The liquidation of a company is a process that affects the interests of a business, its partners, the government, and the company’s employees. In Belarus, as in other countries, the reasons for liquidation can differ, from economic difficulties and changes in the market situation to strategic decisions of the owners. In this article, we will look at the procedure for liquidating companies in Belarus, the main stages, the necessary documents, and the key aspects that should be considered when deciding to close a business. Understanding this process’s nuances is essential to minimize risks and avoid possible legal consequences for the company’s owners.
What does the Liquidation of a Company Mean
A company is considered liquidated after it has been excluded from the Unified State Register of Legal Entities and Individual Entrepreneurs. Recall that during state registration, a record of the company’s registration is made in the Unified State Register of Legal Entities, and from that moment on, the company can legally operate.
You can check the company’s status (operating, in the process of liquidation, or liquidated) on the Unified State Register of Legal Entities website. https://egr.gov.by/egrn/index .jsp?content=Find.
Liquidation is closing a company: selling property, repaying debts, fulfilling obligations, dismissing employees, and transferring documents to the archive.
The liquidation process requires legal support and proper paperwork.
Who Can Initiate the Liquidation of the Company
Both government agencies and business owners can initiate the company’s liquidation procedure. Sometimes, liquidation occurs based on the government agency’s decision. For example, if a company does not operate for 24 consecutive months, it may be liquidated, even if the owners have not made the appropriate decision. In turn, the owners have the right to liquidate the company without explaining the reasons for their decision.
When are the Owners Required to Begin Liquidation of the Company
The state requires the owners to liquidate the company in the following cases:
1. The company has been inactive for 24 consecutive months.
2. The liquidated company is the sole founder of another company.
3. According to the results of the second and subsequent financial years, the company’s authorized capital is less than the minimum possible determined by the state.
When the Owners Cannot Initiate the Liquidation of the Company
The government has also identified cases where business owners cannot liquidate a company:
- When the company was included in the inspection plan by the regulatory authorities. Such a plan is usually drawn up for a year and posted on the website of the State Control Committee. https://kgk.gov.by/ru/pvpminsk-ru/. The company cannot be liquidated until the audit is completed.
- When a company is in arrears in its obligations to creditors (government, business partners, employees), it must file for bankruptcy.
The Timing of the Company’s Liquidation
The liquidation process is limited in time. The state’s requirements set the deadlines for liquidation.
The term of liquidation of the company within 9 months is set by the company’s body, which decides on liquidation by its powers or the company’s owner. Nine months start from the day the decision on liquidation is made.
The management body that decided to liquidate or the company’s owner may extend the liquidation period to 12 months.
The procedure for the Liquidation of the Company by the Decision of the Owner
The liquidation of a company in Belarus on the owner’s initiative is a process that can be represented as the sequential execution of several steps. Below is a detailed step-by-step process of liquidating a Belarus company on the owner’s initiative.
Step 1. Deciding on liquidation
The first and fundamental step is the official decision to liquidate the company. This decision is made by the company’s owner or the management body authorized by the charter to make such decisions. The solution must specify:
- About the beginning of the liquidation of the company.
- The composition of the liquidation commission or liquidator indicates their powers.
- The chairman, if a liquidation commission is created. The chairman is usually appointed by the company’s owner or head, but another person must be appointed chairman when the company has debts.
- Terms and procedure of liquidation.
When the liquidation commission (liquidator) is appointed, it is given all the powers to manage the company’s affairs. This means that the liquidation commission (liquidator) represents the company’s interests in courts and other institutions.
After the decision on liquidation, the company can only make transactions related to liquidation.
Step 2. Notification of the registration authority
The relevant registration authority must be notified within 10 working days of the decision on liquidation. The following documents are submitted for this purpose:
- Application for liquidation of the prescribed form.
- A copy of the liquidation decision.
- A document confirming the legal status of the founders if they are foreign organizations.
- A document on payment for the publication of the liquidation on the website of the Justice of Belarus magazine and in the physical magazine itself.
After receiving the notification, the registering authority makes a record of the commencement of the liquidation procedure in the Unified State Register of Legal Entities and Individual Entrepreneurs.
Step 3. Publication of liquidation information
After notifying the registering authority, information about the company’s liquidation must be published. The registration authority handles this. Information about the liquidation is posted on the Justice of Belarus magazine website and should contain information on the procedure and timing of creditors’ claims. The deadline for creditors to file claims may not be less than two months from publication date.
After the information about the liquidation is published on the journal’s website, it is published by the physical magazine.
