Practical Steps on Voluntary winding up of a Private Company under the Acts of the Astana International Financial Centre
In December 2021 a first case of voluntary winding-up of a Private Company under the acts of Astana International Financial Centre was successfully completed. This was a pilot project implemented by the AIFC Office of the Registrar of Companies and RSP International LLP acting as the Kazakhstani legal counsel to Private Company in connection with all aspects of its voluntary liquidation.
This article will outline the basic procedural steps required for the voluntary winding-up of a Private Company under applicable AIFC legislation. These notes are not exhaustive and do not constitute legal advice.
Voluntary winding-up under AIFC law is an independent liquidation of a Company approved by a simple majority of its members (shareholders). Such a decision is made as soon as the Board of Directors of the Company decides that the Company has no reason to continue its operations. Voluntary liquidation can only be carried out if the Company is solvent, i.e. the assets of the Company must be sufficient to pay all debts in full, together with interest at the statutory rate, within a period not exceeding 12 months from the commencement of liquidation.
In the case of voluntary winding-up, the Company must cease to operate from the commencement of the winding-up proceedings, unless the carrying on of the business may be required for its liquidation. However, the corporate legal personality and corporate powers of the Company shall continue until liquidation.
As part of the preliminary stages of voluntary liquidation, the directors of the Company must make a formal Declaration of Solvency, which is approved by a simple majority of the board of directors.
The Declaration of Solvency must be made within 5 weeks immediately before the date of the liquidation resolution, or on the same day but before the resolution is approved.
In case of voluntary winding-up of the Company one or more liquidators must be appointed at a general meeting of members for the purpose of liquidating the Company and distributing its assets. The Liquidator appointed for the voluntary winding-up of the Company must be registered with the AIFC Register of Insolvency Practitioners and Official Liquidators.
From the appointment of the Liquidator for the Company, all the powers of directors shall cease unless their continuation is approved by the Company in its general meeting or the Liquidator.
During the period of voluntary winding up of the company, the directors must:
− provide information on the operations of the company to the Liquidator and attend meetings when reasonably necessary;
− keep track of the company’s assets and hand them over to the Liquidator together with all books, records, bank statements, insurance policies and other documents relating to the company’s assets and liabilities.
All tax requirements under the Company’s voluntary liquidation procedure are fulfilled in accordance with the tax legislation of the Republic of Kazakhstan, as the tax regime in the territory of the Astana International Financial Centre is determined by the Tax Code of the Republic of Kazakhstan, except for certain exemptions.
The liquidation of the Company is considered completed when the company is dissolved after the final general meeting of the members conducted by the Liquidator. The voluntary liquidation procedure for a Private Company can last from 4 to 6 months. Once the liquidation process has been successfully completed, the legal entity ceases to exist.
If during the voluntary liquidation procedure it transpires that the Company is not solvent, the Liquidator shall convene a meeting of creditors and the liquidation shall become a voluntary liquidation of the creditors.
Accounting Records of Companies
Pursuant to AIFC acts, if a Company ceases to exist the directors immediately shall ensure that its Accounting Records are preserved for at least 6 years from the date of cessation in compliance with international standards of transparency.
This article has been written by RSP International LLP, a legal and consulting services provider which implemented the first ever voluntary liquidation project for a Private Company in Astana International Financial Centre in December 2021.
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