Liquidation of a Legal Entity

Liquidation of a legal entity is a lengthy and bureaucratically protracted process. This is due to the need to submit a notice of cessation of activity to a large number of government bodies. Further interaction with them will also take a great deal of time and effort. Therefore, it is advisable to use the services of competent lawyers to minimize the overall time of the procedure.

Ways to Terminate Activities

There are three main methods:

• Official liquidation. Leads to the complete cessation of the company’s activities with the settlement of obligations to creditors.
• Transfer to new founders. Implemented by transferring the company to new founders with a change of management. The company itself continues to exist.
• Reorganization and liquidation. The essence of the method is that the legal entity’s activity is terminated, and its rights and obligations are transferred to a new legal organization.

Types of liquidation of legal entities

The basis for terminating the activity of a legal entity may be:

• Voluntary. The decision to liquidate is made by the company’s founders or an authorized body.
• Compulsory. The company’s termination is carried out based on a court decision, at the request of a local government body or another state organization.

Grounds for compulsory liquidation may include operating without a license, repeated violations of the law, breach of the net asset value, and other reasons. Depending on the grounds, there may be two types of liquidation.

Procedure for liquidating a legal entity

The procedure for liquidating a legal entity in Ukraine consists of several main stages and includes:

• Adoption of a decision to terminate activities by the business entity or by a court.
• Appointment of a special commission and deadlines for satisfying creditors’ claims.
• Entry of information about the termination of activity into the Unified State Register and publication of a liquidation notice in the mass media.
• Appeal of the liquidation commission to state supervisory bodies (PFU, the Tax Inspectorate of Ukraine, etc.) to monitor the payment of mandatory contributions.
• Collection of accounts receivable. After closure the legal entity has no successors, so all measures must be taken to recover funds for the creditor, including through the courts. Since there is no law on the collection procedure, one often has to independently seek legally sound solutions.
• Dismissal of employed staff. If any exist, each must be notified in writing two months before the final closure.
• Closure of bank accounts, except for one that will be used during the liquidation process.
• Contacting licensing authorities to cancel such licenses.
• Conducting a property appraisal of the legal entity.
• Preparation of an interim liquidation balance sheet to reflect the actual financial position.
• Settling with creditors and selling the company’s assets. All property remaining after the sale is reflected in the final balance sheet and distributed among the owners.
• Issuance of a certificate from the USR about the complete liquidation of the legal entity.
• Notification of the company’s closure to all state bodies and transfer of documents to the archive.
• Destruction of seals, stamps, documents (if necessary).

Liquidation timelines

At the final stages of the process of terminating a legal entity’s activities, the liquidation commission may face unpleasant surprises from the tax authorities, and this happens quite often. The Fiscal Service or the Pension Fund may object to the state registration and delay the liquidation period. The Tax Service or the Pension Fund are obliged to conduct an unscheduled inspection of the enterprise within two months from the publication of the liquidation notice. An objection is grounds for refusal of registration (if these services did not manage to complete their work within the legally established timeframe).

Why it is beneficial to contact the legal company Nakaz

To save yourself unnecessary time and financial costs, you should contact the specialized legal company Nakaz, which has extensive experience in this procedure.

Qualified specialists will help initiate, carry out and complete the process of dissolving a legal entity in the shortest possible time. The cost of services is agreed individually and depends on the desired timelines, availability and condition of documentation, annual turnover, number of transactions per month, and the size of the company’s staff.

Contact us, we are always ready to help!