First: according to the norms of the Law on economic societies, the Civil Code, if at the end of the second and each subsequent financial year the value of the net assets of the company turns out to be less than the statutory fund, this company is obliged, no later than 6 months after the end of the corresponding financial year, to reduce its statutory fund to an amount not exceeding its net asset value.
Second: if, according to the results of the second and each subsequent financial year, the value of the net assets of a limited liability company (LLC!) becomes zero or becomes negative, this company is subject to liquidation.
Please note that the mandatory liquidation rule was introduced in 2021, which means that the obligation to ensure control over the state of net assets arises for companies based on the results of 2021 and each subsequent financial year.
Important: the decision on liquidation must be made no later than 6 months after the end of the relevant financial year, if the basis for liquidation has not disappeared within these 6 months.
Third: if the value of the net assets of a joint-stock company (CJSC, OJSC!) based on the results of the second and each subsequent financial year is below the minimum size of the authorized capital established by law, this company is subject to liquidation.
Please note that the rule on the mandatory liquidation of a company in such a situation did not change the existing approach, but simply specified the liquidation period.
Important: the decision to liquidate a joint-stock company must be made no later than 6 months after the end of the relevant financial year, if the basis for liquidation has not disappeared within these 6 months.
