Voluntary liquidation is carried out by the decision of the members (shareholders) of the Company and has a clearly defined procedure.
The company can be liquidated by the decision of the general meeting of shareholders by a qualified – at least three-quarters – by a majority of votes, and the Limited Company can be liquidated only by the unanimous decision of its participants.
The law firm AGTL, with considerable experience in the accompaniment of such complex procedures, will ensure compliance with all the requirements of the law, registration and tax authorities in order to obtain a positive result – termination of the firm’s activities.
Voluntary liquidation of the company
According to Article 1, 104 of the Ukrainian Criminal Code, the legal entity ceases as a result of the transfer of all its property, rights and responsibilities to other successors (mergers, accessions, separations, transformations) or as a result of liquidation.
The enterprise is an independent business entity, created by the competent authority of the state government or the local government body or other entities to meet public and personal needs through the systematic implementation of industrial, research, trade, other household activities in the order provided by the HK of Ukraine, and other laws.
The liquidation of the enterprise is the implementation of measures to stop the business, to bring its fixed assets to a state that guarantees the safety of people, property and the environment, and measures to protect the released workers.
Liquidation is a form of termination of the business entity, that is, it is a form of termination of the legal entity, in which it ceases to exist with all its rights and responsibilities.
In the event of liquidation of the enterprise, the rights and obligations do not pass to another person.
The liquidation of the enterprise is a long and complex process in which it is impossible to do without the participation of an accountant, and above all in drawing up the liquidation balance.
When liquidation, the company’s activities cease without succession, that is, without the transfer of the rights and obligations of the liquidated legal entity to others. Consequently, when the legal entity is liquidated, his rights and responsibilities are terminated.
According to Article 104 of the Ukrainian Central Committee and Article 59 of the Ukrainian Criminal Code, the legal entity can cease to exist by liquidation or reorganization.
The liquidation of enterprises can be divided into voluntary and forced enterprises.
Voluntary liquidation is carried out by the decision of the owner (owners) or the authorized body, as well as in connection with the end of the period for which the subject of the business was created, or in the case of achieving the goal for which it was created.
Forced liquidation is carried out by a court or economic court. Forced liquidation includes the liquidation of the enterprise as a result of its recognition as bankrupt or the cancellation of its state registration in cases under Article 27 of the State Registration Act.
The liquidation of the enterprise is a complex and lengthy procedure, which is quite difficult to implement within the current legal framework. The difficulty lies not only in the liquidation of the enterprise itself, but also in the unsettled legislative level of some important procedural questions regarding the procedure of the liquidation commission.
Decision to liquidate
The decision to terminate the legal entity is made by its members (1), the court or another body in accordance with its competence. These structures are obliged to immediately notify the state registration authority in writing of their decision. Having received such a notice, the state registration authority makes information to the EGR (2) that the legal entity is in the process of termination (v. 1 art. 105 of the Ukrainian Criminal Code).
The provisions of this article of the Ukrainian Central Committee are aimed primarily at protecting the rights of creditors, who at the initial stage can learn about the intentions of the legal entity, which ceases its activities, as the data of the EGR are open to the public. Such information will be useful to other persons, for example, potential contractors, employees.
In the case of liquidation of the legal entity, a liquidation commission should be established. New for the legislation of Ukraine is the obligation to coordinate with the state registration body the appointment of a commission to terminate the legal entity (liquidation commission). This procedure actually consists in the fact that the representative of the legal entity, who submits documents to the state registrar, informs the last F.I.O. and the identification codes of the members and chairman of the liquidation commission.
The body that decides to terminate the legal entity establishes the order and timing of the termination of the legal entity, taking into account the requirements set by the Ukrainian General Committee. The functions of the termination commission may be entrusted to the legal authority (e.g. the board).
Since the appointment of the commission to terminate the legal entity (liquidation commission) the powers of other bodies to manage the affairs of such a legal entity are terminated. These functions are transferred to the liquidation commission. The legal entity’s ability to work is implemented through this commission, and the commission’s actions are considered as actions of the legal entity itself. The Commission takes legally significant actions, including acting in court on behalf of the legal entity and creating rights and responsibilities directly for it.
