Liquidation procedure: frequently asked questions
How can you conduct the liquidation procedure on your own?
If you have the time and resources to conduct the process of liquidation of an enterprise independently, and you only need some general guidelines, we can provide you with all the documents necessary to initiate and complete the liquidation procedure. Such a service would require more of your time and personal involvement, but will be comparatively cheaper.
What audits will your entity undergo in liquidation?
Immediately after the start of the liquidation procedure, the organization is subject to audits by the following regulatory authorities: the Tax Inspectorate, the Social Security Fund (FSZN), and Belgosstrakh.
What should be done if the property is insufficient for settlements with all creditors?
If in the process of liquidating a legal entity it is found that the company’s funds are insufficient to settle all of its obligations, it will be liquidated only through the bankruptcy procedure. The failure to file (late filing) of the bankruptcy petition entails subsidiary liability and, in some cases, criminal penalties.
How is the process of liquidating commercial entities regulated?
The procedure for liquidating enterprises and for-profit organizations is governed by:
- the Civil Code;
- the Regulation on State Registration and Liquidation (Winding Up) of Business Entities approved by Decree No. 11 of the President of the Republic of Belarus dated March 16, 1999 (as amended by Decree No. 19 of the President of the Republic of Belarus dated August 26, 2008) (hereinafter referred to as the “Regulations”);
- the Law on Business Companies (Companies Act as it relates to the liquidation of an LLC, ALC, CJSC, OJSC).
Who has the right to decide to start the liquidation of the company?
- The property owner (founders, members) of the company;
- the commercial court;
- the registering authority.
For each of these bodies, Decree No. 1 sets out a special list of grounds on which a decision can be made on the liquidation of an enterprise:
The grounds for the decision to liquidate the enterprise by the founders of the firm:
- in connection with the expiration of the term for which the legal entity is established;
- achievement of the purpose for which it was established;
- a commercial court declares invalid the state registration of the given legal entity.
This list is open, so the founders of the company have the right to decide on the liquidation of the company for any other reason that they deem necessary.
Reasons for a commercial court may decide to liquidate a company:
- failure to decide on the liquidation of the company in connection with the expiration of the term for which the legal entity is established or the achievement of the purpose for which it was established;
- the company has carried out its activities without the appropriate special permit (license);
- carrying out of activities prohibited by law, carrying out of activities with other repeated or flagrant violations of legislation, or a сourt ruling that the state registration of the legal entity is invalid;
- cancellation of the state registration of individual entrepreneurs;
- economic insolvency (bankruptcy) of the legal entity;
- decrease of the net asset value of open joint-stock companies (OJSCs), closed joint-stock companies (CJSCs), and other for-profit organizations for which the minimum amount of the authorized fund is established, according to the results of the second and each subsequent fiscal year, below the minimum amount of the authorized fund established by legislation;
- in other cases stipulated by law.