It is an unfortunate circumstance when a business needs to be closed. More often than not, a business needs to be retired due to financial or economic reasons. These could be due to business reorganization, poor management, poor business plan, involuntary closure, bankruptcy, or even events that are not within the control of the company. However, there are some processes that a company needs to do before they can officially close their business to avoid any further problems.
One of the considerations that a company must ensure is the well-being of their employees. By reason of the retirement or closure of the business, employees shall then be terminated. Due process must be followed in the termination of the employees. At least thirty days before the date of termination, a notice of closure and termination must be given to the employees, as well as to the Department of Labor and Employment. This process must be followed to avoid a possible suit for illegal dismissal.
Different local government units have different requirements that are needed for compliance when retiring a business. Check the requirements of the LGU where your business is located for the closure of business. Note that there are requirements that are needed to be submitted at the barangay level, as well as at the city level.
Clearances from government agencies must also be secured when closing one’s business. A notice of closure must be given to the following government agencies: Home Development Mutual Fund or Pag-ibig, Social Security System, Bureau of Internal Revenue, and the Philippine Health Insurance Corporation. If the company is not able to notify the respective government agencies that they are subject for closure, the company shall continue to be assessed therein. Hence, this step is important for the assessments to attain finality. Note as well, that a notice of closure must also be given to other government agencies such as the Board of Investments, Philippine Export Zone, and the like, if the business falls under these government agencies which has granted them license thereto, so as to fulfill the necessary business closure requirements that these different government agencies may have.
Besides the different government agencies and the local government unit where the company was doing business at, the company’s closure must also be filed at the Securities and Exchange Commission or the Department of Trade and Industry, depending on the type of company that is up for closure. For corporations, the filings related to the closure of the company shall be submitted to the Securities and Exchange Commission.
As the corporation has a term or duration, the corporation can opt to be dissolved, or have their term shortened instead. For sole proprietorship, the Department of Trade and Industry is the corresponding agency that needs to be notified of the business retirement of the company.
Need further information and assistance regarding a business retirement? Talk to our team at FilePino to know more about the requirements and process. Call us today at 1.806.553.6552 (USA) or +63.917.892.2337 (Philippines) for more information.