Notices about the termination of the legal entity and the order and timing of the application by the creditors of the claims are published by those print media that publish information about the state registration of the legal entity.
The Commission takes all possible measures to identify creditors (publishing the announcement in the press, posting information on websites on the Internet, etc.). In addition, the commission is obliged to notify the creditors in writing about the termination of the legal entity.
The decision to liquidate the company is made:
Order, order in the liquidation of public, communal or private enterprise;
– minutes of the meeting of the founders in the liquidation of farms, etc.
In the liquidation of farms there are features related to this type of organizational and legal form of economic entities.
The liquidation commission should:
To place an announcement (notice) in the print authorities about the liquidation of the enterprise and on the order and timing of the application by creditors of claims;
– explicit (known) creditors to notify personally in writing (in the time frame set by the HK of Ukraine or a special law) on the liquidation of the enterprise;
Take the necessary measures to recover the receivables of the liquidated business entity;
Assess the available assets of the liquidated business entity;
To make settlements with creditors;
– to draw up a liquidation balance and submit it to the owner or body that appointed the liquidation commission.
The reliability and completeness of the liquidation balance must be verified in accordance with the law. The scheme of liquidation of the enterprise is presented in Figure 1.
Interim liquidation balance
Current regulations do not provide a clear answer to the question of what constitutes a liquidation balance and by what date it should be drawn up. In order to draw certain conclusions, below we will give a few definitions concerning the term “liquidation balance” contained in Ukrainian legislation and regulations.
Article 111 of the Ukrainian Criminal Code stipulates that the liquidation commission at the end of the deadline for making claims by creditors constitutes an interim liquidation balance containing information on the composition of the assets of the liquidated legal entity, a list of claims made by creditors, as well as information on the results of their consideration.
The interim liquidation balance is approved by the members of the legal entity or the body that has decided to liquidate the legal entity.
After the completion of settlements with creditors, the liquidation commission draws up a liquidation balance, which is approved by the participants of the legal entity or the body that decided to liquidate the legal entity.
The property of the legal entity, which remains after meeting the creditors’ demands, is transferred to its participants, unless otherwise established by the founding documents of the legal entity or the law.
Thus, Article 111 of the Ukrainian Central Committee establishes the compilation of liquidation by the liquidation commission, after the end of the term, two liquidation balances – intermediate and liquidation, to make claims to creditors.
The subject of the business is considered liquidated from the day the state register records the termination of its activities. Such a record is made after the approval of the liquidation balance, in accordance with the requirements of Article 7, 59 of the HC of Ukraine.
Article 20 of the House Communities Act stipulates that the liquidation commission must draw up a liquidation balance and provide it to the highest body of the society or body that appointed the liquidation commission. The reliability and completeness of the liquidation balance must be confirmed by the auditor (audit firm)
The Accounting Act (p. 8 p. 8) stipulates that responsibility for accounting of the company’s operations, including the valuation of the company’s assets and liabilities, the liquidation balance and financial statements, is assigned to the liquidation commission, which is established in accordance with the law.
Thus, from the above legislative documents it can be concluded that the liquidation balance should be drawn up at the end of the liquidation procedure, that is, after the inventory, valuation of property, settlements with receivables, repayment of payables. The order of accounting of taxpayers stipulates that in order to deregister, if the founders (participants) of the legal entity, the authorized bodies or the court decide to terminate the legal entity, the legal entity, the chairman of the termination commission (liquidator, liquidation commission) or the person responsible for the repayment of tax obligations or tax debt of the taxpayer, in case of liquidation of the taxpayer, should:
– within 3 days of the date of the introduction of information to the EGR that the legal entity is in the process of termination, to provide to the body of the state tax service (more – GNS), in which the taxpayer is registered, the following documents:
– statement on termination of the taxpayer by F. No. 8-OPP, the date of which should be fixed in the journal by F. No 6-OP;
– original help by f. No 4-OPP;
A copy of the executive document (decision) of the owner or body authorized by the founding documents of liquidation;
A copy of the executive document on the formation of the liquidation commission.
The reporting period for the liquidation balance of the liquidated enterprise, in accordance with Article 13 of the Accounting Act, is the period from the beginning of the year to the decision to liquidate the enterprise.
