Liquidation of a company through sale. Is it possible to close a business in this way without unnecessary problems?

Oct, 10 2022

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The liquidation of a limited liability company is the complete cessation of the company’s work from the point of view of an economic entity, as well as the closure of the LLC itself without transferring it to another person.

Ways to liquidate a company in the Russian Federation

The legislation of the Russian Federation provides for only two types of company closure:

  • Voluntary, that is, at the request of the owner. It involves preliminary passing a desk audit of the interim and liquidation balance sheet, as well as budgeting for the last reporting periods. As a rule, this method takes about four months and, in addition to all the above procedures, involves notifying counterparties, posting information about the closure of a company in the public domain, reducing staff, and paying a state fee.
  • Forced, that is, initiated by a third party. Usually, the applicant is a court or the Federal Tax Service. Judicial authorities may liquidate an LLC for criminal activity or other violation of the law, identified by the Ministry of Justice.

As for the tax service, it can exclude an LLC from the Unified State Register of Legal Entities for several reasons:

  • The company does not conduct business activities. This is expressed in the delivery of zero reporting and in the absence of relations with counterparties.
  • The information specified in the Unified State Register of Legal Entities is unreliable. This may include information about the general director or the legal address of the firm. As a rule, in this case, the inspector of the Federal Tax Service calls the founder for interrogation in order to update the data. If false information is not eliminated within six months, the tax authority has the right to exclude the company from the Unified State Register of Legal Entities.

Most directors do not see a problem in the forced closure of the company. However, experienced lawyers will not agree with this. One of the significant consequences of such liquidation is the disqualification of the CEO for up to three years. This means that this person cannot open a new firm or become a member of an LLC during the period of disqualification.

An alternative option for closing a company without serious restrictions

This decision is the liquidation of the company through the sale. Legally, in this case we are not talking about the complete closure of the company. However, in this way, the current CEO will be able to retire without additional risks and damage to reputation.

Other advantages of this method include:

  • Closing a firm through a sale can take a short time.
  • An effective way to retire from the company.
  • The former CEO will not be liable for the debts and other liabilities of the LLC.

It is important to keep in mind that the liquidation of an LLC through the sale to a figurehead or nominee entails criminal or subsidiary liability. In the first case, we can talk about the fraudulent actions of the old leadership. In the second, creditors can prove the fictitious sale of the company and file a lawsuit to bring the old management to subsidiary liability. Thus, the sale should be organized within the framework of the right field in compliance with the norms of the Civil Code of the Russian Federation and other regulatory legal acts.

Company sale procedure

As we noted earlier, the closure of the company through the sale procedure means only a change in the founders and leaders of the company. There is no talk of a complete closure of the LLC. In general, the sale procedure will be regulated by Art. 132 of the Civil Code of the Russian Federation, which equates any company as a property complex to a real estate object. This means that the assets of the enterprise, buildings and vehicles on the balance sheet, production tools, trademarks, loans and other obligations to counterparties and creditors will be subject to sale.

To carry out the purchase and sale procedure, management must complete a number of steps:

  • Notify all creditors and counterparties of plans to sell the company and obtain their consent in writing. It is important to keep in mind that failure to notify at least one entity may jeopardize the transaction.
  • Notarize the spouse’s consent to the sale of the company, if the company is a jointly acquired property.
  • Draw up a contract for the sale of the company in writing. The document must contain a list of assets and liabilities of the LLC, as well as the estimated value based on the results of the inventory. The contract is signed by the seller and the buyer. Subsequently, the transaction is notarized.
  • Prepare and transfer to the purchaser a package of documents, which includes an act of inventory inspection, a balance sheet, a list of obligations to creditors or counterparties, as well as the conclusion of an audit company.

It should be noted that not formally notifying creditors, as well as the absence of a notarized consent of the second spouse, are not legal reasons for the failure of the transaction. However, in the future, such violations entail the following risks:

  • Filing a claim with the court on the part of creditors for the recovery of the duedebts.
  • Filing a statement of claim to the court by the second spouse to invalidate the contract.

It is important to note that in order to notarize the purchase and sale agreement of an LLC, it is necessary to provide the notary with the following package of documents:

  • Signed sale and purchase agreement.
  • Agreements on the alienation of shares in the authorized capital, if there are several founders.
  • Offers of the founders.
  • Compiled application in form Р14001.
  • Agreement on the establishment of a limited liability company.
  • Articles of Association of LLC subject to amendments.
  • Extract from the Unified State Register of Legal Entities.
  • Originals and copies of passports of all founders.
  • If necessary, a marriage certificate and a notarized consent of the spouse.
  • Bank documents on the transfer of funds for the share of each owner.

Self-execution of all necessary documents can complicate and increase the time of liquidation of the company through sale. VALEN lawyers have extensive experience and broad knowledge in the field of corporate law. We will help to carry out the transaction of purchase and sale of LLC competently and in a short time.

Author of the article
Liquidation of a company through sale. Is it possible to close a business in this way without unnecessary problems?
Valentina Khlavich
Managing Partner
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