Termination of activity of a legal entity. Reorganization, liquidation, bankruptcy

Termination of the business of a legal entity involves its retirement from the relevant civil law relations. Information about the subject is excluded from the register. Let us further consider the procedure for terminating the activities of legal entities.

Relevance of the issue

Termination legal activities persons are regulated by law. The procedure involves several stages, during which the analysis of work is carried out, documentation is drawn up, and the issue of paying off obligations if the subject had them is resolved. The existence of legal entities is not limited to time frames. However, in some cases there is a need to complete the work. So, the liquidation of the enterprise can be caused by insolvency, the inability to repay obligations in a timely manner. In such cases, the procedure is carried out through the court.

Grounds for termination of activity of a legal entity

A company shutdown procedure may be voluntary or mandatory. In the first case, the basis will be the decision of the legal entity or the founders. The compulsory procedure begins by order of the court. Termination of activity of a legal entity, carried out by decision of the founders or the authorized body of the company, may be due to:

1. The expiration of the period for which the company was formed.
2. Achieving the goal set when creating the company.
3. A decrease or increase in the number of members lower or higher than the number established in the charter or law.
4. Invalidation of the registration of an organization by a court due to fatal violations of legal acts committed during its formation.
5. Insolvency.
6. Reducing the price of net assets to below the minimum authorized capital.
7. Other circumstances.

The decision of the court is taken if:

• A violation of the law during the functioning of the organization has been identified.
• Activities were carried out that are prohibited by the norms, or not provided for in the charter, etc.

Methods for terminating a legal entity

The law defines various procedures, as a result of which the company completes its work. The legislation provides for the termination of a legal entity by:

1. Reorganization. This option provides for the completion of one company and the creation of new ones on its basis. All responsibilities and rights of the original organization in this case pass to the successors.
2. Liquidation. In this case, the existing company completes its work without creating other firms. The liquidation of the enterprise involves the full repayment of existing obligations.

Nuances

As mentioned above, the termination of the legal entity may be carried out by decision of the authorized body or meeting of the founders. It depends on the legal type of company. In LLC and JSC, this issue is included in the competence of the general meeting. Some types of termination of activities of a legal entity involve obtaining the approval of the State Committee for Antimonopoly Policy. Such cases, in particular, include transformation, accession and merger. Normative acts regulating competition and monopolies allow for the forced termination of a legal entity in the form of separation and separation.

Such a decision is made by the State Committee and its territorial divisions. Companies that have received an appropriate order must complete the necessary procedures on time. If the company does not do this, the State Committee sends a statement of claim to terminate the activities of the legal entity to the court. In this case, an external manager will be appointed, who is entrusted with carrying out the established activities. The constituent documentation of the newly formed companies, the separation balance sheet are agreed and approved by the court and then registered according to the general rules.

GK Norms

One of the common reasons for terminating the activities of legal entities is bankruptcy. The procedure is regulated by Art. 61-64 GK. A recognition of the company insolvent entails its liquidation. The procedure includes the following steps:

1. Placement in official publications of information on the beginning of the process and the period during which lenders can declare their claims. It should not be less than two months from the date of publication. At the same time, a liquidation commission is appointed, which deals with the identification of all creditors, sends them written notifications, and takes measures aimed at obtaining receivables.
2. Formation of an intermediate balance. It is compiled at the end of the period provided to creditors for the statement of claim. The balance sheet contains data on the property of the company, provides a list of claims of contractors, the results of their consideration. This document must be approved by the founders or the authorized body of the company in agreement with the institution that carries out state registration of firms.
3. Compilation liquidation balance sheet. It is formed after all settlements with creditors are completed.
4. Making an entry in the register on the liquidation of the enterprise.

Features of settlements with creditors

If the enterprise does not have enough funds to pay off its obligations, the liquidation commission organizes the sale of its property at public auction. Payment of the proceeds from the sale is carried out according to the sequence determined by Art. 64 Civil Code, according to the interim balance sheet from the date of its approval. The exception is lenders of the 5th stage. They are paid at the end of the month from the date of approval of the balance sheet.