The compilation of an interim liquidation balance as of the date of the information to the EGR that the legal entity is in the process of termination can be regarded as a reflection of the property situation of the enterprise before the sale of its assets and the implementation of any expenses by the liquidation commission.
The interim liquidation balance contains information on the composition of the assets of the liquidated legal entity, the list of claims made by creditors, as well as the results of their consideration. This balance reflects the rights and responsibilities of the legal entity at the time of the liquidation decision and summarizes the data on which the creditors will be settled.
In the case of liquidation of the enterprise, its assets should be assessed by net value of the sale, and the distribution of assets and liabilities to working (current) and non-negotiable (long-term) loses its meaning, that is, the principle of financial reporting, such as continuity, does not apply in this situation.
In general, the valuation of the assets of the liquidated enterprise consists mainly in bringing the value of the assets to the value of their possible sale and recognizing additional liabilities (e.g., severance pay to employees) or reducing the benefits to recover future costs arising from the enterprise in connection with the decision to liquidate. Stocks, fixed assets and liabilities are generally assessed.
Stocks are reflected in the net sale value for each unit of inventory, minus the expected sale price of the planned completion and marketing costs.
The value of stocks needs to be reviewed in the process of being re-examined in the face of national accounting standards.
The value of the materiality threshold for revaluation or reflection of the decrease in the usefulness of fixed assets may be subject to a value equal to 1% of the net profit (loss) of the enterprise, or a value equal to a 10 per cent deviation of the residual value of fixed assets from their fair value.
The overvalued initial cost and amount of depreciation of the asset of fixed assets is determined by the multiplication, respectively, of the initial cost and the amount of depreciation of the asset of fixed assets on the revaluation index. The revaluation index is determined by the division of the fair value of the object being revalued by its residual value.
The amount of pre-assessment (discount) of the value and wear of the asset of fixed assets is defined as the difference between these indicators before and after the application of the revaluation index.
If the residual value of an object is zero, its overvalued residual value is determined by adding the fair value of the object to its original (overvalued) value without changing the amount of depreciation of the object.
The amount of pre-assessment of the value and wear of fixed assets is reflected by an increase in the initial (overvalued) value and accumulated wear and tear of the asset of fixed assets, and the amount of depreciation of value and wear – a reduction in the initial (overvalued) cost and accumulated wear. The difference between the amount of value estimate and the amount of pre-assessment of depreciation of fixed assets is credited with an increase in additional capital, and the difference between the amount of the depreciation and the amount of depreciation is included in the costs.
In the case of the presence (as of the date of the next (last) assessment of the object of fixed assets) exceeding the amount of previous valuations of the object and losses from the reduction of its usefulness over the amount of previous pre-estimates (indexation) of its residual value and benefits from the resumption of its usefulness from the date of enrollment on the balance sheet of the enterprise of this object, the amount of the next (last) valuation, but no more than the specified excess is included in the revenues of the reporting period, and the difference (if the amount of the next estimate is greater than the specified excess) is directed to increase other additional capital.
In the case of (as of the date of the next (last) depreciation of the fixed asset) exceeding the amount of previous pre-estimates (indexation) of the residual value of the object and the benefits of the resumption of its usefulness over the amount of the previous estimates of the residual value of the object and losses from the reduction of its usefulness, the amount of the next depreciation, but no more than the specified excess, is directed to the reduction of other additional capital, and the difference (if the amount of the additional price) is included in the period.
Excess of previous pre-estimates (indexation), along with the amount of the resumption of usefulness, over the amount of reduced usefulness and previous estimates of the residual value of previously overvalued fixed assets that have been eliminated, is reflected on the loan account accounting for undistributed profits with a simultaneous decrease in additional capital.
The person responsible for repaying the tax liabilities or tax debt of the taxpayer in case of liquidation of the taxpayer is:
Relative to the liquidated taxpayer – liquidation commission or other body that conducts liquidation under the law;
– in relation to branches, branches, other separate units of the liquidated taxpayer – such a taxpayer;
In relation to cooperatives, credit unions, co-owners’ societies or other collective farms , their members (shareholders) are in solidarity;
Relative to investment funds – an investment company that manages such an investment fund.
