Registration and liquidation of legal entities
Registration and liquidation of legal entities are the procedures established by law of the Russian Federation in order that entrepreneurs could commence or cease financial and economic activities. In both cases it is necessary to pay state duties, collect, certify and file documents with tax and other authorities.
A mistake made at any stage can lead to a refusal from tax or other competent authorities. In this case it will be necessary to start all over again, and sometimes this entails fines for company owners. That is why it is better to rely on professional assistants in matters of registration and liquidation of legal entities.
State registration of legal entities
According to the civil legislation of the Russian Federation, companies are deemed established upon introduction of the required record to the Unified State Register of Legal Entities (EGRYuL). The legislation determines the order of certain actions needed to register a company upon establishment.
For this purpose, the following documents are provided to the registering authority:
- application according to a set form;
- founder’s resolution or minutes of the general meeting on establishment of a legal entity;
- constituent documents of the company;
- document confirming payment of the state duty.
State registration is carried out within a maximum of three working days of provision of the documents.
State registration of legal entities upon their establishment is implemented by registering authorities at the location of the permanent executive body or, in case of its absence, at the location of another body or person entitled to act on behalf of the company without a power of attorney.
Liquidation of legal entities
The following types are distinguished according to the grounds of liquidation:
- Voluntary liquidation – on the basis of the resolution of founders (members) or a body of a legal entity entitled thereto according to the constituent documents.
- Compulsory liquidation – by way of a court order in case of detection of major breaches of law that were committed upon establishment of a company and cannot be eliminated, as well as in other cases.
- Liquidation as a result of recognition of a legal entity insolvent (bankrupt).
Liquidation of a legal entity is a procedure carried out in several stages. In case of voluntary termination of operations of a company, everything starts with a resolution on liquidation adopted by a company member or the general meeting of its founders. It must contain the signature of the head of the organisation.
Then the following stages of voluntary liquidation begin.
Notification of the registering authority
The organisation must notify the registering authority of adoption of the resolution on liquidation of the company, as well as introduce the information thereon to the Unified Federal Register of Information on Facts of Activity of Legal Entities (EFRSFDYuL). The registering authority, relying upon the documents, makes a record in the Unified State Register of Legal Entities regarding the fact that the company is in the process of liquidation.
Publication of notices of liquidation in the mass media
The company being liquidated must notify its counterparties of the beginning of liquidation by publishing a report in the Bulletin of State Registration. At the same stage, the liquidation committee (liquidator) identifies creditors and notifies them of liquidation in writing.
Preparation of interim liquidation balance sheets
An interim liquidation balance sheet must be ready after 2 months, it is approved by the founders (members) or the body that adopts a resolution on liquidation. Then it is necessary to notify the registering authority of preparation of the interim liquidation balance sheet.
Satisfaction of creditors’ claims (if any)
Settlements of a legal entity being liquidated with creditors are made by the liquidation committee on the basis of the interim balance sheet, beginning from the date of its approval (excluding fifth-priority creditors).
Preparation and approval of liquidation balance sheets
The liquidation committee must prepare a liquidation balance sheet after settlements with all creditors. It includes information about assets owned by the legal entity by the time of liquidation and before settlements with the founders. The liquidation balance sheet informs about the property which is transferred to the founders. It is approved by the founders (members) or the liquidation committee, after which it is submitted to the registering authority.
Then the company’s property remaining after settlements with the creditors is distributed among its members in proportion to their shares.
Then the following procedures are carried out:
- the bank accounts are closed;
- the tax authority is notified of the completion of liquidation of the legal entity.
Legal entities cease to exist after registration of liquidation of the legal entities – introduction of the corresponding record to the Unified State Register of Legal Entities. For this purpose, it is necessary to file an application and the related documents about the performed liquidation procedures with the registering authority. Lastly, the seal is destroyed.
Subject to compliance with all the established requirements, the average term of liquidation of companies is from 4 months up to 1 year. It should be noted that mistakes at any of the stages of registration and liquidation of legal entities may result in a refusal as well as a longer term of liquidation and fines.
Registration and liquidation of legal entities by VALEN Company
VALEN Company offers a full range of services associated with registration and liquidation of legal entities. We provide support at all stages:
- advising on issues associated with registration and liquidation;
- development of required documents;
- submission of documents to competent authorities;
- accounting services in case of closing;
- termination of labour relations with employees in case of liquidation.