Given the financial crisis, difficulties in corporate governance or other reasons, owners of companies of various forms of ownership decide to liquidate. The LLC liquidation process in Kyiv is no different from other regions of Ukraine.
If you are absolutely certain of the need to liquidate a limited liability company and are not considering other options (mergers and acquisitions procedures, sale of corporate rights, bankruptcy or restructuring), you need to know a number of important points that will help you achieve the desired result quickly and with the least losses.
Making the decision to liquidate an LLC
The decision to liquidate an LLC is made by its participants at the General Meeting. It should also be noted that in order to avoid litigation, the meeting of the company's founders must be held in strict compliance with the letter of the law.
Preparing for the founders' meeting:
- timely notification of the founders about the date and place of the meeting;
- obtaining and keeping documents confirming the advance notice of the upcoming meeting;
- preparation of the meeting agenda;
- drawing up the reporting statement (if necessary).
During the meeting, it is necessary to count the shares of the attending founders, since the meeting will be valid only if those present collectively own more than 50% of the votes.
The meeting approves the liquidation decision, which is formalized in the appropriate minutes. After the liquidation decision is made, the relevant registration actions must be carried out.
Liquidation of a legal entity
LLC liquidation is carried out by the members of the liquidation commission. It is they who are responsible for closing the legal entity's accounts, notifying the company's employees of the decision made and the accompanying dismissal, accepting creditors' claims and settling existing debts, selling the company's assets, and providing the necessary documentation to state bodies for inspections.
The liquidation procedure for a legal entity with debts will be somewhat different. Within a period of two to six months from the submission of the official announcement of LLC liquidation, for example in Kyiv, the liquidation commission accepts the declared creditor claims and forms the creditors register. After this period, the company's assets are valued in order to satisfy creditor claims.
If the existing assets are insufficient, the liquidation commission will be forced to apply to the court to have the LLC declared bankrupt. Then, within the framework of the court proceedings, the company's assets will be checked, a register of creditors will be drawn up and the process of satisfying creditor claims will be determined.
It should also be noted that in the event of liquidation, the company is liable to creditors only to the extent of its assets. However, if the court proceedings establish the fact of intentionally driving the company to bankruptcy, those responsible will bear the liability provided by law.
Liquidation of a legal entity - types and stages
Let us consider, for example, the procedure for LLC liquidation in Dnipro. After the General Meeting makes its decision, the minutes together with the package of documents are submitted to the body performing registration activities.
After that, the declared liquidation commission proceeds directly with the company liquidation process. The members of the liquidation commission publish a notice in the official print media to inform potential creditors about the decision to liquidate the LLC, and also indicate the deadlines within which creditor claims can be made.
The members of the liquidation commission analyze the financial and economic activity of the company, dismiss employees, and close branches.
In addition, all accounts of the company in all banks in Ukraine are closed - all funds are accumulated on one account, through which settlements with creditors are subsequently made.
If the amount of creditor claims exceeds the property assets of the LLC, it is necessary to apply to the Commercial Court of the Dnipropetrovsk region for the company to be declared bankrupt.
After the application is accepted and the actual data verified, the powers of the liquidation commission are terminated.
The liquidation of a legal entity is handled by a bankruptcy trustee appointed by the court in this case.
After the bankruptcy procedure has been completed, the company is liquidated and a corresponding entry is made in the register.
Liquidation of an LLC company. Procedure of actions
LLC liquidation is carried out either by decision of the owner (co-owners) or by court decision. Closing an LLC by court decision takes place in bankruptcy cases, in cases of invalidity of the constitutive documents, prohibition of the company's activity, etc. In other cases not related to coercion, the company is liquidated by the owner. The article format allows considering only one ground for such liquidation - by decision of the owner (there are also such reasons as achieving the purpose of creating the legal entity or the expiry of the term for which it was created), and only with respect to the most common form - an LLC, a limited liability company.
Any legal entity ceases to exist from the date when information on registration of the termination of the entity is entered into the state register of legal entities and individual entrepreneurs. This is preceded by a long and complicated liquidation procedure.
The market is very unstable today, so businesses often have to be closed urgently. And if the registration procedure seemed complicated, LLC liquidation is an even more difficult task. Liquidation of a legal entity is caused by various reasons, but its essence is quite simple - you need to completely close the company and terminate its existence. After the end of operations, any debt claims against your company are considered settled.
To avoid possible problems and make the liquidation procedure of a legal entity as convenient and simple as possible, contact the Absolute Law Agency for services. We provide professional services at an affordable price and guarantee the procedure is completed in the shortest possible time.
