Liquidation under a simplified procedure
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Liquidation under a simplified procedure

Liquidation under a simplified procedure

PUBLICATIONS \ 21.04.2022

In the middle of winter, it became known about the collaborative work of the Ministry of Economic Development and Trade and the Federal Tax Service on simplifying the procedure for the liquidation of legal entities. Timur Kerimov, Acsour’s lawyer, at the request of the “Raschet” magazine compared the current procedure for closing a business with the proposal of the departments.

The procedure for liquidation of a business as it exists today is a complex, sometimes confusing process. Moreover, a considerable number of people are involved in it. Legislation in accordance with article 61 of the Civil Code assumes two types of liquidation of a legal entity: by decision of its participants (voluntary liquidation) and by court decision (compulsory). Among other things, closing a company is also a long process, it can last from 6 to 18 months.

The liquidation procedure is regulated by article 63 of the Civil Code. It includes the following steps: making a corporate decision to start closing a business, approving and appointing a liquidation committee, submitting a corresponding application to the tax service, publishing in the mass media, notification of changes to other government services, transferring company documents to the archive, etc. It is worth noting that such a nature of business closure is typical not only for Russian legal practice, but also for the foreign one.

Since we have mentioned the procedure for closing companies in other countries, it should be noted that the liquidation of subsidiaries of Russian enterprises abroad is also associated with a significant number of difficulties. Third-party law firms are often involved in the procedure. Firstly, because in another country it is easier to entrust the work to qualified specialists who are familiar with internal legislation, and secondly, because it does not incur additional transportation expenses and does not require multiple personal visits to government authorities and to a notary of another state.

Do not forget that the closure of a business entails the costs of legal services to support the liquidation of an enterprise in Russia. The cost of such services varies depending on the legal status of the company and other indicators. It is the expenses of legal services that often become the reason why the participants of legal entities in Russia, especially foreign ones, commit their companies into oblivion. Otherwise, if the company is not liquidated voluntarily, the tax service takes over the procedure, that is, the liquidation begins in a compulsory manner.

The legal grounds for the compulsory closure of a legal entity (liquidation of a company by the tax service) arises in accordance with article 21.1 of Federal Law No. 129-FZ “On State Registration of Legal Entities and Individual Entrepreneurs” dated August 8, 2001. The Federal Tax Service draws attention to the lack of activity of the company, which may be expressed in the failure to submit financial statements within 12 months or the absence of actions on the settlement account of a legal entity. Compulsory liquidation is the right of the tax service, not an obligation! It is important to remember this. It would seem that why spend money on liquidation services if you can forget about your company and it will be liquidated? But it doesn’t work that way, after the compulsory liquidation, over the next three years the company’s participants will not be able to become founders or managers of another legal entity. Moreover, if the company has outstanding obligations to contractors, then even after these three years, both the participants of the legal entity and its sole executive body can bear subsidiary liability for debts.

 

NEW RULES

Recently it became known about the draft amendments to Federal Law No. 129-FZ dated August 8, 2001, which is being prepared jointly by the Ministry of Economic Development and Trade and the Federal Tax Service.

The project involves simplifying the liquidation procedure for small and medium-sized businesses. Now a legal entity can be closed by submitting to the tax service only one application for termination of activity. At the same time, the company has to comply with certain conditions, however, they are not very difficult.

The proposed initiative also takes into account the interests of the business partners of the company, which intends to cease to exist. Thus, contractors whose interests may be affected by the liquidated enterprise, within three months from the date of publication of the decision on closure, have the right to declare their claims.

It is noteworthy that after submitting the application, the work of the tax service itself begins, it is necessary to check: the debts of the liquidated company; the presence of valid judgments limiting the liquidation process; the presence of incomplete desk inspections. The work of the tax service after submitting the application will take not more than five days.

We believe that owing to the high level of development of small and medium-sized businesses in Russia, the proposed changes are timely and reasonable. The termination of the activity of a legal entity in most cases occurs owing to the financial difficulties of the company, which is absolutely normal. The risk factor is one of the most important principles of business activities enshrined in article 2 of the Civil Code, and, of course, both the registration procedure and the liquidation procedure require efficiency and simplicity of actions.

With this approach, it is important to take into account the interests of other parties – contractors of the liquidated company, therefore, if there are no obligations to them, then nothing prevents from abandoning the large bureaucratic component of the procedure for closing a legal entity. Under the new procedure, the number of persons to whom the compulsory liquidation procedure will be applied is likely to decrease.

It should be noted that in the current economic conditions, a simplified liquidation procedure can also be useful to business persons. Although, most likely, the business will feel more protected in the event of the resumption of the practice of a moratorium on bankruptcy. This experience proved itself positively during the pandemic, and at the time of preparation of the material, the government, according to the “Kommersant” publication, was discussing the possibility and conditions for resuming the moratorium.

 

QUICK LIQUIDATION

What else the company need to do in addition to submitting an application to the tax service, and what rules have to be followed:

  1. Be listed in the Unified Register of Small and Medium-Sized Business Entities.
  2. Have no outstanding obligations to pay VAT.
  3. Pay off creditors, employees, make all mandatory payments.
  4. Not to have unfulfilled obligations based on the results of the audit of the tax service.
  5. Not to be in the process of liquidation, reorganization, bankruptcy, reduction of the authorized capital.
  6. Not to have real estate and vehicles on the balance sheet.
  7. Not to have an entry for inaccuracy of information in the Unified State Register of Legal Entities.

Timur Kerimov

Lawyer