Legal analysisBringing a business back to life: can a company be restored after its removal from the state register?
An entry in the Unified State Register (USR) recording the termination of a legal entity usually means that its legal capacity has ended for good. However, court and registration practice shows that there are situations in which the liquidation or termination of a company needs to be challenged. We look at when there is a chance to restore the status of a legal entity and which legal mechanisms exist for doing so. Why can a company disappear from the USR? A business entity is removed from the register on several main grounds: Voluntary liquidation: by decision of the owners (founders) after settling with creditors and submitting the final balance sheet. Reorganisation: in the case of a merger, acquisition, division or transformation of the company. Court decision: compulsory liquidation (in particular within bankruptcy proceedings or following a claim by authorised state bodies). Simplified procedure or technical grounds: an entry made by the state registrar on the basis of decisions of regulatory authorities or for non-compliance with legal requirements. Can the termination record be cancelled? Ukrainian law (in particular the Law of Ukraine “On State Registration of Legal Entities, Individual Entrepreneurs and Public Associations”) provides that there is no administrative procedure for restoring a terminated company. The state registrar has no right to cancel a termination record on their own initiative or at the request of the founders. The only lawful way to restore legal status is to obtain a court decision that has entered into legal force. Grounds for going to court Violation of creditors’ rights: if the company was liquidated while it still had outstanding debts, and the liquidator or founders did not notify creditors or submitted a knowingly inaccurate liquidation balance sheet. Procedural violations: disregard of the liquidation procedure established by civil and commercial legislation. Fictitious or unlawful liquidation: actions taken without the knowledge of the real owners (a corporate raid) or on the basis of forged documents. Steps to restore a company The case law of the Supreme Court confirms that if a liquidation was carried out in breach of third parties’ rights or mandatory provisions of law, the record is subject to cancellation. Gathering evidence — reviewing the registration file. The documents in the registration file must be requested and analysed: the founders’ decisions, notices to creditors, the liquidation balance sheet and the conclusions of the tax authorities. Filing a claim with the commercial court — declaring the actions and decisions unlawful. A claim is filed to invalidate the founders’ decision (or an inspection report or decision of an authority) and to cancel the USR record on the termination of the legal entity. Enforcing the court decision — the state registrar makes the changes. Once the court decision enters into legal force, the state registrar makes an entry cancelling the state registration of the legal entity’s termination. Consequences of cancelling the termination record Once the registrar has entered the cancellation of the termination: The legal entity regains its legal capacity and legal competence in full. The company is registered again with the State Tax Service, the Pension Fund and the statistics authorities. Creditors gain the right to recover debts or to initiate bankruptcy proceedings in the manner established by law. An attempt to “erase” a company with debts or to liquidate it in breach of the procedure does not guarantee escaping liability. The courts protect the violated rights of creditors and business participants by restoring companies’ legal status in the register so that settlements can be completed or business activities resumed.
