Simplified procedure of termination of sole trader in Ukraine
Pleasant innovations of the Law include:
- Cancellation of payment for publication of notification about termination;
- Cancellation of requirement to provide originals of charter documents for termination of a legal entity;
- Cancellation of requirement about provision of act of liquidation commission along with liquidation balance when registering liquidation of a legal entity (instead the head of liquidation commission will have to confirm the fact of all the required liquidation actions completion by means of his signature in a registration card);
- More detailed regulation of termination procedure of sole traders and powers of liquidation commission of a legal entity;
- Elimination of a number of legislation clashes related to the place of publication of notification about termination decision (from now on such publications are possible only in “Bulletin of state registration”. Publications in “Uryadovyi Kuryer” and other newspapers of governmental bodies will not be considered duly).
Provisions which extend the maximal term for provision of creditors’ demands to sole traders from 2 to 3 months as well as setting 6 month maximal term for provision of creditors’ demand to legal entities seem to be a co promise like. On the one hand such limitations will not allow to delay the termination procedure but on the other they provide quite extensive term for provision of creditors’ demands.
Provisions that set term for consideration of these demands can be called beneficial for the creditors. From now on a sole trader will have to consider the demands within 15 days and a legal entity – within 30 days since the day when the demand was received. So the creditors have real ability to appeal not only against refusal to fulfill their demands but also against delays of consideration term.
However the most important “gift” that is provided by the Law actually has a shortcoming. We are talking about an attempt to implement a principle of acquiescence into procedure of termination. It was supposed to allow registration of business entity termination without obtainment of certificates from bodies of the State Tax Service and the Pension Fund of Ukraine about absence debts related to payment of taxes, fees and/or insurance payments.
The law provides that if upon completion of all termination procedures and end of term for provision of creditors’ demands bodies of the State Tax Service and/or the Pension Fund of Ukraine do not provide certificates about absence of debts then the registration can be performed without them.
In this case registration can be obstructed only by notifications of a body of the State Tax Service or the Pension Fund of Ukraine which include objections against registration of the termination and can be sent to a state registrar prior to registration of termination.
Generally it is a nice initiative that was supposed to deal with cases related to delays of business entities termination procedure which were often caused by tax authorities with an intention to provoke provision of bribes for quick obtainment of certificates. But in practice everything is not as good as it seems. The State Tax Service and the Pension Fund of Ukraine can send notifications about objections based not only on inability of audit conduction, presence of financial obligations or debts but also on “other circumstances” under which a business entity cannot be terminated.
Moreover such objection can paralyze termination until the moment when these “circumstances” are eliminated. And therefore Business Entities will have either to appeal against actions of bodies of the State Tax Service/ Pension Fund of Ukraine along with filing the notifications to courts or to pay for “the issue to be solved”.
However there exists administrative liability of officers of the State Tax Service, the Pension Fund of Ukraine and social funds for unfounded denial of registration of Business Entity termination as well as for non-provision of certificates about absence of debts. But it is very unlikely that the state registrars that are authorized to issue administrative protocols about such violations will really do so.
However violations on the side of the State Tax Service and/or the Pension Fund of Ukraine will serve as a ground for dismissal of termination commission members based on delaying of termination procedure conduction. And it is also important due to the fact that fines for violation of termination procedure were raised by 1.5 – 2 times.
This material was written by legal experts of law firm “Pravova Dopomoga”. It is related to service of Liquidation of sole proprietorship.
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