Hello, recently, we have received many questions from those companies that have lost or temporarily suspended their crypto license. The concern is primarily related to the penalties and consequences. We would like to answer the most common questions.
1. What to do with the company if it is no longer needed? What is the safest and most correct option?
There are many options here: sale of a company, liquidation of a company, mergers and acquisitions, bankruptcy, redomicile and others.
If the buyer for the company cannot be found, the redomicile is not an interest, and bankruptcy is not desirable, then the most correct option would be to liquidate the company.
Upon liquidation, you will be 100% sure that you will not fall under the state fines, sanctions and third party requirements and will avoid problems in the future – we explain.
If in the future you want to build your business in another jurisdiction, obtain a different license, open a bank account, with the correct liquidation of your existing company, you will not have any additional questions.
The most common problems caused by an inactive company:
- The bank may refuse to open an account, issue a loan (both personal and for your other legal entity in any other jurisdiction). The bank sees that your crypto license was revoked and does not really go into the specifics of this decision, considering it a risk factor. The bank also sees and takes into account the filing of the annual reports. If you do not provide it in the future for the company, the bank will also have questions.
- Attention from tax and fiscal authorities to the shareholders and directors. In some jurisdictions, for example in the Russian Federation, it is necessary to report on controlled foreign companies on an annual basis. By liquidating your inactive company, you will avoid increased attention and risks.
- Some potential partners and clients seeing that you have an inactive company that does not submit reports, are also wary of your other areas of activity.
- Penalties and sanctions (we will talk about them below)
2. What are the possible consequences if the company is simply “left in the air”?
There are several possibilities for the development of events. The first option, the optimistic scenario, the company is simply removed from the register in 4-8 years.
The second option happens much more often and has more serious consequences, we will talk about it below.
According to the legislation of the Republic of Estonia, the company must have a valid legal address, as well as in the company in which the managers are not citizens of the Republic of Estonia, must have a contact person. Failure to renew these services may result in liability. Liability for failure to submit mandatory annual reports may be incurred.
Article 71. Responsibility of an entrepreneur
(1) In the event of failure to provide data prescribed by law or submission of incorrect data, the register may impose a fine on entrepreneurs and all persons obliged to submit data in accordance with the procedure provided for by the Code of Civil Procedure, regardless of whether the data is a subject for registration or not.
(2) If the data prescribed by law is not provided to the register within the deadline prescribed by law, the register may impose a fine without issuing a warning order provided for by the Code of Civil Procedure.
(21) A fine shall be imposed in the amount provided by the Code of Civil Procedure.
Article 601. Imposition of a fine
(1) If a court has confirmed information that false data have been entered in the register or data that are subject to mandatory entry in the register in accordance with law was not provided, the court shall issue a ruling by which it obliges the persons obliged to submit data, under threat of a fine to either submit the correct data or an objection to the order. The court may also impose a fine in other cases provided by law.
(2) If the obligation is not fulfilled within the time limit set by the court, and an objection is not presented, the court shall issue a decision on the imposition of a fine and repeat the earlier decision on the submission of data with a new warning about the imposition of a fine. The court does this before the execution of the obligation or the presentation of an objection to the order.
(7) When imposing a fine, the court shall also impose procedural costs on the persons involved in the case by a ruling.
Article 86. Suability of the location of the property
(1) If the place of residence or location of a person is in a foreign jurisdiction, a lawsuit with a property claim may also be brought against him at the location of the property against which the claim is made, or at the location of other property of the person.
3. Is it possible and worthwhile to recover the license?
Theoretically and practically – yes, but unfortunately this question can be answered unambiguously only with all the information about the company and the reasons for the suspension and revocation of the license. If you need a detailed analysis from our side, then we will conduct it absolutely free of charge and tell you whether the license is worth restoring or not.
4. Can I get a crypto license for a new and different company?
In case if you will meet all the new requirements, then yes! Find out more about new requirements for crypto license here!
The Private Financial Services team will be happy to assist you in any scenario. Each case is considered individually.
We will provide a preliminary analysis of your case and comments absolutely free.
If you are interested in any other solution, we will also be happy to help!