Liquidation - Tax International

Liquidation is a process initiated when a company violates certain legal obligations, such as prohibitions on conducting business, revocation of permits, licenses, or approvals for carrying out specific activities, etc. So, that is one way to terminate the existence of a company, and it is carried out only if the company is solvent, meaning it has enough resources to meet all its obligations.
There are two main types of liquidation:
voluntary and
preliminary liquidation.
Voluntary liquidation
This procedure is initiated when the members of a company decide to close their business, either because they no longer see value in continuing operations or they wish to continue their business through another entity. The key condition for initiating voluntary liquidation is the solvency of the company – it must have sufficient funds to settle all its obligations. After the members of the society make the decision to liquidate, the company enters the phase of paying creditors and settling all obligations. The final step in this process is making a decision to conclude the liquidation. This decision, along with the other documents prescribed by law, is submitted to the Agency for Business Registers. When all the paperwork is completed, the company is removed from the register, marking the end of its existence.
Preliminary liquidation
The Agency for Business Registers (APR) has begun the process of forced liquidation since October 2017. Forced liquidation is the process by which companies that have not fulfilled certain legal obligations are forcibly closed.
The reasons for initiating forced liquidation are as follows:
1. If a company is imposed a measure by a legally binding act: a ban on conducting activities, and the company does not initiate liquidation within 30 days from the date of the act’s legal validity; a ban on conducting registered activities, and the company does not register the deletion or change of that activity or does not initiate liquidation within 30 days from the date of the act’s legal validity; the revocation of a permit, license, or approval for conducting registered activities, and the company does not register the deletion or change of that activity or does not initiate liquidation within 30 days from the date of the act’s legal validity;
2. Within 30 days from the expiration date for which the company was established, if the company does not register an extension of its duration or does not initiate liquidation within that period;
3. A partnership, in the event of the death of a partner, remains with one partner, and none of the heirs of the deceased partner is registered as a member of the partnership within three months from the date of the final conclusion of the inheritance proceedings, or if the partnership remains with one partner for other reasons, and within three months from the date of the cessation of the partner’s status, the missing member does not join the partnership, or within that period the partnership does not change its legal form or does not initiate liquidation.
4. A limited partnership, in the event of the death of the general partner, will be left without a general partner, and if none of the heirs of the deceased general partner is registered as a member of the partnership within three months from the date of the final conclusion of the inheritance proceedings, or if the limited partnership loses its general partner or limited partner for other reasons, and within three months from the date of the cessation of membership, the missing member does not join the partnership, or during that period the partnership does not change its legal form or does not initiate liquidation;
5. If a final judgment has established the nullity of the registration of the establishment of a company in accordance with the registration law or the nullity of the founding act of the company;
6. If a final judgment orders the dissolution of a company, and the company does not initiate liquidation within 30 days from the date of the finality of the judgment;
7. The company remains without a legal or temporary representative and does not register a new one within three months from the date of the deletion of the legal or temporary representative from the register of business entities;
8. and so on.

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