CLOSURE OF LLC

Closing a limited liability company (LLC) is an important process that requires careful planning and compliance with several legal procedures.

In this article, we will discuss the basic conditions, the closing process, and real customer cases.

Terms of closing the LLC

The closing of an LLC can be initiated for various reasons, including the loss of activity of the company’s further work, financial difficulties, decisions of the founders, or due to legal or accounting problems. Regardless of the reason, it is important to ensure that the closure of such a company is legal.

The closure of a company in Ukraine is regulated by several regulatory and legal acts (NPA), which establish the procedure for the liquidation of legal entities, including limited liability companies.

The main ones include:

• The Civil Code of Ukraine defines the general provisions on legal entities, their rights and obligations, as well as the conditions and procedure for liquidation.
• The Commercial Code of Ukraine contains provisions regulating the economic activity of companies, including the process of their liquidation.
• The Law of Ukraine “On Economic Partnerships” details the procedure for the creation, operation, reorganization and liquidation of economic partnerships, including LLCs.
• The Law of Ukraine “On Accounting and Financial Reporting in Ukraine” establishes requirements for accounting and financial reporting during liquidation.
• The Tax Code of Ukraine contains provisions on tax obligations and procedures to be followed during the liquidation of a company, including closing tax accounts and submitting final tax returns.
• The Law of Ukraine “On State Registration of Legal Entities, Individual Entrepreneurs and Public Organizations” regulates the procedure for state registration of changes related to the liquidation of companies.
• Other regulatory acts – depending on the specifics of the company’s activities, other legislative and by-laws may be applied that regulate certain aspects of its closure, for example, in the field of ecology, employment, etc.

When liquidating a company, it is important to comply with the requirements of all relevant NPAs in order to avoid legal consequences, ensure the rights of creditors and carry out a legal distribution of assets.

The process of closing an LLC

Decision on liquidation

The first step is the adoption of a decision on liquidation by the founders or shareholders of the company. This decision must be formalized in the minutes of the general meeting of participants.

Notification of state bodies

After the decision is made, it is necessary to notify the relevant state bodies, such as the bodies of the state registration service (Tsnap, notary – state registrar), tax inspectorate and statistics bodies.

Appointment of the liquidation commission

Next, a liquidation commission is formed, which will be responsible for the closing process. The commission keeps records of the company’s property, liabilities and payables. Our representative, a lawyer, can become the liquidator.

Inventory of assets and liabilities

The liquidation commission conducts an inventory of all assets and liabilities of the company.

Notice of liquidation

Information about the liquidation must be published in official publications to inform potential creditors.

Satisfaction of creditors’ claims

The company must satisfy the demands of its creditors before distributing assets among participants.

Closing accounts and reporting

It is necessary to close all bank accounts and submit final reports to the tax inspectorate.

Registration of liquidation in the state register

After completion of all procedures, the liquidation commission submits documents for registration of the company’s liquidation in the state register of legal entities.

List of required documents

• Minutes of the general meeting of participants on the liquidation of the LLC.
• Application for liquidation to be submitted to the state register.
• Documents confirming notifications from state authorities.
• Report of the liquidation commission on the inventory of assets and liabilities.
• Documents on satisfaction of creditors’ demands.
• Financial statements and tax declarations for the last period of the company’s activity.
• Certificate on the absence of debt to the budget and extrabudgetary funds.

Closing an LLC is a complex process that requires careful documentation and cooperation with government authorities. Careful planning and following the above steps will help ensure a legal and efficient company closure.

Alternative procedure for closing the LLC

Express liquidation in Ukraine– this is a simplified procedure for terminating the activity of a legal entity without conducting a liquidation procedure through a liquidation commission. This process is defined by the legislation of Ukraine as the purchase and sale of corporate rights.

The main aspects of express liquidation include:

• Process speed: Express liquidation takes significantly less time compared to standard liquidation, allowing entrepreneurs to close their businesses faster. This procedure takes up to 5 working days.
• Simplified requirements: There is no need to create a liquidation commission, conduct liquidation procedures, and undergo inspections.
• Minimizing bureaucracy: Reducing the number of necessary documents and procedures that require state registration and other formalities.
• Mitigation of liability: After signing the contract of sale and purchase and making changes in the register, all rights and obligations regarding the company are transferred to the new owner.

Case:

Recently, Prikhodko and Partners were contacted by a client who is the owner of an inactive company in Kyiv. This client left Ukraine at the beginning of the full-scale invasion of the Russian Federation.

He expressed a desire to liquidate his Ukrainian company but did not have the opportunity to come to Kyiv to start the liquidation procedure. He was offered to start the “express liquidation” procedure without his physical participation.

The client issued a power of attorney to our lawyer at a local European notary and authorized him to take certain actions regarding the sale of corporate rights in Ukraine.

After applying the apostille of the ministry in the country of issuing the power of attorney and sending it to us by mail. In turn, we previously provided step-by-step advice to the client regarding the registration and legalization of such a power of attorney, which greatly facilitated the client’s registration of such a power of attorney.

After receiving the power of attorney, the lawyer on behalf of the attorney turned to the notary and performed all the registration actions related to the purchase and sale of corporate rights.

The result was that in 4 days, another person became the owner of this company, who bore all subsequent rights and obligations to the state and counterparties.

As we can see, this procedure is much simpler, faster, and cheaper than the standard liquidation procedure.

If you are interested in this procedure, or if the procedure of complete liquidation of the company is more suitable for you and you want to receive professional support accompanying such a procedure, leave a request below and we will contact you.