Agreement on the termination of the LLC: conditions, conclusion, execution

BASE (basic) 7.78

advertisement

Ланткевич Кирило

Lawyer

Ukraine / Dnepropetrovsk region

i

Reading time: 16 minutes Total views: 115

Rate:

0

Publication date: 24.07.2024

I am studying in the third year of the State University of Economics and Technology.I specialize in contractual, economic and corporate law, in particular, I provide consultations and write articles.

Agreement on the termination of the LLC:

The agreement on the termination of a limited liability company (LLC) is an important legal instrument that allows the closure of an enterprise with the consent of its participants. The conclusion of an agreement on the termination of a company is an innovation in corporate legislation, which enables companies to carry out a closed resolution of issues of their termination on the basis of a contractual agreement. structure similar to the agreement on the merger (joining) of joint-stock companies.

The main aspects of this mechanism can be as follows:

• Contractual freedom of the partnership: This approach allows the partnership to independently resolve the issue of its termination by concluding a contract. This gives more flexibility and opportunities for the company to control the termination process.
• Legal conditions for conclusion: In order to conclude an agreement on the termination of a partnership, it is necessary to take into account the requirements of corporate legislation, in particular, regarding the establishment of a decision-making procedure, approval of the statute, and, if necessary, approval by shareholders.
• Similarity to a merger agreement: A termination agreement may have similar elements to a merger (joining) agreement, as both of these agreements usually include terms regarding the transfer of property, rights and obligations between the parties, the distribution of assets and liabilities, and the determination of terms and conditions termination.
• Ensuring legal correctness: It is important that the conclusion of such an agreement meets all the requirements of the law and has clear legal forms in order to avoid possible legal disputes in the future.

A partnership termination agreement can be a useful tool for companies considering options for closing their operations by mutual agreement, providing a convenient and transparent termination mechanism.

Terms of the contract on the termination of the LLC:

The agreement on the termination of a limited liability company (LLC) should include a number of important conditions that are the basis for the proper closure of the enterprise and the transfer of its assets and liabilities to the successors.

• Here is a detailed description of these conditions item by item:
• Conditions for the transfer of property, rights and obligations to legal entities - successors: The contract must clearl define the procedures and conditions for the transfer of property (real estate, equipment, intellectual property, etc.), rights (contracts, licenses, trademark rights) and obligations (fees obligations to creditors, repayment of tax liabilities).
• The size of the shares of each participant in the authorized capital of the successor legal entities or the conversion ratios of the shares into shares:

If the successors are joint-stock companies, the contract must establish the size of the shares of each participant of the LLC in the authorized capital of the legal successors. Conditions for conversion of shares into shares may also be determined.

Composition of bodies of legal entities – legal successors or a person who will individually perform the functions of an executive body: The contract must determine what will be the composition of the management bodies of new legal entities that will become legal successors.

The main aspects of the agreement on the termination of the LLC:

1. Identity of essential terms of termination agreement: The termination agreement must contain the same or identical terms for each of the companies involved in the termination process. This includes, for example, conditions regarding the distribution of property and obligations between participants, conditions regarding settlements with creditors and employees, as well as other important aspects that determine the legal consequences of termination.
2. The procedure for informing the members of the company: The members of the company must be informed about the terms of the termination agreement. This includes providing them with a draft of such a contract with sufficient time for review and analysis.
3. In order to ensure transparency and support participants in making a decision on termination, it is also necessary to provide an explanation regarding the expediency or impracticality of such termination. This includes assessing the possible benefits and risks associated with the merger or acquisition of the company that could affect their interests.

These three aspects help to ensure that the process of terminating a partnership through the conclusion of a termination agreement will be conducted fairly, transparently and taking into account the interests of all members of the partnership.

Execution of the agreement on the termination of the partnership:

A detailed description of the moments of execution of the agreement on the termination of the partnership by merger and by accession:

Agreement on termination of partnership by merger:

Termination of the Merging Entities: This time occurs according to the terms of the merger agreement, which usually specifies the exact time or condition for the termination of the merging entities. It can be a certain day after the registration of the contract in accordance with the requirements of the law or another conditional moment.

Agreement on the termination of the partnership by joining:

The moment of making changes to the information in the EDR regarding legal succession: When joining a company to another legal entity, the moment of execution of the contract is determined in accordance with the requirements of the law. This usually happens at the time of registration of changes in the EDR regarding legal succession — that is, when the information about the accession is displayed in the register, confirming the new legal succession.

These points are critical for determining the legal consequences of the termination of a partnership through a merger or acquisition. They determine the time when legal entities cease to exist or when rights and obligations are transferred to a legal successor.

The procedure for concluding an agreement on the termination of a limited liability company (LLC) includes several key steps:

1. Preparatory actions: Making a decision: The founders or members of the LLC make a decision to terminate the company's activities. This may require a general meeting of participants or a written decision from all participants. 
2. Preparation of a draft contract: A lawyer or lawyer prepares a draft termination contract, taking into account all the requirements of the law and the conditions that were discussed and accepted by the participants.
3. Preparation of a draft contract: A lawyer or lawyer prepares a draft termination contract, taking into account all the requirements of the law and the conditions that were discussed and accepted by the participants.
4. Conclusion of the contract: Signing of the contract: After the draft of the contract is prepared, it is signed by all participants of the LLC or their authorized representative
5. Registration in the Unified State Register of Enterprises and Organizations of Ukraine (USR): If the conclusion of the contract involves a change in the information about the company in the Unified State Register of Enterprises and 
6. Organizations of Ukraine (USR), then it is necessary to carry out the corresponding registration of the changes.
   Fulfillment of the terms of the contract: In accordance with the terms of the contract, the members of the LLC carry out the distribution of property and resolve all financial and legal aspects of the termination of the activity.

These steps take into account all the necessary aspects for the effective conclusion of an agreement on the termination of an LLC, ensuring compliance with legal requirements and protecting the interests of company participants.

Legal services when concluding a contract:

The services of a lawyer when entering into an agreement on the termination of a limited liability company (LLC) are critical to ensure the legal purity and efficiency of the process. Here are the aspects that a lawyers online role in this process may include:

Preparation and legal analysis of the situation:

• The legal services online helps the founders or members of the LLC in determining the optimal termination conditions, taking into account legal, financial and practical aspects.
• It analyzes all aspects that should be included in the contract, including the distribution of property, liabilities, rights and obligations of the parties, as well as the legal requirements for the termination of the LLC.

Preparation of the draft contract:

• The lawyer services online prepares a draft termination agreement that meets all the requirements and needs of the parties.
• It takes into account the peculiarities of the LLC's activity to ensure that the terms of the contract will be as beneficial and safe as possible for all participants.

Consultations on legislation:

• The lawyer services provides advice on the requirements of the current legislation regarding the termination of the LLC.
• It indicates the key requirements for registration of termination in the statistical authorities and in the Unified State Register of Enterprises and Organizations of Ukraine (USR).

Representation and signing of documents:

• A types of legal services can act as a representative of the parties when concluding a contract to ensure compliance with all legal formalities.
• He can sign documents on behalf of clients or provide legal advice on required signatures and certifications.