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Attorney. Specialist in commercial and labor law. Over 16 years of experience in legal support of businesses - debt recovery, contract enforcement, recovery of damages, commercial property and lease disputes.
Liquidation of the company in Ukraine due to the sale of corporate rights
Liquidation of a company in Ukraine (LLC) is a process of termination of its activity and distribution of property among participants or creditors.
This process can have different options depending on the circumstances in which the company is located. One of these options is liquidation through the sale of corporate rights.
This process involves the sale of a share or shares of company participants to other persons, which leads to the termination of the original owner’s participation in the company’s activities and the transfer of control to the new owner.
The main principles of liquidation of a company through the sale of corporate rights include:
- Conducting general meetings of participants. Before the start of the liquidation process through the sale of corporate rights, a general meeting of participants takes place, at which decisions are made regarding the transfer of corporate rights.
- Preparation of documents. After making a decision on liquidation through the sale of corporate rights, it is necessary to prepare all the necessary documents, such as the minutes of the general meeting of participants, the contract for the purchase and sale of shares in the authorized capital, the act of acceptance and transfer of corporate rights (notarized) and documents for the registration of changes in the legal entity in the relevant bodies and registers.
- Evaluation of the value of rights. Before selling corporate rights, it is necessary to evaluate their value. This can be done depending on the organizational and legal form of the company, its activities, and the availability of certain resources.
- Registration of changes in the relevant authorities. After signing sales contracts and carrying out all the necessary procedures, it is necessary to contact the relevant state authorities to register changes in the statutory documents and other necessary documents.
The legal aspect of the liquidation of the company through the sale of corporate rights
Ukrainian legislation contains a number of provisions regulating the liquidation of a company through the sale of corporate rights.
The main ones include:
- The Civil Code of Ukraine: It defines the rights and obligations of participants in such a process, the procedure for selling corporate rights, and other important aspects.
- The Law of Ukraine “On Limited and Additional Liability Companies”: This law establishes the general principles of creation, activity, and liquidation of LLCs, including liquidation through the sale of corporate rights.
Advantages and disadvantages of liquidation through the sale of corporate rights
Advantages:
- Process speed. A sale of corporate rights can be a faster way to wind down a company than other liquidation methods.
- The possibility of receiving funds. Company participants can receive monetary compensation for their corporate rights, which allows them to provide a certain level of liquidity.
- Less complexity of the procedure. Compared to other methods of liquidation, which can involve complex procedures, the sale of corporate rights can be less costly and complicated.
Disadvantages:
- Possibility of unprofitable sale. In the event of adverse market conditions, participants may not receive sufficient compensation for their rights.
- Necessity of consent of all participants. If the decision to sell requires the consent of all participants, this can complicate the process, depending on the size of the participants’ shares in the authorized capital.
- Tax aspects. The sale of corporate rights may have tax consequences for the participants, which need to be examined individually for each situation.
Therefore, the liquidation of the company through the sale of corporate rights is one of the methods of termination of the company’s activities.
This process has its advantages and disadvantages, which must be taken into account when making a decision. The legal aspect of such liquidation is determined by the legislation of the country where the company is located. Ukrainian legislation contains the necessary norms for conducting such a process.
The overall productivity of this process greatly depends on the professionalism of the lawyers and economists who deal with this issue, as well as on mutual understanding between the participants.
Before starting the liquidation procedure through the sale of corporate rights, it is recommended to get advice from specialists in this area.
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