Step 4. Audit
This step is not mandatory. An audit during liquidation is a voluntary decision of the liquidation commission (liquidator). Often, such an audit replaces the inspections of the tax inspectorate, customs, and Belgosstrakh during liquidation.
These government agencies usually accept the audit results and only analyze the company’s activities.
Step 5. Notification of creditors and employees
The Liquidation Commission is obliged in relation to:
- Creditors:
Notify all known creditors in writing of the commencement of the liquidation procedure and accept their demands. Creditors must submit their claims within the prescribed period.
- Employees:
Notify employees in writing no later than two months before the expected date of dismissal of their upcoming dismissal in connection with the company’s liquidation. At the same time, employees are paid compensation and severance payments established by law—at least three average monthly earnings. During the period after the warning, employees may resign not in connection with the liquidation of the company but at their request.
Step 6. Inventory and valuation of property
The liquidation commission conducts a complete inventory of the company’s assets, including:
- Fixed assets.
- Inventory items.
- Accounts receivable.
An independent assessment of the property is carried out if necessary to determine its market value. This is especially important if the property is to be sold to satisfy creditors’ claims.
Step 7. Drawing up an interim liquidation balance
After the deadline for creditors to file claims expires, the liquidation commission or the liquidator draws up an interim liquidation balance sheet. It includes:
- Information about the composition of the company’s assets.
- A list of creditors’ claims with an indication of the amounts.
- The results of the review of these requirements.
The interim balance is approved by the body that decided on liquidation.
Step 8. Settlements with creditors
Based on the approved interim liquidation balance sheet, the liquidation commission performs settlements with creditors in the order prescribed by law:
1. First stage:
Meeting citizens’ demands to whom the company is responsible for causing harm to life or health.
2. Second stage:
Severance payments and employee compensation, as well as royalties.
3. Third stage:
Calculations for mandatory payments to the budget and extra-budgetary funds.
4. Fourth stage:
Settlements with other creditors by legislation.
If the company does not have enough funds to meet all the requirements, the liquidation commission will sell the company’s property.
Step 9. Drawing up the final liquidation balance
After completing settlements with creditors, a liquidation balance is drawn up, which includes, in particular, information about:
- The remaining assets of the company.
- The completeness of satisfaction of creditors’ claims.
The liquidation balance is approved by the body that decided on liquidation. If, after all the calculations, the company has property left, it is transferred to its owners.
Step 10. Transfer of documents to the archive
The company’s internal documents are archived, especially those confirming the length of service and remuneration of employees, accounting records, contracts, etc.
Step 11. Transfer of documents to the registration authority
After approval of the final liquidation balance, the liquidation commission submits the following set of documents to the registration authority (the executive committee at the place of registration of the company):
- A statement on the completion of liquidation.
- The final liquidation balance.
- In parallel with the work of the liquidation commission or the liquidator, the registering authority notifies the state authorities in which the company was registered about the liquidation. Accordingly, these authorities are sent to the registration authority.:
- A certificate from the tax authorities on debt’s absence (presence).
- A certificate from the Social Protection Fund.
- A certificate from Belgosstrakh.
The registration authority also sends a request to the archive for the submission of company documents.
Step 12. Exclusion of a company from the Unified State Register
The registration authority reviews the submitted documents and, if they meet the requirements, makes an entry on the exclusion of the company from the Unified State Register of Legal Entities and Individual Entrepreneurs.
To make such an entry, the documents of the liquidation commission (liquidator) must be drawn up in accordance with the state’s requirements, and the company must have no debts to creditors, including to the state.
After recording its liquidation in the Unified State Register of Legal Entities, the company is officially considered liquidated, and all its obligations are terminated.
Conclusion
The liquidation of a company in Belarus is a multi-step process that requires strict compliance with legal regulations. The owner needs to consider not only legal but also financial, tax, and personnel aspects.
The proper organization of liquidation depends on the timely closure of all obligations to creditors, employees, and government agencies. Mistakes or late fulfillment of requirements can lead to fines, administrative liability, and delays in the process.
To avoid possible problems, it is essential to prepare all the necessary documents in advance, conduct an inventory of property, settle debts, and ensure proper interaction with government agencies. In complex cases, it is recommended that professional lawyers be contacted, who will help carry out the liquidation procedure by the legislation.
If all legal requirements are met and the established procedure is strictly followed, the company’s liquidation will take place quickly and without unnecessary complications, allowing the owners to complete the organization’s legal activities.
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