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Dissolution and Liquidation of Corporations in The Philippines
Dissolution and Liquidation of Corporations in The Philippines
Dissolution and Liquidation of Corporations in The Philippines
2.
3.
2.
3.
4.
List of creditors, if any, and their consent, or certification as to nonexistence of creditors. If there are creditors and their consent was not
6.
7.
Endorsements /clearances
applicable
from
other
government
agencies,
if
The first two (2) of the above documentary requirements for SEC
dissolution by shortening corporate term is for the corporate secretarys
preparation. The third is for the independent certified public accountant
(CPA) in the Philippines. The fourth is for the accounting department to
provide. The fifth one, BIR clearance, is quite technical for the dissolving
corporation because before the BIR will issue a tax clearance, it will see to
it that the corporation has no tax liabilities by conducting a tax examination
for at least the three (3) taxable years preceding the year of dissolution
which has not yet been examined. Publishers affidavit is not much of a
problem while the endorsement only applies to those corporations with
secondary license.
Upon completion of the above documentary requirements for dissolution of
corporation in the Philippines and such other requirements the SEC may
require, the, process of evaluation and approval may come within less than
a month. In the preparation and processing of the application for corporate
dissolution, we would suggest you secure services of professional to
facilitate the preparation of such documents.
Disclaimer: This article is for general conceptual guidance only and is not
a substitute for an expert opinion. Please consult your preferred tax and/or
legal
consultant
for
the
specific
details
applicable
to
your
circumstances. For
comments,
you
may
please
send
mail
at info@taxacctgcenter.org.
Businesses can also be closed voluntarily or involuntarily. Voluntary closure
generally means the business owner close the business in his or her own
will, usually complying with applicable business regulations. On the other
hand, involuntary closure means the business is closed due to events, such
as failure to comply with the law or regulations and the government or
court has ordered to close the business. In this article, we assume that the
business owner is voluntarily closing the business.
Usually a business
agencies/offices.
should
be closed in
the
following
government
There are many reasons why a certain business will come to its end. It could
be that the business is already causing the owner significant losses and
decided to just stop the business or it could be that the business needs to be
terminated in order to transform into a new type of business. Not all
business closure brings negative news. For example, a single proprietorship
business that is transforming into a corporation is required to be closed as a
proprietorship. Thus, business closure could also mean expansion.
The process of business closure in the Philippines depends on the type of
the company to be ceased. For corporations and partnerships, they should
be formally close in the Securities and Exchange Commission (SEC) where
they are also registered, unlike sole proprietorship businesses that are not.
There are also businesses that should comply with the closure requirements
of other government agencies, where they are specially regulated. For
example, pawnshops are also required to be closed in Bangko Sentral ng
Pilipinas (BSP), where they are also governed or regulated.
Businesses can also be closed voluntarily or involuntarily. Voluntary closure
generally means the business owner close the business in his or her own
will, usually complying with applicable business regulations. On the other
hand, involuntary closure means the business is closed due to events, such
as failure to comply with the law or regulations and the government or
court has ordered to close the business. In this article, we assume that the
business owner is voluntarily closing the business.
Usually a business
agencies/offices.
should
be closed in
the
following
government
the application form (Affidavit of loss if either the business name certificate
and/or the duplicate copy of the application form was lost)
b. Adopted Name:
Letter request signed by the authorized signatory (Board Resolution for
the authorized signatory)
Board Resolution/Partnership agreement for the cancellation of the
registered business name, stating the reason/s for the cancellation that the
corporation/partnership has no outstanding financial obligation at the time
of closure in connection with the operation of the said business and if there
were creditors copy of notice to them
Original copy of the business name certificate and the duplicate copy of
the application form (Affidavit of loss if either the business name certificate
and/or the duplicate copy of the application form was lost)
Closing a business at the local City/Municipal Office
The procedures and requirements on closing a business may vary among
different LGUs (Local Government Units). This means that the requirements
for business cessation in Makati City can be different in Manila or Pasay
City. The typical requirements for business closure at the LGUs are the
following:
Affidavit of Gross (reason for and date of closure)
Mayors Permit
Business Plate
Financial Statement/ ITR
Sketch
Latest Payment
Certificate of Closure from the Barangay Captain indicating date of
closure
For more complete and accurate procedures and requirements, you may
visit and inquire the City or Municipal Office where your business is
registered.
Closing a business at DOLE
If your business has employees or was required to be registered with the
DOLE, you also have to ensure that you notify the DOLE office and comply
with the labor requirements to avoid labor relation liabilities. The following
are the basic requirements in closing a business and be cleared at the DOLE
office:
Service of a written notice to the employees and the DOLE at least one (1)
month
before
the
intended
date
of
closure/cessation
The closure or cessation of business operations is bona fide in character.
Payment to the employees of termination pay amounting to at least onehalf (1/2) month pay for every year of service, or one (1) month pay
whichever is higher, per Philippine Labor Code mandate.
Closing a business at the BIR
The process of business cessation at the BIR is perhaps the most tedious
one among others. And if you have unpaid tax liabilities or delinquencies
due to the government, the process could even get more problematic.
Among the government offices, where your business is registered, the BIR is
the one which records and monitors your internal revenue taxes, such as
income and business taxes (Value Added Tax or Percentage Tax). And to
formally close and clear your business with the BIR, the bureau has to
ensure that you have already paid all your tax obligations.
BIR Form 1905 (Application for Registration Information Update) is the tax
form used in applying for closure of a business. The following are the
requirements and procedures for closure of business at the BIR.
Documentary Requirements
1) Letter of request stating reason for termination of business
2) Original Certificate of Registration
3) Books of Accounts
4) Inventory List of Unused Receipts and Invoices
5) Unused Receipts and Invoices for cancellation
6) Board Resolution / Notice of Dissolution (if Corporation / Partnership)
Additional Requirements in Case of Death of Individual Taxpayer:
1)Death Certificate
2) Payment of Estate Tax, if any
Procedures
1) Taxpayer applicant files BIR Form 1905, together with the attachments at
the RDO where they are registered within ten (10) days from retirement of
business.
2) Taxpayer files short period return for income tax purposes.
3) RDO verifies if taxpayer has open cases reflected in the Integrated Tax
System (ITS). If YES, ask taxpayer to submit required returns and pay the
corresponding tax due/s and penalties if any.
4) RDO verifies if taxpayer has delinquent cases at the Assessment,