Liquidation – one of the possible stages of “life” of the enterprise, institution or organization.
Economic activity can be terminated by liquidation, division, separation, merger or transformation. Regulatory requirements for registration and liquidation are provided by the Civil Code of Ukraine, the Commercial Code of Ukraine, the Laws of Ukraine “On State Registration of Legal Entities, Individuals – Entrepreneurs and Public Associations”, “On Limited and Additional Liability Companies”, “On Joint Stock Companies” and statutory documents of legal entities.
The general procedure for liquidation of a legal entity is as follows:
- Adoption and execution by the owner (owners) on liquidation decision, which must contain the procedure and terms of liquidation (not less than 2 and not more than 6 months from the date of publication of the decision), personnel of the liquidation commission (name of members, registration numbers their taxpayers’ registration cards), the rights and obligations of the commission.
- Decision registration on liquidation with the state registrar within 3 working days from the date of the decision on liquidation.
- Identification of creditors and notification of the latter on liquidation by publishing a notice of liquidation of the enterprise in a specialized print media, which should determine the procedure and deadline for creditors to file claims, which may not be less than 2 months. In addition to the notice in the print media, each creditor must be notified in writing. As a rule, each creditor is sent a valuable letter with a description of the investment and a notice of delivery.
- Conducting inventory and property valuation. Termination (liquidation) of a legal entity is a case of mandatory inventory according to paragraph 7 of the IFI order of 02.09.2014 № 879. The inventory is continuous, covering all types of liabilities and all assets of the enterprise, regardless of their location.
- Property valuation of the liquidated enterprise is needed in order to determine its value. Such an assessment can be carried out both by the liquidation commission and by involving professional appraisers. If the company has a share of state or municipal property, the services of a professional appraiser are required.
- Passing a tax audit, which may be appointed no later than 10 working days from the date of publication of the notice of commencement of liquidation.
- Compilation of the initial liquidation balance.
- Termination of employment with employees, and, in accordance with the requirements of paragraph 1 of Part 1 of Art. 40 and Art. 49-2 of the Labor Code of Ukraine, not later than 2 months the company must issue a relevant order indicating the date and reason for the reduction; within the same period, everyone who is subject to dismissal, under signature, must be notified.
- Collection of receivables and settlements with creditors. Claims of creditors are satisfied in the following order (Article 112 of the CCU): compensation for damage caused by injury, other damage to health or death, as well as satisfaction of claims secured by collateral or otherwise; satisfaction of the requirements of employees related to labor relations, royalties; payment of taxes and fees, other mandatory payments to the budget; all other requirements (first of all the requirements of creditors who applied for recovery in time are satisfied).
- Compilation and approval by owner (owners) of liquidation balance sheet. All property remaining after satisfaction of creditors’ claims is distributed among the owners in proportion to their shares in the authorized capital. The liquidation balance sheet is also submitted to the State Tax Service at the place of registration of the legal entity together with the latest reporting.
- Submission of the latest reports to the controlling institutions, execution and documents transfer to the state archival institution, closing of bank accounts, destruction of seals, cancellation of certificates, permits, accreditation at customs, exclusion from registers, etc.
- Receipt from the tax authority and the pension fund management of certificates of absence of taxes arrears, fees and the absence of arrears payment of a single contribution to the obligatory state social insurance, as well as insurance premiums.
- State registration of a legal entity termination after the termination procedure, and the date of entry in the USR on the termination of the legal entity is considered the date of liquidation.
Thus, despite the liquidation normalization of a legal entity, such procedure remains a complicated long process. For example, the sale of a company’s assets, the collection of receivables and payables, and many other liquidation-related actions can take much more than two months.
It is expedient during the quarantine and other restrictive measures to assess receivables and payables, analyze the amount of actual assets of the enterprise, to begin collection of receivables.
DEGA lawyers will professionally and as soon as possible conduct an audit of receivables and payables, suggest both possible ways to recover receivables and restructuring of accounts payable.
