The sole shareholder by his or her sole decision or the shareholders of the LLC by a majority of 2/3 of the votes (or by a large number, if it is stipulated by the articles of association of the LLC) at any time at his or her discretion and without justification of reasons may decide to liquidate the LLC.
In this case, the LLC shareholders decide on the termination of activity and the beginning of the liquidation process, as well as on the appointment of a liquidator, whose functions are usually performed by a member of the board of the LLC.
The shareholder’s signature on the liquidation decision is notarized. The decision on liquidation together with a statement on the beginning of the liquidation process is submitted to the Register of Enterprises. The Register of Enterprises independently organizes a publication in the newspaper “Latvijas Vestnesis” for potential creditors.
After registration in the Register of Enterprises of the beginning of liquidation, the process of dismissal of employees in connection with the liquidation of the company can begin. For this, notifications of termination of employment contracts in connection with the liquidation of the company must be prepared and handed under signature. When dismissing an employee, the employer must comply with the term for warning the employee about dismissal. In the case of the liquidation of the company, the employer must warn one month in advance. When terminating employment with employees due to liquidation of the company, the employer, in accordance with Section 112 of the Labour Law, an employer has the obligation to disburse a severance pay to an employee in the following amounts: 1) one month average earnings if the employee has been employed by the relevant employer for less than five years; 2) two months average earnings if the employee has been employed by the relevant employer for five to 10 years.
Simultaneously with the start of liquidation, a member of the board, through operational activities, terminates contracts with partners of the company, settles settlements with creditors, sells the property of the company and makes tax payments.
Not earlier than a month after the publication of an announcement to creditors about the beginning of liquidation (Clause 1), subject to full settlement with all creditors of the company, execution of all tax calculations, termination of employment contracts and final settlements with employees (including in connection with the payment of all severance pay), the liquidator prepares a final financial report (liquidation balance sheet) and a plan for the division of the remaining property of the LLC between the shareholders, which indicates the liquidation quota due to each shareholder.
The remaining property of the LLC can be divided between the shareholders no earlier than 2 months after providing the shareholders of the LLC with a final financial report and a plan for the division of property, and the division can be completed earlier if all shareholders agree.
After the division of property, the final financial report (liquidation balance sheet) is submitted to the State Revenue Service (SRS).
Simultaneously with the submission of the final balance, it is necessary to organize the submission of all company documents to the archive (usually for this purpose the services of professional service providers are used, who organize the collection and transfer of company documents to the archive for a fee).
After submitting the final financial report to the SRS and settling the obligations of the LLC to the SRS, the liquidator submits an application to the Register of Enterprises to complete the liquidation process and, based on the decision of the Register of Enterprises, the company is liquidated, as an entry appears in the Register of Enterprises.
The process of liquidation of the company, in the absence of debts and disputes with creditors, full understanding and agreement between the shareholders of the LLC, can take about 2 months.