Nowadays, you won’t surprise anyone with your own business; almost everyone can start it. But, unfortunately, a newly started business is not always successful. It is no secret to anyone that for every open organization for statistics there are two closed ones. It’s good if you managed to say goodbye to a non-profitable business, having previously paid off all obligations, but this does not always happen. What does a business owner expect if there are unpaid debts? Today in the article we will consider this problem with respect to the most common form of ownership in the Russian Federation - Limited Liability Company. What is the responsibility of the founders and directors of the LLC?
General Provisions
Often, the form of ownership of an LLC is chosen by business owners due to their apparent “simplification” of financial obligations. In our country, the vast majority of organizations are opened by one person, and most often the responsibilities of both the chief manager and an accountant are laid on him. People prefer society to the opening of individual entrepreneurship, because the entrepreneur covers the obligations for debts arising in the course of his activities with all personal property, while the owner of the company - exclusively in the limit of the capital indicated by the statutory documents. But is this really the case, or is it not so simple?
Due to the fact that many people use the ease of owning society not for legitimate purposes, the state has taken the necessary measures to stop this. Since July 2017, LLC obligations are transferred to its participants and officers under certain conditions. This is regulated by federal law and aims to satisfy the rights of creditors and their financial security. Under what circumstances is this possible? Let's consider everything in order.
When is accountability possible?
According to article 56 of the Civil Code, neither the founders nor the director are truly responsible for the organization’s affairs; it acts independently in accordance with all the rules of a legal entity. Many are guided by this provision and try to use it for their mercantile purposes. However, this state of affairs is valid only in the case when the society is functioning. If the legal entity no longer exists, the circumstances change. That is, in case of bankruptcy of the company, the founders and the director of the LLC become liable in those situations where it is proved that the collapse occurred through their fault and due to their incorrect actions. If this state of affairs really took place, it would be rather difficult to justify hapless businessmen.
Who may need to prosecute the director of the LLC or its shareholders? Clear business - to creditors, sponsors, trustees, deceived by such actions and having lost money. They will do this in the manner prescribed by law. Unfortunately, the number of such processes is growing every day.
Intentional bankruptcy
Artificial bankruptcy is a very common practice. Unscrupulous business owners resort to it in order to hide from financial obligations that arose before them. But deliberate incapacity has always been and will be unlawful from the point of view of state bodies, because not only sponsors, but ordinary citizens who are among the clients or employees of such a company may suffer from such actions.
For such acts, of course, an appropriate punishment is provided, which varies depending on the severity of the consequences. It is regulated by article of the Criminal Law No. 196.Under this law, the offender will be punished by fines (within two hundred to five hundred thousand rubles) to imprisonment for a period of up to six years. Now it’s clear what responsibility the director of the LLC has in case of closure of the enterprise.
There are also administrative obligations. They occur in cases where the damage is insignificant and is regulated by article 14.12 of the Administrative Code. In such cases, the director will be able to repay the guilt by paying a fine of up to ten thousand rubles.
The liability of the director of the LLC and business owners for debts arising under such circumstances is increasingly being considered in the courts. Intentional bankruptcy grounds can be easily identified by knowingly unprofitable transactions, cases of alienation of property immediately before the end of the activity and other decisions that entailed the complete impossibility of paying off debts.
Obligations of the appointed CEO
If the enterprise is headed by an appointed general director who is not part of the owners, part of the responsibility for the actions and penalties of the enterprise lies with him as well. Given the 44th article of the law on a limited liability company, the manager assumes the share of obligations that arose during the course of his work.
The liability of the general director of the LLC occurs if:
- He signed contracts in violation of the rights of society, which is why it incurred losses, that is, acted on the basis of its own interests.
- The employee hid the details of the transactions concluded from the owners.
- I did not inform the founders if such a condition was spelled out in the charter.
- He did not try to obtain information crucial for concluding a contract, as a result of which the company was deceived by counterparties.
- He did not take into account the provisions of the charter known to him when signing agreements that were important for the organization.
- Forged or stole company documents.
In such situations, business owners can file a lawsuit against the hired manager and hold the director of the LLC responsible. However, if he can provide evidence that the owners limited him in making decisions, then he can be released from obligations.
Obligations of the founders of the company
In the event that the organization is managed by its founder, it will not be possible to get rid of responsibility in any way, he is obliged to pay off all the debts that have formed. Responsibility of an individual, as mentioned above, comes after the bankruptcy of the company. Another condition is that the connection between the actions of the owner and the financial collapse must be proven, that is, confirmation that there was a deliberate bankruptcy.
