The process of liquidating a limited liability company (LLC) can be complex and demanding. However, by following clear and defined steps, it is possible to effectively conclude the company’s operations in a proper and legally compliant manner. 

The procedure for liquidation of commercial and public legal entities is regulated by the provisions of the Civil Code and Tax Code of the Republic of Azerbaijan, the Law of the Republic of Azerbaijan "On State Registration and State Register of Legal Entities", and the "Rules for the Cancellation of State Registration of Commercial Entities and Accounting of Taxpayers in State Tax Authorities".

According to Article 59 of the Civil Code, a legal entity may be liquidated in the following cases:

By decision of its founders or a body authorized to do so by the charter;

If the court deems its registration invalid due to legislative violations committed during the establishment of the legal entity;

If it is declared bankrupt.

In order to enter a record of a legal entity being "in liquidation process" in the state register of legal entities, the registration authority must be provided with documents, the list of which is specified in the law.

The liquidation period cannot exceed twelve months. If the process is not completed within this time, it will be necessary to re-make the decision on liquidation and carry out the entire procedure from the beginning with the execution of new documents.

Liquidation of a legal entity entails, first of all, the exclusion of the legal entity from the State Register of Legal Entities. From this moment on, the enterprise no longer exists as a subject of any legal relations.

Based on the decision to liquidate, a legal entity may terminate employment contracts with all employees. In this case, all employees must be notified personally of the upcoming dismissal in advance. Employees are entitled to benefits, the amount of which is stipulated in the Labor Code.

When liquidating a legal entity, the law requires that not only its employees but also creditors be notified of the upcoming termination of the enterprise. To do this, the liquidation commission must prepare and send documents to each creditor with a notification indicating the time period during which they can file their claims. This period cannot be less than two months.

During liquidation, the territorial tax authority may appoint an on-site tax audit. In this case, the time of the previous audit is not taken into account. In this case, a period of no more than three years preceding the year in which the decision to conduct the audit is made is audited.

Liquidation of a legal entity is the termination of its activities, therefore the created commission closes the company's bank accounts. They can be closed earlier - by the time the liquidation balance is submitted. However, in practice, it is not recommended to close a bank account until a reconciliation with the tax authority has been carried out and all documents and reports have been submitted.

ALIBI will help with the organization and liquidation of a legal entity effectively and in a short time. We offer comprehensive support for legal entities planning to cease their activities, we help with the preparation of documents and their submission to official authorities. Contact us, and we will provide detailed advice on any issues that arise during the liquidation process.