Liquidation of Cyprus companies
There are three main methods for dissolving a company in Cyprus: strike-off, voluntary liquidation (by shareholder or creditor), and compulsory liquidation.
If you decide to strike-off your company, Fine Life Limassol will be able to support you through the procedure, which involves a number of steps:
- Strike-off is the simplest method because the company is not formally dissolved but rather just struck off from the register; as such it involves no court proceedings and may be reinstated in the future, unlike in the case of liquidation. It is regulated under Section 237 of the Companies Law Cap. 113.
- In order to complete the strike-off, the financial statements of the company must be prepared and submitted with the relevant income tax return to the Cyprus Tax Authorities, which will then issue a Tax Clearance Certificate; provided that any tax liabilities are settled.
- All the directors of the company must sign a Declaration of Solvency (affidavit), which acts as a confirmation that the company has no assets or liabilities i.e. can pay all its debts, and is no longer carrying out business activities.
- The procedure for the strike-off costs EUR 1000 + VAT and takes approximately 1 year to be completed.
The second method is a Members’ Voluntary Winding Up under Sections 261 to 274 of the Companies Law, Cap.113. At Fine Life Limassol, we provide fully-licensed outsourced solutions for the liquidation of companies, supporting our clients throughout the liquidation process, including submission of all the necessary documentation and financial accounts.
- This method is used usually when the company has decided to discontinue business activities. It requires for a liquidator to be formally appointed in order to distribute certain assets, primarily for tax reasons.
- The procedure involves the preparation of financial statements and a statutory declaration by the directors declaring that the company is able to pay its debts.
- The Declaration of Solvency must be sent to the Registrar of Companies within 5 weeks of the passing of the resolution to liquidate the company.
- If at any stage it appears that the company is not in a position to pay all its debts, then a voluntary liquidation by shareholders becomes a voluntary liquidation by the creditors.
- All the debts of the company must be settled within 12 months from the commencement of the winding up.
- A Tax Clearance Certificate will also be issued.
- The liquidator is appointed to call a general meeting of the shareholders and the final accounts are then presented at the meeting, detailing how the assets of the company will be distributed.
- After the meeting a copy of the report of the final meeting will be sent to the Registrar of Companies by the liquidator at least one week after the meeting.
- The Registrar of Companies will issue a Certificate of Dissolution within 3 months from this date of filing.
- A compulsory liquidationcan occur as a result of a number of circumstances: if the members of the company have filed a petition to the Court; the company did not submit the statutory report to the Registrar of Companies; the company’s activity did not start for over a year following the registration of the company; if the company is a public listed company whose number of members has decreased to below 7; or if the company cannot pay its debts
- The procedure involves a fee that is payableto the Companies Registrar and the Official Receiver before submitting the application to the Court, which must be accompanied by an affidavit.
- The application is set for hearing in 30 days. If during that time no objection is registered, the Court reschedules the application for proof in maximum 30 days, while an announcement is made into the Official Gazette of the Republic of Cyprus regarding the liquidation of the company.
- The Order is submitted to the Registrar of Companies and a liquidator appointed by the Court.
- Once all the debts are covered, the Court formally dissolves the company.
Contact our team of international legal experts today and we will be able to advise you on the most suitable method for dissolving your company, as well as assist you throughout the liquidation process.