Company Liquidation in Russia
Company Liquidation in RussiaUpdated on Friday 19th April 2019
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The company liquidation procedure in Russia is regulated by the Civil Code. A Russian company may be liquidated in two ways: voluntarily, if the founders decide to do so or by a court decision. A company may also be liquidated if the duration period, stipulated in the formation documents, has expired. A court decision regarding the liquidation of a company may be taken if the company fails to observe the Russian laws, like having proper licenses or practicing an activity forbidden by the law.
If you need more information about the procedures for liquidating a company, you may call our lawyers in Russia.
Company liquidation steps in Russia
The following steps must be taken in order to dissolve a company in Russia:
- A thorough examination of the documents based on which the liquidation of the company was decided;
- A verification of the company’s bank accounts and with the tax authorities;
- Preparing the documents for liquidation and filing them with the Trade Register;
- Publishing the decision to liquidate the company in the Official Gazette;
- Closing the company’s bank accounts and announcing the liquidation.
The founders are obliged to notify the Unified State Register of Legal Entities from Russia as soon as the liquidation decision is taken. They also must appoint the liquidator who is the person who will help to apply the rules from the Civil Code during the entire liquidation process. A liquidation committee will take all the Board Members’ responsibilities and represent the company in court.
The liquidation must be announced in the specific gazettes and all the creditors must be notified in written regarding the process, so claims can be submitted. An intermediary liquidation balance must be issued after the term posted in the announcement for issuing claims has expired.
The company’s employees in Russia or their representative must also be notified about the liquidation of the company. This should be done by the employer and no later than two months before the dismissal. The employees or their representative must also be notified in case of collective dismissals, no later than three months before the termination of the employment agreements.
The intermediary liquidation balance must contain information regarding the creditors’ claims, the assets of the company and the result of the claim examination. The liquidation balance must be approved by the founders who have taken the liquidation decision. In case the monetary amounts are insufficient for paying all the claims, the company’s properties may be part of a public auction.
Company liquidation documents in Russia
The following documents must be prepared when dissolving a company in Russia:
- - the articles of association, the charter and the bylaws of the company;
- - a certificate issued by the Trade Register which must contain the date for starting the liquidation process;
- - the statements and all the documents indicating the financial status of the company;
- - the minutes of the shareholders’ meeting and declaration showing the decision to dissolve the company.
Our attorneys in Russia can assist with the preparation of the documents required in case of company dissolution.
How is the payment of creditors handled during the liquidation?
The payment of the creditors begins when the intermediary liquidation balance is approved, and the claims are honored in order of the priorities. After paying all the creditors, a liquidation balance must be issued regarding the remaining monetary amounts. This must be approved again by the founders responsible for the liquidation decision.
All the company’s bank accounts in Russia must be closed, but only after the relevant balance sheets and other bank documents have been obtained. The Social Insurance Fund and the Pension Fund must also be notified of the company’s liquidation.
The remaining goods are divided among the shareholders. This is the final step in the liquidation. The end of the liquidation process must be reported immediately to the Unified State Register of Legal Entities. Only after this submission is the company considered liquidated.
If a liquidation committee refuses to satisfy the claims of a creditor, then a claim against it may be raised and if it’s considered valid, the creditor will receive the payment from the remaining assets of the liquidated company.
The claims not covered are considered settled if the creditor hasn’t raised a claim to the court. A company unable to cover the claims is declared bankrupt, but only after a court has decided so.
How long does it take to liquidate a company in Russia?
The Russian taxation authorities must be announced regarding the liquidation of a company no longer than three days since the decision. After publishing the announcement regarding the liquidation in the specific publications, a term of two months must be appointed in order to receive and analyze all the claims. The minimum term during which a company may be liquidated in Russia is, at least, six months and it’s considered final when it is published in the Unified State Register of Legal Entities.
The liquidation method, either by decided court or voluntarily, is decided according to the particular situation of the company. An “alternative” company liquidation is possible in case of mergers and acquisitions in Russia. Although this is not essentially the same as voluntary liquidation caused by financial difficulties, the company that will be merged needs to transfer its assets, rights, and obligations of its purchaser.
For more details about the liquidation process, you may contact our law firm in Russia. Our Russian lawyers offer a wide range of legal services for investors who want to liquidate their companies.