Liquidation of a Legal Entity

According to Article 57 of the Civil Code of the Republic of Belarus (hereinafter - the Civil Code), the liquidation of a legal entity entails the termination of its activity without any transfer of rights and obligations in succession to any other entities, unless otherwise provided by acts of legislation.

The liquidation of a legal entity and an individual entrepreneur is carried out in accordance with the Civil Code of the Republic of Belarus, the Regulation on the liquidation (termination of activity) of legal entities, approved by Decree of the President of the Republic of Belarus dated January 16, 2009 No. 1 (as amended by Decree of the President of the Republic of Belarus dated January 24, 2013 No. 2), and other acts of legislation.

A legal entity can be closed down by a decision:

1.      Of the owner of the legal entity (founders, participants) or the body of a legal entity authorized by the constituent documents;

2.      Of a court in case of/when:

·        a decision of liquidation hasn’t been made by authorized people as the period for which this legal entity was created expired; the goal of entity has been reached; violation of the procedure of the formation of the charted fund established by law, invalidation of the state registration of a legal entity by the court.

·        a legal entity carries out activities without a special permission (license), or activities prohibited by acts of legislation, or in case of other repeated or gross violations of acts of legislation;

·        economic insolvency (bankruptcy) of a legal entity;

·        decrease in the value of the net assets of a legal entity to which the law establishes the minimum size of a charted fund, according to the results of the second and each subsequent financial year, below the minimum size of the authorized capital determined by law;

·        violation of the procedure and terms of liquidation established by law;

·        other cases provided for by the Civil Code and other acts of legislation.

3.      Of other bodies in cases established by acts of legislation (for example, by decision of the registering authority due to the lack of implementation of business activity for 24 consecutive months).

Procedure of liquidation of a legal entity

Let’s look at a step action plan of liquidation decided by owners.

1. Making a decision. The general meeting of participants in a legal entity or the sole participant in a legal entity makes a decision on the liquidation of a legal entity. Such a decision should contain information about the appointed liquidator (liquidation commission), the procedure and terms of liquidation.

2. Notification of the registration authority. Within 10 days from the moment of appointment of the liquidator or the head of the liquidation commission, the registering body should be notified about the beginning of the liquidation procedure.

3. Publication of the information on the beginning of the liquidation procedure, notification of interested parties. Information that the legal entity is in the process of liquidation, information about the procedure and deadline for filing claims by its creditors are posted on the Internet on the official website of the legal scientific and practical journal “Justice of Belarus” with subsequent publication in the appendix to the specified journal. Information about the beginning of the liquidation procedure is also sent to interested parties (creditors, debtors, state bodies, etc.).

4. Drawing up an interim liquidation balance sheet. After the beginning of the liquidation procedure, the liquidator or the liquidation commission should conduct an asset and liability recognition of a legal entity. Based on the results of recognition, an interim liquidation balance sheet is prepared, and then its approval by the owner of a legal entity or by a body that made the decision on liquidation. Within two days, an interim balance is provided to the tax authority.

5. Creditors' claims acceptance and consideration, sale of property of a legal entity. Creditors' claims are made in accordance to the law, within the time period determined by the liquidator in the published announcement. Based on the results of the consideration of the claim, the liquidator either includes it in the register of creditors' claims for subsequent satisfaction or refuses and indicates the reason of refusal. Based on the results of the inventory, the property identified by the liquidator is sold in accordance to the law. Claims of creditors are repaid by selling the property.

6. Drawing up a liquidation balance sheet. After all employees have been laid off, the property has been sold and all claims of creditors have been settled; the liquidator re-conducts an asset and liability recognition, which results in the liquidation balance sheet. This balance should be submitted to the tax authority no later than two days from the date of its approval. If any assets remain, they are transferred to the founders in the due course.

7. File of documents. Documents that remained with the company should be filed.

8. Striking off the companies register. After the liquidation, the liquidator should submit to the registering authority the final liquidation balance sheet and certificate of a state registration to make an entry in the Unified State Register of Legal Entities and Individual Entrepreneurs on the exclusion of a legal entity.