Liquidation of a company as a way to terminate a business

Currently, legal entities and branches are opening in Kazakhstan in order to expand their business and enter new markets. However, sometimes they may drop the case due to various reasons. Some of these may be due to poor planning, lack of resources or lack of management support. Also, changes in market conditions or unforeseen circumstances may lead to the termination of the branch’s activities. It is important to conduct analysis and planning before opening a branch, as well as ensuring its effective management and support for successful business development. But if a company successfully overcomes the first three years of its existence on the market, this is an important indicator of its potential and sustainability. During this period, she was already able to establish her reputation, find her niche and attract clients. Such experience and stability create a favorable basis for further growth and development of the company. But it is important to remember that the success and growth of a company after three years in the market is not guaranteed. This requires constant market analysis, adaptation to changing conditions and a constant desire to improve.

When a legal entity or branch of a company is not active and does not conduct its business, the KORGAN Law Company recommends making a decision to suspend the company’s activities or to liquidate it, rather than simply abandoning it. After all, if you do not make a decision to liquidate an inactive branch or legal entity, the company may face the problem of accumulating tax liabilities of reports not submitted on time. The reports and taxes that must be paid on the branch will continue to accrue even if it is not making a profit or operating. Accumulating tax liabilities can lead to serious financial problems for a company. Tax authorities may begin to impose fines and penalties for non-payment of taxes, which can significantly increase the amount owed. In addition, unpaid tax liabilities can lead to lawsuits and other legal problems.

In turn, liquidating a branch can help a company reduce its operating costs and improve its financial position. This is especially important in cases where the branch does not generate sufficient profit or requires significant investment to restore it. Through liquidation, a company can free up its resources and redistribute them to more promising projects or areas.

However, it is important to note that the process of winding up a branch requires careful planning and compliance with legal and financial procedures.

Liquidation of a branch is a procedure for deregistering a structural unit of a legal entity, which is a branch/representative office, from registration with the justice authorities. In this article, we will look at effective ways to liquidate branches in Kazakhstan and recommendations for business owners who are considering this possibility.

What difficulties might the company encounter?

Companies “A” and “B” contacted the KORGAN Law Company with a request to liquidate their branch. These branches did not conduct any activities. After a thorough analysis of the case, our lawyers identified the lack of appropriate documentation to initiate the liquidation process. Our experienced lawyers, despite such subtleties of the case, re-established all the necessary documents and certificates. However, our lawyers are still faced with the problem of non-confirmation of the state duty by the Tax Authority. It took some time to fix this problem. I had to contact the Tax Authority at the location of the branch. And our company successfully completed the task within two months and successfully liquidated the branches. When liquidating, we strongly recommend that you check all tax reports, as well as the liquidation balance sheet of the company.

Documents required for liquidation of a branch:

  • Publication in a legal newspaper
  • Constituent documents
  • Regulations on the branch
  • Document confirming payment to the State Corporation “Government for Citizens” for deregistration of a branch (representative office) of a legal entity that is a commercial organization
  • Liquidation balance sheet

Liquidation of a branch is a complex and responsible process that requires careful preparation and implementation of certain procedures. In this article, we examined the main problems and recommendations for the effective liquidation of branches in Kazakhstan. If you are faced with the problem of liquidating a branch, contact the KORGAN Law Firm, our experienced lawyers will easily help you solve this problem. After all, “Legal awareness is the key to business success.”

Please call +7 700 5000 553 and our lawyers will contact you to provide consultations.