Consequences of the liquidation of the representative office in Ukraine

Practice shows that starting a business is quite an easy and simple thing, but closing it is a more problematic procedure.

In our article, we will explain how you can close a foreign representative office in Ukraine legally correctly and without any complications.

Liquidation of a representative office is a logical completion of economic activity. This step should be taken with great responsibility since violation of the procedure of liquidation procedure can entail civil, administrative, or even criminal liability of the liquidator (liquidation commission), and director of this representative office, as well as delay the liquidation procedure.

Why is business liquidation a complicated procedure?

The main problem for a liquidator (liquidation commission), the director of a representative office that is to be liquidated, is the lack of an established procedure for conducting the liquidation procedure. The legislation defines only the basic requirements and sequence of liquidation. In this case, the violation of the procedure or failure to conduct a certain stage in full will complicate the overall liquidation procedure or can lead to the process to a complicated situation.

It should be noted that gaps in the legislation are not the only problem faced by Clients during the liquidation of the representative office. Usually, people want to close the representative office quickly and without problems, but the system of supervisory bodies does not allow them to carry out liquidation promptly.

Moreover, the tax inspections may reveal violations, which will be a reason to bring the principal/head accountant to responsibility, including criminal responsibility.

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How can to ensure that the process of dissolving the company goes smoothly?

Before starting the liquidation procedure, we recommend engaging a lawyer to carry out a thorough analysis of the activities of the representative office, conduct a so-called audit of the financial situation and develop a detailed plan of activities that will need to be carried out both during liquidation and before it begins.

In addition, there are quite a few peculiarities associated with the specific activities or legal structure of the business, for example, joint stock companies or enterprises. Therefore, if you see advertising about dozens of liquidated LLCs, it does not mean that this lawyer or law firm will help you. It is necessary to understand that each case of liquidation is different, and requires a well-developed strategy and rational approach.

In order not to drag on a long and time-consuming process of liquidation and not to complicate the procedure, it is better to immediately contact qualified lawyers with relevant knowledge and experience, which will minimize the risks and hold liquidation qualitatively and promptly. We have such specialists.

Stages of representative office liquidation in Ukraine

The basic "most important" steps in the liquidation process include:

• conducting audits in the tax, pension fund, and social insurance fund, and preparing the necessary financial reports. The result of such inspections should be certificates of no debts to the budget and deregistration;
• closing bank accounts that will not be used in the liquidation process;
• dismissal of employees in compliance with all legal requirements;
• drafting and approval of the interim and final liquidation balance sheet, in particular reflecting the existence of debts and the value of the property, repayment of debts.

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Termination of labor relations with employees

We recommend that you begin the liquidation process in advance and comply with the deadlines established by law. Important details:

• at least 3 months in advance, inform the representatives of the employees;
• not later than 2 months before submitting a notice of liquidation, issue a corresponding order indicating the date and reason for the layoff. It is necessary to inform each employee against signature;
• simultaneously with the issuance of the layoff order, notify the State Employment Service;
• on the last day, issue an order of dismissal, make settlements with the employees.

However, there may be controversial issues, such as the dismissal of the director of the company. Our lawyers will find the best way to address any situation.

As for the analysis of the financial activity of a representative office and the preparation of final financial reports, things are very individual. That is why we ask our clients to provide accounting documents of the representative office for the whole period of its activity.

How can we help?

We will control every stage and prepare all the necessary documents for inspection by the tax authorities of Ukraine. If necessary, we will help to analyze penalties, accruals, and fines caused by incorrect accounting or non-submission of statements. We will consider all the possible options for resolving these situations.

Our big advantage is that we provide all services in one place. Accordingly, you won't experience any interruptions or misunderstandings. All actions are coordinated and backed up by practical experience.

Settlements with employees and creditors, preparation of the initial, interim, and final liquidation balance sheet, and final accounts are all procedures where the accountant plays a major role.

That is why it is important that such a person is supervised and assisted by a lawyer - a specialist who will help solve non-standard situations and negotiate with representatives of regulatory authorities.

That is why we offer the combination of a lawyer + an accountant.

The cost of liquidation of the representative office here.

For a detailed consideration of your specific situation, please contact us for a personal consultation.