There are two methods of dissolution of a Cyprus company:
- STRIKING – OFF: A summary procedure when the company has no assets or liabilities.It is considered to be the easiest and cheapest method of dissolution under section 327 of Cyprus Companies Law, Cap.113.
- MEMBERS VOLUNTARY LIQUIDATION: Comprehensive liquidation to distribute assets and liabilities of the company. It is considered to be a more formal method under sections 268 to 274 of the Cyprus Companies Law, Cap.113.
STRIKING – OFF
This method is considered to be the easiest and cheapest method of dissolution and is regulated under section 327 of Cyprus Companies Law, Cap.113.
Prior to initiating the procedure, it is important that the directors ensure that the Company has no assets or liabilities, particularly tax liabilities, to avoid objections to the striking off of the company by any creditors, or the Tax Authorities.
It is essential to submit up to date Tax Returns to the Tax Authorities and ensure that all taxes are settled so that Tax Clearance Certificate is obtained.
The Registrar of Companies takes internal action and informs the public its intention to strike off the company. The whole process takes several months until the Registrar of Companies publishes a final notice of the striking off, in the Official Gazette of the Republic.
A Company which has been struck-off from the Register can be restored, provided that an application is made to this direction prior to the 20 years’ expiration period from the date of publication notice of strike off, in the Official Gazette of the Republic.
MEMBERS VOLUNTARY LIQUIDATION
A Company may be wound up voluntarily if the company resolves so by special resolution under sections 268 to 274 of the Cyprus Companies Law, Cap.113,
This is a more formal and conclusive method of liquidation, whereas a licensed insolvency practitioner acting as liquidator is appointed, to initiate the liquidation proceedings.
A declaration of solvency is firstly sworn by all the directors in Court, stating that the company will be in a position to repay in full all of its debts and liabilities within a period not exceeding twelve months from the commencement of the dissolution. This declaration of solvency should be made within five weeks preceding the date of passing the resolution of dissolving the Company and a tax clearance certificate should already be obtained.
The liquidator informs the Cyprus Registrar of Companies that the company has been placed into members’ voluntary liquidation and an advertisement is placed in the Official Gazette of the Republic, giving notice to any creditors of the company to forward any claims against the company.
The Registrar of Companies will issue a Certificate of Dissolution within 3 months from this date of filing of the final liquidator’s accounts and the company is deemed to be dissolved.
The whole procedure takes approximately 6 months and fees depending on the work load involved.
The content of this article is intended to provide a general guide to the subject matter and does not constitute a legal advice.
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