The order of settlement with creditors, in the case of liquidation of the business entity, provides that;
The creditors’ claims to the liquidated business entity are satisfied at the expense of the property of the entity, unless otherwise provided by the HK of Ukraine and other laws;
The integrity and order of satisfaction of creditors’ claims are determined by Article 112 of the Ukrainian Central Committee;
Claims that are not satisfied due to the lack of property of the business entity, claims not recognized by the liquidation commission, if their claimants within a month after receiving notice of the full or partial rejection of the claim do not file a claim in court, as well as claims, which are denied by the court’s decision to the creditor, are considered to have been repaid;
The property left over from the creditors’ claims is used at the direction of the owner.
The payment of the sums of money to the creditors of the liquidated legal entity is made in the order of order established by Article 112 of the Ukrainian Central Bank, on the interim liquidation balance, starting from the date of its approval, except for the creditors of the fourth stage, the payments of which are made after a month from the date of approval of the interim liquidation balance.
According to Article 112 of the Ukrainian Central Committee, in the event of liquidation of the solvent legal entity, the requirements of its creditors are met in the following order:
First of all, the claims for damage caused by injury, other damage to health or death are met, and the creditors’ claims secured by collateral or otherwise;
Second, the requirements of employees related to labor relations, the author’s requirement to use the result of his intellectual, creative activities are met;
Third, the requirements for taxes and fees (mandatory payments) are met;
Fourth, all other requirements are met.
The requirements of one queue are met in proportion to the amount of claims belonging to each creditor of this queue.
If the liquidation commission refuses to satisfy the creditor’s claims or evades their consideration, the creditor has the right to apply to the court with a claim to the liquidation commission until the liquidation balance is approved. According to the court’s decision, the creditor’s claims can be satisfied at the expense of the property left after the liquidation of the legal entity.
The creditor’s claims, which are declared after the expiration of the deadline set by the liquidation commission for their presentation, are satisfied with the property of the liquidated legal entity, which was left after meeting the creditors’ claims, declared in a timely manner.
The claims of creditors who are not recognized by the liquidation commission, if the creditor within a month after receiving notification of the full or partial refusal to recognize its claims, have not applied to the court, the claims, which the court refused, as well as the requirements that are not satisfied due to the lack of property of the liquidated legal entity, are considered to be repaid.
For business companies, money belonging to the society, including the proceeds from the sale of its property during liquidation, after calculations on the pay of persons working on the terms of employment, and fulfillment of obligations to the budget, banks, owners of bonds issued by the society and other creditors, is distributed among the members of the society in accordance with the terms and conditions provided by the House Of Commons and Foundation Documents Act, within 6 months after the publication of the information.
The property, which has been donated to the public for use by the participants, is returned in kind without remuneration.
In the event of disputes over the payment of a public debt, its money cannot be distributed among the parties until the dispute is resolved or until the creditors receive the appropriate guarantees.
In the case of insufficient amount of money liquidated legal entity, in order to satisfy the requirements of creditors, the liquidation commission carries out the sale of the property of the legal entity.
“zero” liquidation balance
The liquidation balance is drawn up by the liquidation commission also after the repayment of the company’s debts. It should not contain information on receivables and payables.
Consequently, the liquidation balance is drawn up by the commission after the settlements with the creditors have been completed. It reflects the assets (property) left over from settlements with all creditors. This balance must be approved by the members of the legal entity or the body that has decided to liquidate the legal entity.
The property of the legal entity, which remains after meeting the creditors’ demands, is transferred to its participants, unless otherwise established by the founding documents or the law. For example, pp. 7.11.11 The Profit Taxation Act stipulates that, in the event of liquidation of a non-profit organization, its assets must be transferred to another non-profit organization of the relevant type or credited to the budget revenue.
Jurlitz loses his rights and is declared liquidated from the day of the recording of its termination in the EGR.
The concept of “zero” liquidation balance is very controversial, as some legislation stipulates that the property left after the creditors’ claims is used at the direction of the owner or transferred to the participants (founders). Consequently, the liquidation balance may contain some assets and liabilities and, of course, it does not always have to be “zero”.
