Company Closure: Dissolution and Liquidation of an EOOD or OOD

Closing an EOOD or OOD is not the same as ceasing the company's activity. A company may halt its business activity and nevertheless continue to exist as a legal entity; this is referred to as „freezing the activity“. In such a case, the company remains registered in the Commercial Register, but although it does not carry out any activity, it continues to be under an obligation to file tax and accounting returns.

In order to strike the company off the Commercial Register definitively, a liquidation procedure is required. The liquidation process is considerably longer and more complex than registering a new company. Closing an EOOD or OOD through liquidation takes a minimum of 8 months, and this period may be extended if the National Revenue Agency (НАП) decides to carry out a check or an audit.

Notifying the НАП

The first step after the decision to liquidate is to submit a notification to the territorial directorate of the НАП pursuant to Article 77 of the Tax and Social Insurance Procedure Code (ДОПК). The НАП must issue a certificate within 60 days confirming that it has been notified of the liquidation. This certificate is a mandatory document when submitting the liquidation application to the Commercial Register.

Once notified of the commencement of liquidation, the НАП may initiate a check of the company, particularly if it has been registered for VAT or has carried out active business. Should any tax or social insurance liabilities be established, the public enforcement agent may impose security measures over the company's assets.

Entry of the Liquidation in the Commercial Register

Once the certificate from the НАП has been issued, the documents for entering the liquidation are submitted to the Commercial Register. The required documents include:

• Application Form Б6;
• Minutes of the general meeting of the partners (or of the sole owner of the capital in the case of an EOOD) for the dissolution of the company, its declaration into liquidation, the appointment of a liquidator and the setting of a period for the liquidation;
• Notice convening the general meeting (for an OOD);
• A notarially certified specimen of the liquidator's signature;
• Certificate under Article 77 of the ДОПК;
• Declaration under Article 13(4) of the Commercial Register and Register of Non-Profit Legal Entities Act;
• Power of attorney (if the documents are submitted by an authorised representative);
• Proof of payment of the state fee.

The liquidator is most often the manager, but may also be another person or several persons who jointly represent the company. The liquidation period may not be shorter than 6 months, which begins to run from the date of publication of the notice to creditors, and not from the entry of the liquidation.

Deregistration for VAT

In the event of liquidation, companies are entitled to choose whether to deregister for VAT before being struck off the Commercial Register, or to retain their registration until the company is finally closed.

Notice to Creditors

Once the liquidation has been entered, the liquidator is obliged to publish a notice to creditors to submit their claims within the period set for the liquidation. The documents required to publish the notice in the Commercial Register are:

• Application Form Г1;
• Notice to creditors;
• Declaration under Article 13(4) of the Commercial Register and Register of Non-Profit Legal Entities Act;
• Power of attorney (if not submitted by the liquidator in person);
• Proof of payment of the fee.

Duties of the Liquidator

Following the entry, the liquidator must submit an application-declaration to the НОИ for the issuance of a certificate for the handover of payroll records and other employment-law documents, and must ensure that these documents are handed over to the НОИ. The liquidator must also complete the current transactions, collect the company's receivables and distribute its assets among the creditors. New transactions may be concluded only if they are necessary for the purposes of the liquidation.

The liquidator must draw up an opening liquidation balance sheet as at the date of commencement of the liquidation and a closing liquidation balance sheet as at its end, accompanied by an explanatory report.

Striking Off from the Commercial Register

Once the liquidation period has expired, the creditors have been satisfied and the company's assets have been distributed, the company may be struck off the Commercial Register. The documents required to strike off a company include:

• Application Form А4;
• Certificate under Article 77 from the НАП;
• Certificate from the НОИ under Article 22 of Instruction No. 5;
• Minutes of the general meeting of the partners (or of the sole owner of the capital) for the adoption of the final balance sheet and the liquidator's report;
• Notices convening the general meeting;
• Declarations under Article 273(1) of the Commerce Act and under Article 13(4) of the Commercial Register Act;
• Power of attorney (if not submitted in person);
• Proof of payment of the state fee.

After the company has been struck off the Commercial Register, a final tax return must be submitted within 30 days under Article 162(1) of the Corporate Income Tax Act for the last tax period, which covers the time up to the date of striking off. If the annual tax return for the previous year has not been filed, it too must be submitted within 30 days of the company being struck off.

Should you require additional information, assistance or a consultation in connection with the closure of a company and the carrying out of the liquidation of an EOOD or OOD, please contact us on telephone 0887550706, e-mail: [email protected]