Taras Miroshnychenko

Head of practice

E-mail

miroshnychenko@prikhodko.com.ua

Phone numbers

Head of Corporate Law and Fintech Practice. Expert in the creation and reorganization of companies, support of M&A transactions, as well as legal support for opening and running a business in the EU, Asia, and North America.

Liquidation of the farm

Liquidation of a farm (hereinafter referred to as the FG) may be carried out by decision of the owner or its members. The law provides for the termination of the FG’s activities only in a limited list of cases (in accordance with the Law of Ukraine “On Farming“). The liquidation procedure itself includes making a decision, creating a liquidation commission, making settlements with all creditors, passing the necessary checks, drawing up a liquidation balance sheet and making an entry in the Unified State Register (USR). More details about this are in the article below.

What do you need to check before liquidating a farm?

Before starting the procedure, it is necessary to conduct a number of internal checks. This will include:

first, documentary and accounting (verification of the availability and execution of primary documents for the last three years, tax reporting);
second, calculations of current debt (or its fixation for further settlement of the situation by creating a separate register of creditors) – from debt to utilities to debt to other legal entities;
third, closing personnel issues (preparation of timely notification for employees about the upcoming dismissal in connection with liquidation, severance pay for certain categories of citizens, etc.);
fourth, verification of the absence of tax debt (absence of arrears, fines and penalties to the state and local budgets);
finally, inventory of all assets of the financial institution (if necessary, their revaluation).

Get legal advice

Liquidation of a farm: what is the procedure?

The process of liquidation of a farm is clearly regulated by law and involves the following stages:

the members of the farm make a decision on termination by liquidation (it also necessarily determines the composition of the liquidation commission or appoints the person of the liquidator, determines the period for presenting creditors’ claims from the date of publication of the notice of liquidation);
the authorized person (liquidator) submits a notification of the start of state registration of the termination of the legal entity to the state registrar and a document confirming his authority (the corresponding decision of the participants of the farm on his appointment and a passport certifying his identity);
a mandatory complete inventory of the assets and liabilities of the farm is carried out (approval of the interim liquidation balance sheet), an independent valuation of property and work with receivables (interim liquidation reporting must also be available during this stage);
each employee must be notified in writing of the dismissal in connection with the liquidation no later than two months before the relevant date, and a final settlement must be made with them;
the liquidator submits primary documents and reports to the tax and pension fund, initiating an unscheduled documentary audit;
all bank accounts are closed and a final liquidation balance is drawn up;
the remaining property is distributed between the members of the farm in accordance with their contributions;
the liquidator transfers documents subject to long-term storage (at least three years) to the archive and submits an application to the state registrar for the termination of the legal entity.

Taking into account all of the above, the procedure can last from 2 months to six months. And if the farm initiates the debt restructuring procedure, then even longer. For more detailed information, we recommend that you order a consultation with one of our corporate lawyers.

It will also be useful: TAXATION OF THE FARM

What documents will be required to liquidate a farm?

The main documents can be divided into three main groups:

to initiate the liquidation itself (decision of the participants on termination (protocol), document on the liquidation commission, application for state registration of termination);
to undergo documentary checks from state bodies (financial and tax reporting for the last reporting period, primary documents, interim liquidation balance sheet, certificate of absence of debt to the state or local budget);
to complete the procedure (certificate from the archival institution on acceptance of documents for storage, application to the state registrar, etc.),

What will happen to the land that was owned or permanently used by the farm?

The issue of the land of the farm is resolved depending on the legal basis on which the person owned it. Therefore, if the land plot was registered as property, then after full settlement with creditors it is included in the liquidation balance sheet and is subject to distribution among the members or return to the founder. In other cases, in particular, if the FG used the land on the basis of a lease, the contract is terminated if it does not provide for the transfer of the right to use the land to its members. Although most often, if this is a right of permanent use, the land plot returns to the ownership of the territorial community or the state.

Find out the cost of legal support

Why should you contact a lawyer regarding the liquidation of a farm?

Liquidation of a farm, as can be seen from the above, is a whole complex of actions that require experience and qualifications. A lawyer from the company “Prikhodko & Partners” can protect you at every stage and speed up their passage as much as possible. His main services will include:

Liquidation of the farm

What do you need to check before liquidating a farm?

Liquidation of a farm: what is the procedure?

What documents will be required to liquidate a farm?

What will happen to the land that was owned or permanently used by the farm?

Why should you contact a lawyer regarding the liquidation of a farm?

You may also need:

Andrey Prikhodko