Dismissal of employees in liquidation of the enterprise
In the voluntary liquidation of the enterprise, all issues should be decided by the owner, including the payment of persons who will be involved in the liquidation process. The owner of the company with members of the liquidation commission may have:
Employment relations (if liquidation is entrusted to the company’s management body or manager);
Civil-legal relations (in other cases).
If the liquidation is carried out by the company’s management body or manager, the liquidation procedure will be carried out within their labour functions. That is, they will continue to work within the labor relations that have already developed, until the complete end of the liquidation procedure.
This option has significant drawbacks. First, the salary paid (in this case, the remuneration paid to the members of the liquidation commission) is subject to taxation on all types of taxes and fees. Secondly, there is a need to accrue payables (including taxes and fees), and therefore, the company is not able to deregister with the regulatory authorities until the liquidation procedure is over.
Pay for the services of members of the liquidation commission will have in advance in the form of an advance under a civil-legal contract or within the scope of the employment contract (with the accrual of all taxes and fees). However, in such a situation it is difficult to predict the period of the commission’s work, and hence the amount of remuneration. Consequently, members of the liquidation commission should know in advance how and to what extent they will be paid for this type of work.
The possibility of termination of the employment contract concluded indefinitely, as well as the fixed-term employment contract before the end of its validity is provided for by p. 1 p. 40 CPOT of Ukraine in case of changes in the organization of production and labor. In this paragraph, changes in the organization of production and labor are understood and the liquidation of the enterprise.
Dismissal of employees, according to p.1. Article 40 of the CPOT of Ukraine is the termination of the employment contract at the initiative of the owner or the authority authorized by him. Therefore, such dismissal should be carried out in accordance with the relevant guarantees, rules and order established by Ukrainian law.
During the liquidation of the enterprise, the rules of article 1 of Article 40 of the CPOT of Ukraine can be applied even when a new enterprise is formed at the same time after the termination of its activities. In these cases, the employee is not entitled to demand his reinstatement at work in the newly formed enterprise, unless he has been transferred there in due course.
Article 49-2 of the CPOT of Ukraine stipulates that the impending dismissal of an employee should be personally warned no later than 2 months.
This article does not require written registration. However, in order to prevent possible disputes about the very fact of warning of dismissal or its contents, it is advisable to do so in writing or to familiarize the employee with it under the mural. If the employee is absent from work, he can be given a warning on the place where he is located .
During the period of warning of subsequent dismissal, the employee must perform his duties, adhere to the rules of internal labor.
The administration does not prohibit the termination of the employment contract with the employee on other grounds during the period of the warning of dismissal.
Current legislation does not exclude from the period of warning an employee about the impending dismissal of his time on leave or the period of temporary incapacity.
In the event of termination of the employment contract on the grounds specified in p.1 p.1 p.1 p. 40 10 000 of Ukraine, the employee, in accordance with Article 44 of the CPOT of Ukraine, is paid a severance pay of at least the average monthly earnings. At the same time, in accordance with Article 116 of the CPOT of Ukraine, the payment of all the sums owed to the employee from the enterprise is made on the day of dismissal.
If the employee did not work on the day of the dismissal, the amounts must be paid no later than the next day after the payment requirement has been made to them.
According to Article 47 of the CPOT of Ukraine, the owner or the authority authorized by them is obliged to give the employee a properly issued work book and a copy of the order to leave his job on the day of dismissal.
According to Article 233 of the CPOT of Ukraine, in case of violation of the law on pay, the employee has the right to apply to the court for the recovery of the proper wages without restriction of any period. Consequently, there is no statute of limitations for unpaid wages and there is no right to write off the debt.
Calculations with participants
After settlements with creditors in the company, it is possible to have situations when:
The value of the property is sufficient to repay the debt owed to the founders on contributions to the share capital;
The value of the property is not sufficient to repay the debt owed to the founders on the contributions to the share capital;
– The value of the property exceeds the debt owed to the founders on contributions to the share capital.
Since the property left after meeting the requirements of all creditors of the liquidated enterprise is transferred to its founders, unless otherwise established by the founding documents of the legal entity or the law, the calculations with the participants is the final stage of liquidation of the enterprise.
The property of the private liquidated enterprise is transferred to the owner or used on his behalf.
The property of the collective enterprise is distributed among the members (shareholders) of the company in accordance with the Act on