December 14, 2020
Procedure for Voluntary Liquidation of a Legal Entity in Uzbekistan
Decree of the President of the Republic of Uzbekistan dated 07.06.2019 No. UP-5739 “On Measures to Simplify the Procedure for Liquidation of Business Entities”;
Appendix No. 1 to the RCM of the Republic of Uzbekistan dated 21.08.2019 No. 704 “Regulations on the Procedure for Voluntary Liquidation of Business Entities and Termination of Their Activities”.
When establishing a company, entrepreneurs are associated with a range of consecutive mandatory steps due to the collection and acceptance of a number of documents, as well as compliance with a number of procedures. Subsequently, in the course of the legal entity’s activity, the entrepreneur also faces a series of procedures that he is obliged to perform in accordance with legislation. Examples of such procedures include paying taxes, submitting reports, and re-registering a legal entity in the event of appropriate changes. When liquidating a legal entity, the entrepreneur will also need to face a number of mandatory steps and procedures. This article is devoted to a detailed review of the legislation of Uzbekistan on the voluntary liquidation of a legal entity. It provides step-by-step instructions for the necessary actions for voluntary liquidation.
With the entry into force of the Decree of the President of the Republic of Uzbekistan dated 07.06.2019 No. UP-5739, the procedure for voluntary liquidation of a legal entity has become much simpler. Namely, since January 1, 2020, the procedure has been introduced, according to which, in case of voluntary liquidation of business entities:
- publication of the announcement of the liquidation of a legal entity in print media is not required, data on the liquidation are posted on the official website of the center for public services (registration authority);
- if the financial and economic activity has not been carried out by the enterprise since the state registration, and it has no tax debts, the financial and economic activity is not subject to inspection;
- The maximum frequency of inspections by the tax service of the financial and economic activities of the liquidated enterprise is 3 years;
- Information about the liquidated enterprise is now available through the automated system of state registration and registration of business entities;
- Total term of voluntary liquidation may not exceed 6 months from the date of receipt by the registering body of the notification of voluntary liquidation.
Further, when reviewing the voluntary liquidation procedure, it is important to note that this procedure does not apply to:
- Banks and credit bureaus, their branches and representative offices;
- City-forming commercial organizations and equivalent commercial organizations;
- State bodies, non-governmental non-profit organizations, including their separate divisions that are legal entities, as well as representative offices and branches of international and foreign non-governmental non-profit organizations;
- Commercial organizations that have the legal signs of bankruptcy.
The decision is adopted by the founders (participants) of the commercial organization, representatives or authorized body. The decision should reflect the following:
- Information about the legal entity being liquidated (full and abbreviated name, taxpayer identification number, postal address);
- Information about the liquidator (passport details, phone number and email address);
- Place and time for receiving requests for the object being liquidated;
- Reason for liquidation.
The legal entity must appoint a liquidator, who, from the moment of appointment, will have all the powers to manage the affairs of the liquidated legal entity. The liquidator is appointed from among the founders (participants) of the commercial organization, or the founder himself appoints the liquidation Commission. In the case of an individual entrepreneur, an individual appointed as an individual entrepreneur also enjoys the powers of a liquidator.
If the liquidation Commission is responsible for the liquidation, all issues related to the management of the company’s activities are resolved by voting and decisions are made by a simple majority vote of the members of the liquidation Commission. In the event of a deadlock, the vote of the Chairman of the Commission is decisive.
The powers of the liquidator include:
- Implementation of voluntary liquidation and compliance with the interests of creditors, founders (participants) of the company and other relevant persons;
- Enforcement of enforcement documents for which the firm participates as a debtor;
- Representation of the company without a power of attorney, signing of financial, payment and settlement documents of the company;
- Issuing orders, orders and other acts that are mandatory for all employees and officials of the company;
- Other powers, if granted by the decision of the founders (participants).
The liquidator’s powers are terminated in the following cases:
- on the day when the liquidation record is entered in the register;
- if the decision is made to resume the company’s activities;
- if the company is declared bankrupt;
- if a new liquidator is appointed.
Within 3 days from the date of appointment of the liquidator, the company’s management bodies or an individual are obliged to transfer to the liquidator all documentation related to the company’s commercial activities, seals, stamps and other property of the company according to the inventory.
