The problems of joint stock company liquidation and ways of their settlement

The article explores the problematic aspects of joint stock company liquidation. The essence and types of liquidation of joint stock companies have been analysed. The distinctive features of voluntary, compulsory and enforced liquidation of joint stock companies, as well as the liquidation of a bankrupt joint stock company and the liquidation on the basis of the law have been determined. The elements of the legal composition constituting the basis for the termination of joint stock companies by voluntary liquidation have been investigated. The complexity of the procedure of voluntary liquidation has been established. The expediency of introducing a simplified mechanism of voluntary liquidation has been substantiated. The main factors that hinder the liquidation of joint stock companies in Ukraine in the current context have been identified. The main problems of terminating joint stock companies through forced liquidation and the reasons for their emergence have been revealed. The main obstacles to compulsory liquidation of joint stock companies by judicial and administrative procedure have been elucidated. It has been ascertained that the current Ukrainian legislation on liquidation is still in its formative stage, characterized by inconsistencies, internal contradictions and fails to solve the main problem – a civilized exit of business entities, including joint stock companies, from the sphere of economic relations. Special emphasis is placed on researching the prospects for the development of legal regulation of relations connected with the liquidation of joint stock companies in the context of solving the revealed issues. It has been proposed as a priority step to address the problems of liquidation of joint stock companies by ensuring an adequate level of legal and regulatory regulation of the relations to terminate such organisations through liquidation. It has been reasoned that further research should be conducted into specific recommendations for solving the problems of JSC liquidation in order to consider them in the preparation of Draft No. 2493 for the second reading in the Supreme Council of Ukraine, as well as the systematisation of general rules on voluntary and compulsory liquidation in the Civil Code of Ukraine.

Does patenting always help new firm survival? Understanding heterogeneity among exit routes

While patents are a valuable resource ensuring the competitive advantage of firms, there is limited evidence on the role of patents in the survival and exit strategies of new firms. To fill the gap in the literature, we examine whether the effects of patenting on new firm survival vary according to exit routes (bankruptcy, merger, and voluntary liquidation), while considering the endogeneity of patenting. We use a large-scale sample of new firms in the Japanese manufacturing and information services sectors for the period 2003–2013. The findings indicate that new firms with a higher stock of patents are less likely to go bankrupt. Conversely, new firms with a higher stock of patents are more likely to exit via merger. These findings are consistent, regardless of whether patent stock is measured based on the patent applications or granted patents. Furthermore, we provide evidence that new firms with a higher stock of granted patents are more likely to voluntarily liquidate their businesses. Plain English Summary Can new firms enjoy a “patent premium” in terms of survival and exit outcomes? The findings of this study indicate that (1) patenting reduces the risk of bankruptcy, and (2) it increases the odds of exit via merger and voluntary liquidation. On the one hand, patenting ensures that new firms obtain competitive advantages, and thus, survive in the product market. On the other hand, it enables new firms to pursue successful exit strategies in the markets for ideas. This study concludes that new firms can enjoy a patent premium in terms of survival and exit outcomes. In promoting sustainable economic growth via entrepreneurship, policymakers need to shift their focus from creating more firms to creating innovative firms.

Voluntary Liquidation of Credit Organization: Law Issues

The article reveals the legal issues of voluntary liquidation of the credit organization process and considers the main stages of such process. In order to simplify the liquidation of the credit organisation for both the Bank of Russia and representatives of the credit organization the article contains some suggestions for development of Russian banking regulations, in particular, set out of qualification and business reputation requirements for members of the liquidation committee and transformation of the credit organization being a professional participant on securities market into non-bank financial organization – professional participant on securities market.

A Detailed Research on Liquidation of a Company

Liquidation is a process of closing the business affairs of a company .It also means closing of all the business activities of a company .In certain circumstances if the company has been involved in illegal business then liquidation is made compulsory. The main reasons for Liquidation of a company is due to insolvency of a company , obsolescence of the products made by the company continuous losses or any other compelling reasons .As per Companies Act , 1956 liquidation of a company can be done in 3 ways , Compulsory liquidation ,Voluntary liquidation and winding up under the supervision of the court . The process of liquidation is done by the appointed liquidator who would look into the interests of the company , its members and its creditors. Compulsory liquidation is usually initiated by the creditors. The essentiality of winding up a company is to save the creditors and members from further losses and also distribution of assets and liabilities among the creditors and members.A company is liquidated when it is ascertained that the business is not in any state to continue. This may be due to various reasons such as insolvency unwillingness to carry on with the operations, etc. An empirical study is done where the samples are collected by using probability sampling and random sampling method. Samples of approximately 1512 respondents are collected . Using the spss tool the value of the chi square is found and the output of the research is that there is no significant association between the process of liquidation of company done by the liquidator and gender and there is a significant association between the compulsory liquidations initiated by the creditors as per court order and its concluded that most of the company undergo liquidation process in order to save the company from loss and also the money which is raised will be distributed to the creditors as well as the shareholders the liquidation process is done only when the business is not in any state to continue

Voluntary liquidation: When is it financially profitable?

The aim of this article is to offer insight into a concept making it possible to assess the financial rationality of the voluntary liquidation of businesses. The author of the study presents a decision-making algorithm that should be applied before deciding to voluntarily liquidate a business entity. The algorithm is based on the concept of Value Based Management (VBM), and the related calculations have been performed following the basic rules of mathematical finance. The presented solution is also based on the calculation of free cash flow generated by an enterprise for its owners and on investigating the relationship between the said cash flow and the rate of return expected to be attained by the enterprise’s owners. Because no such models are given or discussed in the literature covering the subject matter, it appears that the proposed solution may become a valuable tool to improve the process of making a decision in the scope of voluntary liquidation of an enterprise.

A random effects multinomial logit model for the determinants of exit modes

Purpose The purpose of this paper is to examine the factors associated with three modes of firms’ exit (voluntary liquidation, involuntary liquidation and acquisition) in a mutually exclusive environment. In particular, three modes of exit are treated as independent events given that different causes and consequences exist for each exit mode. The data set is a panel of 4,408 US manufacturing firms spanning over the period 1976–1995. Design/methodology/approach The discrete choice model is used to establish a relationship between modes of exit and a set of explanatory variables, which are specific to the firm, industry and macroeconomic conditions. Use of panel data encourages us to estimate a random effects multinomial logistic regression model, which allows exit modes as mutually exclusive events and at the same time controls the firm-specific unobserved heterogeneity in the sample. Findings The analysis suggests that the determinants of voluntary liquidation are age, size, profitability, technology intensity and inflation level. The determinants of involuntary liquidation are size, leverage, profitability and inflation level. For acquisition, determinants are age, size, advertising intensity, Tobin’s q, GDP growth, inflation level and interest rate. The findings suggest that exit modes have a different set of determinants and the scale of effects of some common determinants such as age, size and profitability differs between exit modes. Research limitations/implications The analysis presented in this study relies on data from US manufacturing firms only. Thus, there is a need to explore the determinants of exit modes in other countries as well using the proposed econometric model. Practical implications The findings presented in this paper are useful for managers and policymakers to design strategies/actions for avoiding particular mode of exit. Originality/value This study provides empirical evidence on the differences in factors associated with exit modes and confirms the existence of mutually exclusive nature of exit modes. Findings suggest that for future empirical studies on firm exit, the exit modes must be treated as a heterogeneous event.