Simplification of the Liquidation Process for Legal Entities of Small and Medium Businesses

On May 23, 2023, the Government submitted to the State Duma a bill designed to simplify the procedure for voluntary liquidation of small and medium businesses companies.

According to the bill, in order to terminate the company activities in a simplified manner, its shareholders must apply to the tax authority with relevant request for exclusion from the register of legal entities (EGRUL). Such application confirms that company has settled claims with all creditors and employees, as well as submitted all required tax reports (or undertakes to do so no later than 1 business day before the date of its liquidation).

The tax authority considers the application within 5 business days. A positive decision on the upcoming exclusion of a company from the Unified State Register of Legal Entities can be made if company simultaneously meets all of the following criteria:

  • Company is included in the register of small and medium businesses;
  • Company  is not a VAT payer or is exempt from paying the tax;
  • Company  has settled all claims with creditors and its employees, has no debts on mandatory payments;
  • Company  does not own real estate and vehicles;
  • Company is not in bankruptcy procedure, in liquidation or reorganization processes,  in process of exclusion from the register of legal entities by the decision of the tax authority;
  • Company has paid off tax, fees and contributions debts;
  • there is no record of unreliability of information in relation to company in the Unified State Register of Legal Entities.

After making a positive decision the tax authority conducts liquidation procedures itself, including publishing of required notification in mass media. At the same time, the deadline for submitting creditor claims remains standard – 3 months from the date of publication of the decision on the upcoming exclusion.

If no claims received during the mentioned period, the tax authority excludes the company from the Unified State Register of Legal Entities.