After making a decision on liquidation, the liquidator must submit a copy of this decision to the relevant public services Center within one business day.
In turn, after receiving the decision on liquidation, the state services Center enters information in the state register that the company is in the process of liquidation. In this way, the relevant departments and organizations are notified through a common automated system. This information is also posted on the official website of the center for public services for universal access. Within 19 working days, the enforcement Bureau and tax authorities send the liquidator an Executive document for liquidation, as well as an inspection of the financial and economic activities of the company is conducted. It is important to note that the inspection period should not exceed thirty calendar days. The inspection covers the financial and economic activities of the subject from the date of the last inspection to the date of notification of the public services Center of the decision to liquidate, but this period may not exceed three years.
The financial and economic activity of the legal entity is suspended from the moment the public services Center is notified of the liquidation. From this point on, the following taxes are no longer charged:
- land tax;
- single tax;
- wealth tax;
- tax on the use of water resources;
- penalties for all types of taxes and other mandatory payments.
Other taxes and mandatory payments are paid in accordance with the law in case of sale of property, remaining annual production and other assets of the company.
Also from the moment of notification:
- measures to secure creditors ‘ claims are canceled;
- changes and additions to the company’s constituent documents are prohibited;
- transactions can only be made within the scope of the liquidation procedure;
- the deadline for fulfilling all obligations is considered to have come.
The liquidator must also send a copy of the decision on voluntary liquidation and 2 copies with samples of signatures and seal of the liquidator to the Bank that serves the company’s main Deposit account, as well as to the Bank that has funds in the company’s foreign currency, within 1 business day after the decision is made. In addition, the liquidator must send a request to all other banks that service the company’s secondary accounts to close them and transfer the remaining funds to the main accounts.
The liquidator, after making a decision on voluntary liquidation, must conduct an inventory of the company’s assets and liabilities and draw up a register of Executive documents. Moreover, the liquidator makes calculations for all types of taxes for the period from the beginning of the year to the date of notification of the public services Center.
After the deadline for submitting claims by creditors, the liquidator draws up a draft liquidation balance sheet. It must be approved by the founders (participants) of the company.
After approval of the interim liquidation balance sheet within 5 business days, the liquidator notifies all creditors of the recognition or non-recognition of their claims and pays the creditors in the following order:
First of all, the following categories of claims are paid:
- employee claims arising from the employment contract;
- claims of citizens to whom the company is responsible for causing harm to life and health.
Second of all:
- payments to the State budget and state trust funds.
To the third stage:
- other claims.
It is important to note that creditors ‘ claims secured by collateral are covered by funds received from the sale of the pledged property. However, if these funds are insufficient, the remaining funds will be covered in the order of priority described above.
After completing settlements with creditors, paying taxes, and distributing property among the founders (participants), the liquidator draws up a draft liquidation balance sheet. It is approved by the founders (participants) of the company and submitted to the tax service. Also, the liquidator must send a request to the Bureau about the presence of outstanding documents by the firm.
The tax service, after accepting the liquidation balance sheet and in case of the absence of arrears on taxes and other mandatory payments, within one business day sends the liquidator, as well as through an automated system to the relevant public services Center, a conclusion on the absence of arrears.
Also, the Bureau, if there is no outstanding Executive document, within three working days, sends a notification to the liquidator, as well as through an automated system to the relevant public services Center about the absence of relevant outstanding Executive documents.
After receiving the conclusion from the tax service and notification from the Bureau, the liquidator applies to the Bank to close the main account. However, if the main account is seized, its closure is prohibited.
After closing the main account within three business days, the liquidator submits all accounting and other documents of the company to the state archive.
To exclude a company from the state register, the liquidator must submit the following documents to the relevant public services Center:
- Certificates from all banks on closing all accounts;
- Seals and stamps of the company;
- If available, a certificate of cancellation of issued securities;
- A certificate confirming the submission of documents to the state archive.
Within two working days after receiving these documents, the center for public services verifies compliance with all requirements and makes a record of liquidation in the state register. The decision of the public services Center is issued to the liquidator within one business day after its adoption.