of State Registration of the notice of liquidation; notification of creditors about liquidation and about the time frame for filing claims (at least 2 months), collection of accounts receivable; compilation and submission to the Federal Tax Service of the interim liquidation balance sheet; preparation for a possible on-site inspection from the Federal Tax Service Inspectorate; formation of the final package of documents; submission of documents; obtaining documents on registration and deregistration:
This is the cleanest way from the point of view of the complete official termination of the organization’s activities. It guarantees that in the future there will be no problems with this company, since all kinds of checks have officially passed, got rid of debts and other “hangs”. At the same time, this is the longest and most tedious journey.
- Liquidation by changing the director, chief accountant, and founder. This method takes 3-4 weeks and is relatively cheap. This solution is suitable if you need to get rid of a company urgently. However, in order to use this type of liquidation, the organization should not have debts and obligations. Since the record of the liquidation of a company will not be entered in the Unified State Register, and information about it will be listed in the database of the tax service. In the future, the possibility of a tax audit is not excluded.
If the company has debts or other obligations, there is an option to close the company with the involvement of a non-resident. In this case, a foreign legal entity and/or individual becomes the founder and manager.
- Reorganization by merger or acquisition. Here the rights and obligations of a legal entity are transferred to its legal successor – another organization. Thus, a company ceases to exist in its former form. The affiliated company transfers the responsibilities, rights, privileges of the parent company, and the company itself ceases to exist as a legal entity (according to Federal Law No. 208, and Federal Law No. 14). This method takes 3-4 months. In terms of complexity, it surpasses other types of company liquidation, so it will cost more than others. However, such a scheme removes unnecessary communication with the tax service and is suitable for debtor firms.
- Bankruptcy. Bankruptcy is an inability of a debtor recognized by an arbitration court to fully satisfy creditors’ monetary obligations and (or) fulfill the obligation to pay mandatory payments. Recognition of a company as insolvent in court entails liquidation, that is, the complete cessation of the company’s activities.
Liquidation through bankruptcy most often occurs when the decision to close the company has already been made and it turns out that the company cannot fulfill its obligations. This option of liquidating the company will take a long time, but it will allow to write off the outstanding debts of the company.
However, it is worth knowing that in some cases subsidiary liability may be applied to the participants and the head of the company. And then debt collection will be made at the expense of the personal property of the founder, director, or even the ultimate beneficiary.
Company liquidation with Valen Group lawyers
Contact us and save not only your time but also money. Our experts will tell you which option to close the company is suitable in a particular case. We will legally competently formalize the liquidation of the organization and the procedure will take place in the shortest possible time.