Also, the responsibility of the general director of the LLC and its founders may be administrative in nature. Any unlawful actions during the liquidation, whether it is a change in the composition of the participants on the eve of the crisis or the appointment of a nominee to the post of leader, will be equated to offenses for which the perpetrators will bear administrative responsibility.
Nonetheless, the most frequent form of attracting debt from negligent businessmen since 2017 is subsidiary liability.
Subsidiary liabilities
The subsidiary liability of the founder and director of the LLC is also called additional and arises on the basis of agreements or letters of the law. Individuals may be involved in such obligations, who will already be responsible by their own resources for the organization's failure to fulfill its obligations to creditors. Such a guarantee was introduced relatively recently and serves to resolve disputes related to sponsors.
Responsibility of the director of the LLC and business owners can be contractual and non-contractual.The first is based on direct agreements and occurs as a result of evading duties. The second is dictated by laws and occurs due to the organization’s lack of sufficient funds to pay off penalties. To attract non-contractual liability, credit organizations will have to prove the involvement of an individual in the impossibility of paying off a debt by an enterprise.
Affected by the subsidiary liability of the director of the LLC, its founders, as well as all persons who had an influence on the decision-making process regarding the company within three years before liquidation. Such individuals or legal entities may not be directly related to the company and witness testimony is sufficient for their involvement in the trial. In judicial practice, persons who have an influence on the course of business of an enterprise are considered even more often than managers themselves.
Necessary conditions for bringing to subsidiary liability
The subsidiary liability of the director of the debts of the LLC, as well as its founders and controlling persons, occurs under a combination of certain conditions:
- The company must be declared complete bankrupt.
- The organization’s assets do not cover existing debts.
- Proved guilt of controlling persons in the bankruptcy of the company.
- An accurate calculation of the damage was submitted to the courts.
- Members of the company did not contact the regulatory authorities when they realized that they could not cover the debt, or did deliberately inaction, did not submit reports to the regulatory authorities, and did not contact for a long time.
Procedure for bringing to subsidiary liability
The prosecution of the former director of the LLC or its participants occurs in the following order:
- The company is declared bankrupt.
- The assets of the organization are distributed to pay off debts.
- The amount of unliquidated obligations resulting from a shortage of assets is determined.
- It is proved in court that insufficient funds arose intentionally.
- A court decision is made either in favor of the creditors or in favor of the accused.
What responsibility does the director of the LLC and its participants bear? The one that the court will appoint. Obligations are not limited to the authorized capital, that is, all guilty parties will be paid by their own means and values (of course, excluding from this list the only living space of the culprit, which in accordance with the rules of the law cannot be removed). Partial obligations relate only to the legal entity itself, while individuals participating in the course of the enterprise are treated as individual entrepreneurs with respect to arising debts. So to refer to the limited liability of the enterprise in no way succeed.
Criminal liability
What could be the reason for bringing the criminal liability of the director of the LLC and its founders? It all depends on the scale of the committed guilty acts. These are mainly the following unlawful acts:
- Deliberate concealment of the organization’s assets and property values, as well as falsification of the results of their cost assessment.
- Illegal disposition of the property of society, its material goods.
- Unreasonable repayment of debts to creditors.
- Materially inadequate approval of claims from borrowers.
- Deliberate signing of contracts leading to a loss-making company.
- Tax evasion.
- Illegal issue of enterprise securities.
- Illegal transfer of money in foreign currencies and tax evasion.
A separate item is the deliberate bankruptcy of the enterprise. Such actions, proven in court, are regulated by article 196 of the Criminal Law.According to this law, as noted above, the offender will face punishment in the form of penalties (from 200 to 500 thousand rubles) or imprisonment for a period of up to 6 years.
The liability of the director and business owners for debts arising under such circumstances is increasingly being considered in the courts. Intentional bankruptcy grounds can easily be identified by knowingly unprofitable transactions, cases of alienation of property immediately before the end of the activity and other decisions that entailed the complete impossibility of paying off debts.
Conclusion
Based on the foregoing, the design of the legal form of a Limited Liability Company does not limit the obligations of members of the company, general director, chief accountant and other persons controlling the organization. In the event of bankruptcy of a company, all of those listed in court are responsible for its debts. Including businessmen who prefer opening an LLC to individual entrepreneurship, are liable for arising debts with all their property. Particular attention is paid to the responsibility of the director of the LLC and controlling persons. Therefore, in order to protect themselves from all possible problems and lawsuits, equity holders and officials must strictly adhere to the legislation of the Russian Federation.