Exceptions

The above provisions do not apply to state-owned enterprises and institutions. In case of insufficient funds from these entities, obligations are repaid in court at the expense of the property of the owner. The remaining objects after settlements are transferred to the participants of the company, who have property rights to them or obligations in relation to the company, unless otherwise provided by regulatory acts or constituent documents.

Forms of completion of activities

Reorganization of a legal entity can be carried out by:

1. Mergers. In this case, several companies are combined into one. According to the deed of transfer, she receives the duties and rights of the original firms.
2. Affiliations. In this case, the "absorption" of one enterprise by another occurs. Obligations and rights also pass to the latter under a deed of transfer.
3. Separation. It involves the formation on the basis of one legal entity of several independent organizations. The duties and rights of the original firm are transferred to them in accordance with the balance sheet.
4. Allocations. In this case, the organization is separated from the existing company. In this case, the original firm is retained. Obligations and rights are transferred to the allocated enterprise according to the separation balance sheet.
5. Transformations. It involves a change in the legal type of company. The transfer of rights and obligations is carried out according to the deed of transfer.

Reorganization is recognized as completed after state registration of newly formed legal entities.This rule does not apply to the accession procedure. It is considered completed from the moment of inclusion in the State Register of the completion of the acquired company.

Documents

Obligations and rights are transferred to newly formed companies on the basis of a deed of transfer or balance sheet. These documents must contain provisions regarding succession. They include information on all rolling liabilities, which are disputed, including to existing creditors, as well as about all debtors. The act or balance sheet is approved by those who made the decision to conduct the reorganization. Documents are submitted to the body authorized to conduct state registration. In case of impossibility to determine the successor of the newly formed enterprises arises joint responsibility to creditors.

State registration

Only after its holding the company will be recognized as reorganized. The rules of state registration depend on the form of the procedure. For registration of a company reorganized through a merger, the authorized body shall provide:

1. Constituent documentation of all entities involved in the process.
2. Minutes from meetings (held separately in each company and joint).
3. Merger agreement and deed of transfer.
4. Confirmation of the publication of the start of the procedure in official publications.
5. Proof of written notices to lenders.
6. Copies of company balance sheets.
7. Name of the newly formed company.
8. The characteristic of the formation of capital of the company.
9. Passport data of the head of the emerging company.
10. The legal address of the new enterprise.

Additionally (if necessary) a document is provided confirming the approval or notification of the antimonopoly authority. During the reorganization by way of merger, state registration is carried out according to the rules provided for the registration of changes that are made to the constituent documentation.

Specifics of Succession

During the reorganization, the scope of duties and rights that go over the balance sheet or act is of particular importance. Succession may be:

1. Partial. At the same time, the transfer of duties and rights is carried out both to several and to one subject. This situation occurs when highlighting.
2. Complete with the transfer of duties and rights to one successor. This situation takes place during transformation, merger and merger.
3. Complete with the transfer of duties and rights to several entities in the respective shares. Such a succession is characteristic of separation.

Moment of transition

The question of its definition arises from almost all reorganized entities, as well as from their creditors. The latter, in particular, are concerned about the process of repayment of obligations. The previous Civil Code indicated that the transfer of property is carried out on the day when the deed of transfer is signed or the separation balance sheet is approved. The rules of the new Code exclude this approach. A certain period passes between the adoption of the decision on reorganization by the founders or the authorized body. In Art. 57 of the Civil Code, the moment at which the entity is considered to be reorganized is clearly established. In the process of separation, spin-off, merger, transformation, it is the date of state registration of newly created companies. Succession is not based on any contract. It acts as a consequence of the reorganization. It follows from this that the fact of state registration will be crucial in determining the moment of transfer of duties and rights. Until its end, succession is impossible, since the receiving entity has not yet been created. The situation is similar with accession. In this case, the reorganization is also considered completed after the inclusion of the corresponding entry in the State Register on the termination of work of the affiliated entity.

Conclusion

To prevent violations during the execution of succession during the reorganization, a special rule is provided for in the Civil Code. In accordance with it, in the absence in the separation balance sheet or the act on the transfer of provisions on the transfer of duties and rights, state registration of newly formed companies is not carried out. If uncertainty arises in resolving the issue of succession, the legislative provision on joint and several liability of firms applies. It provides additional guarantees for creditors and obliges legal entities to fulfill their obligations in any case.