Russian legislation, specifically Federal Law No. 129-FZ of August 8, 2001, on State Registration, empowers tax authorities to unilaterally liquidate companies under specific circumstances. These include the failure to submit required financial reports for an entire year, or if a record of unreliable company information exists in the State Register for at least six months.
The procedure for involuntary liquidation begins with tax inspectors issuing a decision on the upcoming exclusion of the company. This decision must be officially published within three days of its adoption. The purpose of this publication is to inform interested parties, allowing them to submit objections to the impending liquidation. If no objections are received within a three-month period, the tax authorities proceed to deregister the organization and record its termination in the Unified State Register of Legal Entities (USRLE).
A compelling case of such forced liquidation involved a sole owner and director of a company. After an extended period spent abroad, he returned to discover that his organization had been dissolved.
The company’s registered address was the owner’s residential address. Before his departure, he sold his apartment to an individual unrelated to the business but failed to register the company at a new address. This oversight led to an entry in the USRLE marking the company’s registered address as unreliable.
As the owner did not respond to official correspondence from the tax inspection requesting updates to the state register, the record of an unreliable address was soon followed by a record indicating unreliable information about the director. Furthermore, the company’s financial reports were not submitted. After six months, the inspectors issued a decision for impending exclusion and, receiving no objections, proceeded to liquidate the organization.
The individual attempted to revive his company by challenging the liquidation decision in court. His lawsuit argued that the exclusion procedure from the State Register had been violated and that his inability to review the publication about the impending exclusion was due to circumstances beyond his control.
However, courts across three instances upheld the tax inspectors’ actions as lawful. The judges concluded that the adverse consequences stemming from the company owner’s inaction could not be attributed to the tax authorities.
Attempts to overturn the liquidation decision on procedural grounds also proved unsuccessful. The inspectors were found to have fully complied with all procedures and deadlines for dissolving a non-operating organization.