Specialist of the business development department
The coronavirus pandemic has put Russian business in a predicament: companies have been suffering losses for several months. If the company is finally “mired” in debts, the founders may decide to liquidate. In this article, we will explain how to execute the liquidation of a LLC.
There are several methods to close a LLC: from company liquidation to reorganization, change of participants, or bankruptcy. However, it should be understood that alternative methods of liquidation are often unreliable or take up a lot of time. For example, a change in the membership and Chief Executive Officer does not terminate your company’s activities, therefore it does not remove its obligations. In this case, concerned parties may present demands even after restructuring. In turn, reorganization through merger, demerger and other methods is complicated by a number of inspections, increased attention from the Federal Tax Service (referred to below as FTS), as well as the need to obtain a considerable number of permits. Therefore, Acsour’s experts recommend choosing the most common, easy and safe method – a voluntary liquidation. Let us have a look at the main stages of this process.
The suspension of the company’s activities begins with the general meeting, at which the LLC participants make an unanimous decision that the business should be closed. During the meeting, participants should appoint a liquidation committee, the chairman of this committee, and sign the minutes of the general meeting. If there is only one participant, then it is necessary to draw up a resolution of sole member to liquidate the enterprise.
After the general meeting, it is necessary to submit a notification of liquidation to the tax inspectorate at the place of registration of the company within 3 working days. Counting begins from when the minutes and the resolution on liquidation are signed. What should be sent to the FTS:
For late submitting of notification, the company may be fined of 5,000 rubles or issued a warning (part 3 of article 14.25 of the Administrative Code). In addition, a similar notification of liquidation should be sent to Fedresurs. In the notification, let us know:
Please note: owing to the coronavirus pandemic, the Government of the Russian Federation issued resolution No. 486 dated April 12, 2020, in accordance with which the employer is obliged to provide information about the liquidation of his or her LLC to the all-Russian database of vacancies “Employment in Russia”.
After you receive a document from the Unified State Register of Legal Entities with the entry “organization in the process of liquidation”, it is necessary to transmit information about the closing of your company in a specialized journal. The “Bulletin” (referred to in Russian as “Vestnik”) will include a note on the liquidation of the LLC in the next issue, and within two months from the date of publication, creditors may present demands to you. To submit a notification, register on the official website vestnik-gosreg.ru and prepare:
Despite the fact that this is the fourth stage, the notice of dismissal of employees should be prepared immediately after the decision to liquidate, since from the date of notice to the moment of dismissal should take at least 2 months (part 2 of article 180 of the Labour Code). Please be reminded that employees should be familiarized with this notice against signature. In addition, you need to prepare a corresponding notification to the Employment service 2 months before the dismissal. At the same time, if more than 15 people are subject to dismissal, the notice to the public authority should be submitted 3 months in advance.
The next stage is to contact the creditors personally by sending each a letter with advice of delivery (paragraph 2, clause 1 of article 63 of the Civil Code). We recommend to do so not later than the note is published in the mass media. The letter should indicate the beginning of the liquidation of your company, as well as the terms in which the creditor may present a demand. Let us recall that this term cannot be less than 2 months.
At this stage, it is necessary to find out the exact amount of the organization’s debts, which is why you should compare payments with the Federal Tax Service Inspectorate and funds. After you find out all the creditors’ demands and determine the exact amount of debts, it is necessary to draw up and approve an interim liquidation balance sheet. It contains data on the LLC’s property, as well as on all demands presented and the results of their consideration. We would like to draw your attention to the fact that during the liquidation, the tax inspectorate has the right to conduct an on-site inspection, for which it is also necessary to be prepared. But if the company’s liquidation procedure is carried out by professionals, business owners do not have to be anxious about such nuances.
After approval of the interim liquidation balance sheet, it is necessary to settle with creditors in the procedure approved in clause 1 of article 64 of the Civil Code. These settlements may be started after paying off the expenses of carrying out of liquidation (paragraph 1, clause 1 of article 64 of the Civil Code). First of all, it is necessary to satisfy the demands “for reimbursement for harm to life and health of citizens” and “for compensation in excess of reimbursement for harm” in cases when the company has caused such harm or violated safety requirements. The next step is to settle accounts with employees. Then it is necessary to settle arrears to the budget and social benefit funds, and after that – to settle with the other creditors.
For debts repayment, funds are usually taken from the company’s settlement account. If there is not enough money for debts repayment, the liquidation committee sells the LLC’s property and divides money among creditors. If this method does not help to repay all debts, the company may submit an application for bankruptcy and notify creditors that the liquidation is terminated (paragraph 2, clause 4 of article 62, clause 3 and paragraph 2, clause 4 of article 63 of the Civil Code). Please note that subsidiary liability may be imposed not only on the Chief Executive Officer or Chief Accountant, but even on their relatives or line managers. In the matters of bankruptcy and subsidiary liability, we recommend contacting specialists.
Within a month from when the interim liquidation balance sheet is approved, it is necessary to submit a calculation of insurance premiums to the tax service and report on the following items:
These documents should be submitted for the period from the beginning of the year to the date of the decision on liquidation. In addition, within one month from when the interim liquidation balance sheet is approved, it is necessary to submit information about employees in form ADV-1, forms CZV-STAZH and CZV-M to the pension fund. The form 4-FSS is sent to the Social Insurance Fund within the same period.
The last stage of the LLC liquidation procedure consists in drawing up the final liquidation balance sheet and submitting the concluding set of documents to the Federal Tax Service Inspectorate. The final liquidation balance sheet is drawn up after the company has settled with all creditors. On its grounds, the owners may distribute the remaining property, or start bankruptcy procedure (if there are debts left after drawing up the final balance sheet). If there are no debts left and the liquidation balance sheet is approved, the company should notify the tax service of the termination of the process by sending the following documents:
In 5 working days, the Federal Tax Service Inspectorate will make a decision to exclude the organization from the Unified State Register of Legal Entities. After that, the company is deemed to have ceased to exist. Then the owners will only have to submit the documents to the archive, destroy the seal of the organization and check the receipt of an extract on the liquidation of the company from the Unified State Register of Legal Entities.
In conclusion, it should be noted that if you are an individual entrepreneur or the owner of a small-sized company without debts, the process of closing the company will certainly be much easier. However, usually the procedure of liquidation of a company takes at least 3 months and requires maximum immersion of the liquidation committee in the process, hard work with documents and strict compliance with statutory regulations. Acsour’s specialists monitor up-to-date information about changes and have wide experience working with challenging, non-standard cases, which will allow you to save your time and finances.