The application form has been approved for excluding from the Unified State Register of Legal Entities (the “USRLE”) a legal entity classified as a small or medium entrepreneur
Pepeliaev Group advises that the Federal Tax Service has approved an application form (form р19001)Order No. ED-7-14/493@ of the Federal Tax Service dated 24 July 2023 “On approving the application form for excluding from the Unified State Register of Legal Entities a legal entity classified as a small or medium entrepreneur and on approving the requirements for completing such an application” (registered with the Russian Ministry of Justice on 29 September 2023 under No. 75392) (the “Order”).
for the “simplified liquidation” of some small or medium entrepreneurs.
This change is caused by amendments to Federal Law No. 129-FZ dated 8 August 2001 “On the state registration of legal entities and individual entrepreneurs” (“Federal Law No. 129-FZ”), namely in article 21.3 of Federal Law No. 129-FZ that entered into force on 1 July 2023.
The order the Federal Tax Service enters into force in 10 days after the date on which it was officially published, i.e. on 10 October 2023.
Please be reminded that, since 1 July 2023, certain small or medium-sized entrepreneurs are able to be liquidated according to the “simplified procedure”. To do this, the registering authority excludes the legal entity based on the relevant resolution of the entity’s members. The resolution must be signed by all members of the company and their signatures must be notarised. No notarisation is required if the application is filed in electronic format, provided that such an application is signed by enhanced qualified electronic signatures of each member.
In order to qualify for using this method of terminating its activity, the company, on the date when the resolution is adopted by its members, must comply with the following criteria:
it is a small or medium-sized entrepreneur;
it has no ownership title to real estate and transport vehicles;
it is not a VAT payer or is exempt from calculating and paying VAT;
it has no incomplete settlements with creditors from the list of those specified in article 64(1) of the Russian Civil Code; and has no arrears with regard to taxes and levies;
there is no record in the USRLE stating that the information regarding the company is incorrect;
it is not in the process of liquidation, reorganisation or exclusion from the USRLE based on a decision of the registering authority; no bankruptcy proceedings have been initiated with regard to the company;
the company has filed the application (form r19001) with the relevant registering authority according to the approved form and this application has been signed by an authorised person.
Please note that all settlements with creditors and employees must be completed by the date when the application is filed. The company must, at least one business day before it is excluded from the USRLE, perform its obligations to submit documents, financial statements and documents regarding the payment of taxes, duties and other mandatory payments under Russian legislation on taxes and levies.
When the registering authority receives an application to exclude a company from the USRLE, it publishes in the State Registration Bulletin its decision to exclude the company from the USRLE and information regarding the procedure and timelines for creditors and other persons whose rights and legitimate interests are affected in connection with the company being excluded from the USRLE to send objections to this future exclusion, specifying the address to which objections can be sent. Not later than one business day following the date of publication of this decision, information regarding the future exclusion is to be published on the official website of the registering authority.
Article 21.3 of Federal Law No. 129-FZ establishes neither an obligation to pay state duty, nor an obligation to publish information in the Federal Resource about the future exclusion of the company from the USRLE. Since there are no clarifications from competent state authorities, it is expected that there are no such obligations with regard to “simplified liquidation”.
When the three months elapse after the date when the decision to exclude the company in future from the USRLE was published, provided that no objections have been received from creditors, the registering authority excludes the company from the USRLE by making the relevant record in the register. Creditors or other persons whose rights and legitimate interests are affected in connection with such exclusion from the USRLE may challenge this exclusion within one year from the date on which they learnt or should have learnt about the infringement of their rights.
What to think about and what to do
A standard procedure for liquidating a legal entity requires a lot of time and efforts: a liquidator needs to be appointed, liquidation balance sheets must be prepared and approved, etc. Liquidation may take up to one year.
If legal entity is forcibly excluded from the USRLE, though it requires fewer actions on the part of members and company’s management bodies, an actual ban will be imposed in future on specified persons becoming a member of or a manager in other organisations. Moreover, in practice, one of the grounds for having a company forcibly excluded from the USRLE is its failure to submit the annual financial statements to the tax authorities. Therefore, good-faith companies will need to disregard this obligation for at least one year for this requirement to be applied to them.
From this point of view, the “simplified liquidation” procedure is the best option for cases when a legal entity that meets the requirements needs to be liquidated promptly, with no negative consequence for its members.
As easy as the “simplified liquidation” procedure seems, it is important to understand that its use in practice may be fraught with certain difficulties. Since there is no relevant case law regarding this newly introduced procedure and no clarifications from the competent authorities, it is impossible to predict what difficulties companies may face during this process.
Help from your adviser
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