Documents for LLC liquidation
The list of documents is regulated by paragraphs 10, 13 of Article 17 of the Law of Ukraine No. 755-IV. In accordance with it, the list of submitted documentation includes:
- the original and a certified copy of the decision to close the company from the authorized body;
- a document on the composition of the commission participating in the procedure (indicating the tax identification numbers of its members, the deadlines for third parties to file claims);
- an application for registration of the liquidation of the legal entity;
- documents for registering a new company (if the company is being closed due to the opening of a new one);
- an extract from the Unified State Register (if the company is merging into another one);
- a certificate from the archive confirming the acceptance of documents for storage;
- a distribution balance sheet (if the company is being divided);
- a transfer deed (if the company is subject to reorganization).
Additionally, banking institutions require:
- copies of the National Bank's decision to revoke the license and liquidate the banking institution;
- copies of the decision on the appointment of the authorized person of the Deposit Guarantee Fund;
- a report on the completion of the institution's closing procedure.
Closing an LLC - specific features
As we can see, liquidating an LLC is quite difficult, although legislation has recently simplified this process. If you have questions about the nuances of the liquidation procedure, specialists of our law firm will explain in detail how to close an LLC. You can also entrust us with overseeing the liquidation from start to finish.
Who should use LLC closing services?
An LLC (limited liability company) is one of the most popular forms of company in modern business, especially in Ukraine. But the difficulty is that all participants or partners are liable with their personal contributions for debts and expenses. That is why problems often arise not only when opening a company, but also when closing a legal entity.
Liquidation of an LLC is a concept that means the complete termination of the company's operations as a legal entity, in which any rights and obligations of the legal entity cannot pass to any other persons.
The most common reasons for LLC liquidation:
- if the managers (founders) of the company decided to completely stop and terminate its operations;
- the business stopped generating profit and its remaining assets have to be sold;
- the company has many legal violations, so it is easier to create a new firm than to resolve problems with this one;
- due to threats from creditors, there is a risk of losing assets;
- to enter a new market, you need to get rid of a bad tax history;
- there are serious concerns that during an inspection of the company by the tax service or other institutions you may receive large fines.
Often the liquidation procedure has to be started due to the requirements of court decisions or other bodies. This happens if the company (LLC) had previously accumulated fines and violations.
Liquidation of a company in Ukraine and its specific features
The company liquidation procedure in Dnipro, as the most common procedure in a bankruptcy case, has a number of peculiarities.
The Bankruptcy Law sets itself the task of treating financially "ill" companies. And only when it is impossible to financially revive such an entity does the liquidation of the company take place.
The main task of the liquidation procedure is a system of measures aimed at satisfying the claims of the debtor's creditors. The satisfaction of creditors' claims is carried out on the principle of fairness on a proportional basis. Creditor debt can be repaid only at the expense of the debtor's assets, which the bankruptcy trustee can identify, preserve and subsequently sell. Such actions are aimed at protecting not only the interests of creditors, but also of the debtor itself.
Legal support in the procedure of restoring the debtor's solvency must be considered from both the debtor's and the creditor's side. In both cases, there are many aspects, risks and prospects for the development of events on which the cost of company liquidation directly depends.
Understanding the entire bankruptcy procedure and taking into account the peculiarities of each party with our support ultimately gives the expected positive result.
The process of company liquidation in Ukraine. Algorithm of actions:
- Preparation of documentation (decision to change the composition of the founders, change of management, powers of attorney);
- State registration of changes in the composition of the founders, the company's management and its location;
- Notification of the Pension Fund about changes in the composition of founders/manager;
- Notification of the bank in which the company's current account is opened about the change;
- Publication of all necessary announcements in the press;
- Notification of the State Fiscal Service and other state institutions about the liquidation decision;
- Notification of all creditors in accordance with accounting data;
- Inventory of assets and liabilities. Obtaining certificates from state institutions and banks;
- Obtaining extracts from the registers of movable and immovable property;
- Notification of creditors about the results of consideration of their claims;
- Preparation of the liquidation balance sheet;
- Analysis of the financial condition of the company;
- Making a decision to apply to court with an application for bankruptcy (the decision is made by the founders and the liquidation commission);
- Filing an application for bankruptcy with the court;
- Obtaining a court decision on the liquidation of the company;
- State registration of the company's termination.
How long does company liquidation take
After the decision on liquidation is made and the composition of the liquidation commission is determined, a plan and deadlines for the necessary liquidation measures must be established.
