Winding-up (Liquidation) of a Foreign Company in Russia

The turbulence of the business environment often forces to close and liquidate companies with foreign investments. This may be due to, inter alia, with political and economic events, and introduced sanctions in relation to both individual entrepreneurial activities and specific individuals. It is important to note that the activities of companies with foreign investments in Russia are carried out in accordance with Russian legislation.

The application of the norms of national legislation requires representatives of foreign companies to have deep knowledge legal procedures of liquidation of legal entities in Russian jurisdiction. Winding-up and liquidation of a company with foreign investments can be carried out for various reasons, for example:

1. end of accreditation in Russia;
2. liquidation of the parent company, if the activity in the Russian jurisdiction was carried out in the form of a representative office or branch;
3. political or economic events, including imposed sanctions, etc.

The liquidation of a commercial organization with foreign investments is carried out on the terms and in the manner prescribed by the Civil Code of the Russian Federation and federal laws. At the same time, the liquidation of a company is a complete cessation of the organization’s activities without the transfer, by way of universal succession, of its rights and obligations to other persons. As a rule, the owners of the company independently decide on the termination of the organization’s activities, but sometimes such termination of activities can be carried out by a court decision. In accordance with the norms of the Civil Code of the Russian Federation, a legal entity is liquidated by decision of its founders, including in connection with the expiration of the period for which the legal entity was created, with the achievement of the purpose for which it was created. At the same time, a legal entity is liquidated by a court decision:

1. Pursuant to the claim of a state body in case of recognition of the state registration of a legal entity as invalid.
2. At the suit of a state body in the event that a legal entity carries out activities without a proper permit (license) or in the absence of mandatory membership in a self-regulatory organization or a certificate of admission to a certain type of work required by law issued by a self-regulatory organization.
3. At the suit of a state body in the event that a legal entity carries out activities prohibited by law, or in violation of the Constitution of the Russian Federation, or with other repeated or gross violations of the law or other legal acts.
4. At the suit of a state body in the event of a systematic implementation by a public organization, social movement, charitable and other foundation, religious organization of activities that contradict the statutory goals of such organizations.
5. At the suit of the founder of a legal entity in case of impossibility to achieve the goals for which it was created, including in the event that the operation of the legal entity becomes impossible or significantly hampered.
6. In other cases provided by law.

The liquidation of the organization is carried out in the following order:

1. Publication in the media of a message on the liquidation of the organization and on the procedure and deadline for filing claims by its creditors.

2. Drawing up an interim liquidation balance sheet.

3. In case of initiation of insolvency (bankruptcy) proceedings against a legal entity, its liquidation, carried out in accordance with the rules of the Civil Code of the Russian Federation.

4. Sale of property of a legal entity in case of insufficient amount of funds to satisfy the claims of creditors.

5. Settlements with creditors.

6. Drawing up a liquidation balance sheet.

7. Entering information about the termination of the company's activities in the unified state register of legal entities.

It is important to note that in most cases, foreign companies operate in Russia in the form of representative offices or branches of the main foreign companies. In this case, the liquidation is carried out subject to the provisions of Article 21 of Federal Law No. 160-FZ of July 9, 1999 “On Foreign Investments in the Russian Federation”.

Given the requirements of national legislation in the field of registration and liquidation of legal entities with foreign investments, in most cases, representatives of such companies prefer to involve experienced lawyers in order to avoid adverse consequences that may arise from the incorrect application of the law governing such relationships. In addition, it is also important in this matter to comply with the deadlines that are prescribed for the liquidation procedure.

Possible risks that may arise in case of non-compliance with national legislation depend on the correctness of the liquidation procedure for a company with foreign investments, for example, such as holding the founders liable, imposing penalties, etc. At the same time, the involvement of a company with foreign investments in the liquidation procedure will minimize possible risks for the owners of the company and eliminate possible adverse consequences that may arise during the liquidation of the organization.

Legal services

1. Advising clients on the closure and liquidation of companies with foreign investment
2. Preparation of the necessary documentation for the closing and liquidation of companies
3. Support in the process of winding-up and liquidation of foreign companies in Russia
4. Representation of clients in legal relations related to the closure and liquidation of a company with foreign investment in Russia