Update on the practice of liquidation of legal entities
Update on the practice of liquidation of legal entities


Update on the practice of liquidation of legal entities


According to the  Article 59.6 of Civil Code, the general period of liquidation procedure shall not exceed one year from the date information on liquidation of the legal entity is entered to the state register of legal entities.  


In case of exceeding the period for liquidation, decision on the termination of liquidation procedure and restoration of activities of a legal entity, termination authorities of liquidator and appointment of executive body is required to be submitted by the legal entity which was on the liquidation procedure.


In practice, the above-mentioned decision is also required by the registration body for resumption of the liquidation procedure of a legal entity of which the previous liquidation procedure was terminated due to exceeding the required period of time.


According to the position of higher tax authority on the issue, the decision on the restoration of activity of legal person should be adopted when liquidation procedure of a commercial legal entity is not restarted and it continues to be functioning. On the other hand, if such entity will restart the liquidation procedures, only the documents required for initiating liquidation procedure will be introduced to the registration body.


Thus, as a practical update, it should be noted that in case of non-completion of the liquidation procedure within 1 year and application by such legal entity for resumption of the liquidation procedure, the requirement for the legal entity to resume its activities initially has been removed and replaced by the requirement for the legal entity to submit the documents required by law to begin the liquidation procedure.


Thus, the restoration of a business entity's operations as a result of non-completion of liquidation within 1 year should be distinguished from the procedure of restarting the liquidation. As so, in the second case, the procedures under the provisions of Article 60-61 of the Civil Code should be followed and documents for initiating the liquidation should be submitted. The requirement for the restoration of business activity (operations) is not applied to the legal entities which decided to restart liquidation procedures.


This procedure is approved by the written response of the higher tax authority and is practically accepted by the registration authority. Enterprises in a similar situation with the liquidation procedure may apply the above-mentioned procedure.

For legal and tax support regarding the liquidation procedure of a legal entity, please contact us via: [email protected], or 0099450 289 89 73