In Azerbaijan liquidation of legal entities under the new rules

President Ilham Aliyev signed on December 28 this year, a package of legislation aimed at regulating the process of liquidation of legal entities, as well as the definition of a measure of responsibility for avoiding them. The legislative framework had some flaws that allowed individuals controlling legal entities to do gross violations of the rights of other owners.

Were signed a decree on the application of the Law "On Amendments to the Civil Code ," the decree on the application of the Law "On Amendments to the Law " On State Registration and State Register of Legal Entities " and the Law " On Amendments to the Code of Administrative Offences."

In these documents, the process of elimination is regulated by the entire chain - from the emergence of requirements to liquidate the company to its withdrawal from the state register of legal entities. These documents have been approved by Parliament on 22 November this year and welcomed by the business community.

Provisions of the Civil Code (CC) to the elimination of the legal entity established and updated more transparent mechanisms. Under the changes, the first step should be the elimination of the adoption of a formal statement (state assets and liabilities) on the solvency of the legal entity on 12-month deadline for all claims of creditors. Statement adopted at the request of members of the executive body of the company 20 days prior to the decision to liquidate. Until today, the liquidation of companies carried out regardless of their financial status and the question immediately exposed on the agenda of the general meeting of its founders . Now, if the company's executive body will warn about impossibility to take a formal declaration of solvency, then attracted by the general meeting of the company's independent auditor may approve its conclusion solvency legal entity. This audit report is considered appropriate official statement. Otherwise, if the auditor comes to the opinion of insolvency, voluntary liquidation will not take place. For providing false official statements about the solvency officials will bear administrative liability in the amount of AZN 1,000.

The liquidation process cannot be delayed for more than 12 months. Otherwise, the process must be carried out anew. The new text of the Civil identified specific deadlines for each action stages of the liquidation process.

Articles GC providing decision procedures and rules liquidation of legal entity, fully provided in the new version. The liquidation commission (liquidator) continues activities liquidated legal entity for the payment of bills payable, sales and distribution of property to owners. At the same time membership in the liquidation committee may not be permanent.

Information about the decision on liquidation of a legal entity and a notice of its creditors that will be published in the official gazette of the State Registration Service three times within 60 days after the formation of the Liquidation Commission .

The seal of a legal entity is returned to the registration authority. After this the commission uses a stamp with the name of the legal entity with a note "in the process of liquidation." On expiry of the filing requirements by lenders is the liquidation balance sheet and forwarded to all members of the legal entity. This document is recognized as a minimum, information on the assets and accounts receivable, as well as the claims of creditors. Disagreeing with this balance holder of at least 10 % stake, may challenge it. This requires approval of the interim balance sheet at the general meeting of participants (shareholders).

If the Liquidation Commission finds that the property is not enough to satisfy all creditors' claims, it should be initiated bankruptcy proceedings. Repayment of debts to creditors is carried out by order of their receipt.

Upon completion of settlements with creditors, within 5 days the liquidation balance sheet and a statement of the plan of distribution of the remaining assets to the owners under their equity are compiled. These documents must be approved by members of the juridical person not later than 45 days. Thus the creditor retains the right to seek approval of the liquidation of debt to the balance sheet. Property is subject to the provision of the participants within 10 days. Another 10 days allotted Liquidation Commission to provide liquidation balance sheet, asset distribution plan and other documents provided by the Law of AR "On State Registration and State Register of Legal Entities " to public authorities registration of legal entities . Stock companies are also required to provide information of the State Committee for Securities turnover on the withdrawal of their shares.

After making the appropriate notes in the state register of legal entities legal person ceases to exist.

Recall that before the creditors could push material claims within two months after the announcement of the liquidation process. And the process of liquidation could continue indefinitely. - 08D-