What happens when a company was suddenly liquidated without the consent of the owner?

11.08.2021 Irina Stromberga, lawyer

There is such a thing as a simplified liquidation of enterprises, which is provided for in Article 314.1 of the Commercial Law of the Republic of Latvia. According to this legal provision, the activities of a limited liability company or joint stock company can be terminated on the basis of a decision of the Commercial Register and / or the tax administration.

The Register of Enterprises has the right to decide on the termination of the company’s activities in two cases:

  • if the company has no management board for more than three months, and this violation has not been eliminated within three months from the date of receipt of a written warning from the Register of Enterprises;
  • the company is not available at its registered legal address and this violation has not been eliminated within two months from the date of receipt of a written warning from the Register of Enterprises.
    Means that the Register of Enterprises sends a notice to the Company with a demand to eliminate the violation and a warning about the further exclusion of the Company from the Commercial Register, if the violation is not eliminated within the prescribed period.

The activities of the company may also be terminated on the basis of a tax administrative decision if:

  • the company has not submitted an annual report within one month after the imposition of an administrative fine and at least six months have passed since the day the violation was committed;
  • the company, within one month after the imposition of the administrative fine, did not submit the tax declarations stipulated by the law for the six-month period;
  • the activities of the company were suspended on the basis of a tax administrative decision, and the company, within three months after the suspension of its activities, did not eliminate the indicated deficiency.

After two or three months (depending on the violation), the Register of Enterprises makes a decision to exclude the company from the commercial register, which comes into force within one month after its notification to the company, if it has not been appealed in accordance with the procedure established by law.

Also, by this decision, the Register of Enterprises invites all persons interested in the liquidation of an enterprise to declare themselves and propose a liquidator.

If, within a month from the date of receipt of the decision, no person has declared his intention to liquidate the company under the normal procedure, and also if this decision has not been appealed by the company itself, the company is excluded from the Commercial Register.

It can be emphasized that in accordance with Section 12, Paragraph four of the Commercial Law, if a merchant is sent correspondence to a legal address registered in the Commercial Register, the merchant shall be deemed to have received this correspondence if the sender can prove the dispatch of this correspondence.

That is, the actual receipt or non-receipt of correspondence does not matter, and will not be a weighty argument for company in the event of an appeal against the decision of the Register of Enterprises.

Unfortunately, the owner of the company does not always find out about the decision made in a proper time. If the deadline for appealing against the decision is missed, then the law allows the Register of Enterprises to ask to extend or even renew the missed procedural deadlines. Until recently, this was possible even after the company was excluded from the commercial register.

The reason is that the essence of the simplified liquidation is the exclusion from the commercial register of “abandoned” merchants whom no one wants to deal with and which no one wants to liquidate in the usual procedure.

However, since August 1, 2021, the practice of the Register of Enterprises has changed, and now it is possible to request the renewal of missed procedural deadlines as long as the company is not excluded from the Commercial Register. After exclusion, the situation can no longer be changed.

If necessary, the Law office Inlatplus is ready to provide its clients with timely legal assistance in restoring missed procedural deadlines and appealing against decisions of the Register of Enterprises.

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