We are pleased to share with you the following updates related to liquidation of companies.
On 07 June 2023 the Russian parliament approved the draft law
Timing. The whole liquidation process under the new procedure will take 3 months instead of usual 7-12 months as per the existing liquidation rules;
Liquidation process is expected to be simplified for certain entities. Shareholders will need to sign and submit a single application instead of 3 applications under standard procedure. All other steps (such as notification of liquidation in mass media) will be made by the registration office.
Who is eligible?
According to the draft law, any legal entities matching all the following criteria simultaneously will be able to apply for the simplified liquidation:
Included in the register of small and medium-size enterprises;
Not paying VAT or exempt from its calculation and payment;
Not in bankruptcy and no signs of bankruptcy from the Russian law perspective;
All payments due to dismissed employees are made in full;
Settlements with creditors are made in full;
No unsettled tax and other state-related obligations;
There are no records
No real estate or vehicles owned;
Not in already launched standard liquidation reorganization or administrative exclusion from the register.
When to expect?
According to the draft law, the new provisions shall come into effect starting from 1 July 2023.
Decree of the President No. 618 dated Sep-tember 08, 2022 (“Decree 618”) introduced the obligation to get approval of the Government Commission for the control of foreign investment in the Russian Federation (the “Government Commission”) when persons from so-called “unfriendly” states
Possibility to launch liquidation without approval of the Government Commission
As of today, we see that it is practically possible to launch liquidation without approval of the Government Commission under Decree 618 in case liquidation proceeds do not exceed 10 million RUB (otherwise, approval under Decree 737 is required). We also see that there are different interpretations regarding the necessity to get approval under Decree 618, and we cannot exclude the risk that there may arise certain difficulties with launching the liquidation (due to the position of the Russian notaries and authorities), or that the Russian authorities can issue clarifications stating that the approval under Decree 618 is required in all cases. As of today, though, we have many successful cases when liquidation without approval under Decree 618 was launched with no issues. The main risk we see here is that in the middle of the liquidation the necessity of getting the approval may arise, and in that case it would be necessary to either get the approval or cancel the liquidation.
We hope that the information provided herein will be useful for you.