Bankruptcy and Insolvency
When the company is about to stop its business activity, the sharehoders are faced with the question of choosing the appropriate way of a company liquidation. Under the Cyprus Law, there are 2 different procedures for liquidation of the company: Strike-off and Members’ Voluntary Liquidation.
Main Differences between Strike-off Method and Members’ Voluntary Liquidation Strike-off is the simplest and cheapest method, no liquidator is required and it is usually applicable to dormant companies. On the contrary the members’ voluntary liquidation is a more complex and costly procedure and a liquidator is required to be appointed. Moreover, in the case of strike-off, any person with a locus standi against the company may submit an application to the court requesting that the company is reinstated on the register before the 20 years’ from the date of the publication in the Gazette of the notice lapses, while in the case where a company has been dissolved by a members voluntary liquidation, any such Court application can be made at any time within two years of the date of dissolution by the liquidator of the company, or by any other individual who appears to the Court, showing interest, and upon such terms as the Court thinks appropriate, declaring the dissolution to be void.
1. Strike-off is a very straight-forward procedure and is generally used for companies that have terminated all activities and do not intend to carry on any business in the future. The Registrar can also proceed with the striking off of a company where he has reasonable cause to believe that the company has ceased to carry on its business (i.e. if a company does not comply with its obligation for filing of the Annual Returns to the Registrar of Companies) and/or when the company omits to pay the annual levy, as provided by the Companies Law, Cap. 113. It is noteworthy that in case where any member or creditor feels aggrieved by the striking-off of the company, they can apply to the Court for the reinstatement of the company provided that the application will be done before the 20 years’ expiration period, from the publication in the Gazette of the notice.
2. A company may be wound up voluntarily if the general meeting resolved the voluntary liquidation of the company either by the passing of a special resolution resolving that the company be wound up voluntarily, or by passing an extraordinary resolution to the effect that it cannot by reason of its liabilities continue its business, and that it is advisable to wind up. As the first step the auditors of the company should prepare the statement of assets and liabilities of the company, as at the latest practical date before the declaration of solvency, and the the Company’s directors swear an affidavit before the registrar in the District Court, making a Declaration of Solvency. Moreover, the directors of the Company needs to be passed, where the directors of the Company will appoint a liquidator. Once the liquidation commences, the auditors should proceed with the filling of the audited financial statements up to the date of the appointment of the liquidator and it is essential to obtain the Tax Clearance Certificate by the Tax Authorities. Upon receipt the Tax Clearance Certificate, the liquidator should sent to the Registrar of Companies the one month notice of the Final General Meeting for publication in the Official Gazette of the Republic of Cyprus, fixing such meeting. The Company is deemed to be dissolved on the expiration of 3 months from the registration of the said report with the Registrar of Companies and the Registrar of Companies will issue a Certificate of Dissolution.
Our highly experiences legal team has an extensive eperience in the field of Companies liquidation. We have an in-house certified liquidator, who can assist the clients at all stages of the process, regardless of the method of liquidation that the company follows. Should you require further information on the matters of liquidation procedures, please contact us by phone or email.