Liquidation of Companies
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What is the liquidation of a business entity?
The liquidation of a business entity is the final cessation of its activities without the transfer of its rights or obligations to other persons. The procedure for liquidating a business entity may take from 6 months to 1.5 years.
The liquidation procedure is quite complicated, and more so due to a possible check up by the tax authorities. Due to this, we recommend that a company with extensive experience in handling such cases is involved.
Adoption of the decision on liquidation
This decision is adopted at a general meeting of company participants.
Appointment of a liquidator or liquidation commission
This decision is AppointmenAfter the decision on liquidation is adopted, a person – the liquidator, or a group of persons – the liquidation committee must be appointed that will be responsible for the liquidation procedure. In addition, all powers to manage the business entity will be transferred to them.
Notification of state agencies and funds
In accordance with the law, after the decision on liquidation is adopted, the registration authority in the place of the business entity must be notified within 3 days. This requires the preparation of a statement and submission of the required documents. It should be noted that the signature on the statement must be certified by a notary.
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After receiving notification, the registering authority must publish a message about the liquidation in the State Registration Bulletin, in which the timeframe and procedure for creditors to initiate claims are indicated.
Written notice is provided to creditors and employment agencies on the proposed liquidation
After receiving notification, the registering authority must publish a message about the liquiLegislation requires each creditor to be given written notice of the liquidation of the business entity. The notice must specify the procedure and timeframe for initiating claims. This may not be less than 2 months from the date of publication of the notice of liquidation.
Preparation, approval and submission of the preliminary liquidation balance sheet
Two months after publication in the State Registration Bulletin, a preliminary liquidation balance sheet must be drawn up. The preliminary balance sheet is a document that indicates the value of all the property owned by the business entity, as well as any receivables and payables.
Usually a list of the property of the business entity is attached to it, as well as a list of creditors and their claims. Together with the preliminary liquidation balance sheet a notice of its drafting must be submitted to the registering authority. The signature on the notification must be certified by a notary.
How will creditors be paid back?
When all the debts of the creditors are paid, a final balance is created and sent to the creditors. The debtors with priority are paid first so that everyone gets something. After that, you must issue a final balance, where you will tell the creditors how much money they will receive.
This must be approved again by the founders responsible for the liquidation decision.
All the company’s bank accounts in Russia must be closed, but only after the relevant balance sheets and other bank documents have been obtained. The Social Insurance Fund and the Pension Fund must also be notified of the company’s liquidation.
The remaining goods are divided among the shareholders. This is the final step in liquidation. The end of the liquidation process must be reported immediately to the Unified State Register of Legal Entities. Only after this submission is the company considered liquidated.
If a liquidation committee refuses to satisfy the claims of a creditor, then a claim against it may be raised and if it’s considered valid, the creditor will receive the payment from the remaining assets of the liquidated company.
The claims not covered are considered settled if the creditor hasn’t raised a claim to the court. A company unable to cover the claims is declared bankrupt, but only after a court has decided so.
Liquidation balance sheet and distribution of company assets
After satisfying the creditor claims, a liquidation balance sheet must be drawn up that lists the remaining company property. After the founders of the business entity approve the liquidation balance sheet, the remaining assets may be distributed among the founders. When this is done, an act is drawn up which indicates the property was transferred to each founder. The act must be signed by all cooperate members.
Registration of liquidation in the Unified State Register of Legal Entities and deregistration from the tax authorities
The final stage of the liquidation procedure is the submission of documents to register the liquidation of the business entity, and deregistration from the tax authorities. To do this the required documents must be submitted to the tax office. Within 5 days after submission of the documents entry in the Unified State Register of Legal Entities and notification of deregistration from the tax authorities can be obtained.
How long does it take to liquidate a company in Russia?
The Russian taxation authorities must be announced regarding the liquidation of a company no longer than three days since the decision. After publishing the announcement regarding the liquidation in the specific publications, a term of two months must be appointed to receive and analyze all the claims. The minimum term during which a company may be liquidated in Russia is, at least, six months and it’s considered final when it is published in the Unified State Register of Legal Entities.
The liquidation method, either by the decided court or voluntarily, is decided according to the particular situation of the company. An “alternative” company liquidation is possible in the case of mergers and acquisitions in Russia. Although this is not essentially the same as voluntary liquidation caused by financial difficulties, the company that will be merged needs to transfer its assets, rights, and obligations to its purchaser.
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