The duration of company (legal entity) liquidation varies depending on the scope of the activity being carried out, but must be at least 6 months from the date of the relevant decision.
These actions will be relevant, except in cases where liquidation is ordered by the court. This is called the bankruptcy procedure of a legal entity, which also implies liquidation, but with the presence of many nuances, including the company's debt to creditors.
The Absolute Law Agency has extensive experience in handling cases and providing legal services on bankruptcy and liquidation matters. Our experts are ready to help you close a business of any form: FOP or LLC, PE and other forms.
Entrust the fate of your company to professionals!
Stages of the LLC liquidation procedure
The first document to be drawn up is the owners' decision to liquidate the LLC. Such a decision is made at the general meeting of the LLC members. Generally, the votes of participants collectively holding 51% of the LLC's charter capital are sufficient to make a decision on LLC liquidation; however, the LLC's charter may provide otherwise. In any case, the decision is made by the LLC members who collectively own an absolutely large share in the LLC's capital.
This decision is formalized in minutes. The minutes must record that there was a quorum at the meeting and the voting results. There is no need to describe the reason for liquidation in detail.
Simultaneously with the decision to close the legal entity, the meeting forms and approves the composition of the liquidation commission or appoints a liquidator, determines the procedure of the commission's work, and approves the chairman of the commission. The minutes include the surnames, first names, patronymics and taxpayer registration card numbers of the members and the chairman of the liquidation commission or the liquidator.
The minutes must also specify the period within which the LLC's creditors must apply for satisfaction of their claims. This period cannot be less than two months from the day the liquidation decision is published and cannot be more than six months. The day of publication is the day the information about the decision is entered into the Unified State Register. At the same time, the minutes must explain the procedure for creditors to apply (address of the liquidation commission, working hours, means of communication, etc.).
The minutes are stitched, numbered and signed by the participants or the chairman and the secretary of the general meeting (if such a decision is made by the general meeting). The authenticity of the signatures is certified by a notary.
The decision on liquidation and the decision on approving the composition of the liquidation commission and determining the time and procedure for creditors to apply may be set out in different documents (minutes), but in practice these are different agenda items of the general meeting contained in one set of minutes.
One copy of the minutes is submitted to the state registrar to register the notice of the decision to liquidate. Note: the notice of the decision, not of the liquidation itself. It may be submitted by an authorized person, but not by the head of the LLC, since from the moment the composition of the liquidation commission or the liquidator is approved, the rights to manage the LLC pass to the chairman of the commission (liquidator). The chairman of the commission, its members or the liquidator represent the legal entity in relations with third parties and act in court on its behalf. Therefore, it is advisable to appoint the head of the LLC as chairman or member of the liquidation commission, or as the liquidator.
The minutes must be submitted to the state registrar within three working days from the date of the decision.
If the information about the LLC is contained in the Unified State Register of Legal Entities and Individual Entrepreneurs, which is most often the case, there is no need to notify the tax office and social insurance funds of the decision. The relevant bodies will receive the information from the state registrar.
During the specified period, the liquidation commission carries out the necessary actions for liquidation, in particular: actions to identify creditors, settlements with them, closing accounts in banks except the one used for settlements; dismisses the LLC's employees and settles with them, destroys seals and stamps, returns licenses and permits to the relevant bodies for cancellation, draws up and approves the liquidation balance sheet. It provides the tax office and social insurance funds with information for inspections and settles accounts with them. If property remains after the creditors' claims are satisfied, it is returned to the LLC participants. Documents of permanent and long-term storage are transferred to the archival institution, about which a certificate is drawn up.
The maximum term of the liquidation procedure is not defined. The minimum term - the term for creditors to file claims - is determined in the liquidation decision. One should proceed from whether the deadline for filing claims by creditors has expired, whether settlements with the tax office, funds, and dismissed employees have been made, whether bank accounts have been closed and documents handed over to the archive. The last point deserves special attention, and here is why. Only two documents are submitted for the registration of termination of an LLC: an application for state registration of termination of a legal entity of the established form and a certificate of transfer of documents to the archive, which is the only paper document confirming the performance of actions by the liquidation commission. As for other actions as of the date of filing the application, they are merely declared (confirmed) by the applicant's signature on the application. The registration of termination of a legal entity is carried out within 24 hours after its acceptance, provided that the Unified State Register database contains no information about the LLC's debts to the tax office or funds, or claims of other state bodies and institutions. If such information exists, registration is suspended for 15 calendar days. If the grounds for the suspension are not eliminated within this period, the registrar refuses registration.